Budget: January 29

– will focus on job creation through micro-financing, micro-industries

By Tajeram Mohabir

BUDGET 2016 will be presented on January 29, and, among other things, will focus on job creation through micro-financing and supporting of micro-industries to ramp up economic growth.

Last year, the business community had complained of a slowdown in the economy, which was due to several factors, but principally the prorogation of Parliament and the subsequent hosting of Regional and General Elections. This year’s budget is expected to breathe fresh life into the economy.

President David Granger, without going into details of what Budget 2016 contains, told the Guyana Chronicle that strong emphasis will be placed on stimulating economy growth, increasing revenue collection, and reducing leakages through tax evasion.

Significant efforts will also be made to address non-compliance with the law as well as non-payment of contributions to the National Insurance Scheme (NIS).

Aside from these, the issue of unemployment has also been a cause for concern. Last year, the Caribbean Development Bank (CDB), in a report, estimated youth unemployment in Guyana to be around 40 per cent.

President Granger said his administration is aware of the problem, and Budget 2016 will contain measures geared at addressing the problem.

The budget will tackle employment through microfinance and micro-industries, and will give entrepreneurs, particularly young entrepreneurs, opportunity to participate in the economy.
Youth employment has not been the only challenge with youth. The number of school dropouts is also high.

“Until and unless we get more young people into the economy, we won’t be able to see the type of growth [the country needs],” President Granger said.

But encouragingly, he said, while Government’s social programmes have been consuming a lot of revenues, they are showing notable sign of success.

Notwithstanding the elections and the uncertainty that accompanied it, Finance Minister Winston Jordan, in his 2015 Budget, projected a 3.4 per cent growth for the year, but the economy was unable to achieve that target.

President Granger explained that Guyana does not exist in isolation, and depends heavily on the primary commodities of sugar, rice and bauxite. These have not been receiving favourable prices on the world market, he said, noting that this situation has caused the slowing of growth and revenues.

OPTIMISM
But Guyana can look forward with optimism this year, he said. The International Monetary Fund (IMF), in May 2015, reported that Guyana’s economy is expected to grow by 4.4 per cent in 2016.
However, the IMF noted that growth in the region is expected to make a modest recovery to two per cent, and it draws attention to the downside risks that could further complicate the outlook for Latin America.

The Fund said further possible weakness in commodity prices -– perhaps related to a sharper downturn in China –- would increase pressures on South America’s net commodity exporters.

President Granger said that for Guyana to be competitive in the global arena, it cannot be business as usual. He stressed the need for education reform with strong focus on science and technology.

“The education system has failed to produce the quality and number of scientists that we need to develop the country,” he said, while pointing out that the problem cannot be addressed overnight.

Knowing the problem, however, allows Government to tackle it head on.

And the President said his Administration will tackle that, along with poverty and unemployment, and strive to develop an economy that absorbs more young people and entrepreneurs than ever before.

“We expect that we will see some of those initiatives in the budget,” he said.

Finance Minister Jordan had told this publication that, in this year’s budget, billions of dollars will be pumped into infrastructure, crime and security, communication, climate change and resilience, health and education.

A major focus, he said, will be placed on “infrastructural transformation” aimed at bridging the gap between the coast and hinterland.

“We keep saying that the hinterland is where all the wealth is, but we have most of the people strung along a narrow strip on the coast. So we really want to bridge that gap. Whether the bridging of that gap be physical bridges, roads, boats, airstrips, communication…all those areas we are going to tackle,” he added.

Last year, Mr Jordan presented a $221B budget, and this year, he said will be presenting a bigger budget as Government wants to create a friendly investment climate.
“Proper infrastructure is crucial for attracting business,[helping] existing businesses to stay in business [and] linking our different parts of the country,” he said.