The Ministry of Finance has revised the 2018 growth upwards to 4.1 percent, from 3.4 percent.
Government has released its revised figures on the 2018 performance of the economy with the country’s growth rate pegged at 4.1 percent, higher than the 3.4 percent that was forecast in November when the 2019 national budget was unveiled.
In the ‘End of Year Outcome 2018’ report released by the Ministry of Finance yesterday, it was also disclosed that at the end of 2018, Guyana’s stock of public debt was higher than estimated at US$1,708.4 million, 1.5 percent higher than the projected 2018 figure of US$1,683.7 million at Budget 2019.
However, the Ministry explained this rise in the public debt stock was due to higher disbursements in the last three months of 2018, from the Inter-American Development Bank (IDB) and the China EximBank.
For 2018, the total public debt-to-GDP ratio was 44.2 percent, 0.2 percentage points lower than the budget 2019 projection of 44.4 percent.
Again, the performance of gold was credited with helping the economy along.
According to the report, belated improvements in gold declarations during the last quarter of 2018, was a key driver.
Finance Minister, Winston Jordan
The report warned that economic resilience going forward will be largely dependent on the country’s ability to capitalize on institutional strengthening and opportunities for diversification. On the fiscal side, there continues to be challenges to implementing the Public Sector Investment Programme – public spending on projects.
“More rigorous steps are being applied to project appraisals to ensure a higher degree of project implementation readiness during 2019 and the years ahead. Revenue collections remained high, but include a significant level of arrears as improved compliance and the 9-month tax amnesty bolstered revenue collections.”
According to the report, global growth, according to the International Monetary Fund, in its 2019 World Economic Outlook Update, estimated 2019 growth to be 3.5 percent.
With regards to the December 21st no-confidence vote in the National Assembly, the country is being affected.
“However, political developments in late December 2018, which spilled into 2019, and unpredictable weather conditions, can pose threats to the performance of our key sectors. This can be aggravated by the continued influx of Venezuelans escaping deteriorating economic and social conditions – in January 2019, it was reported that about 3,868 documented Venezuelan migrants are in Guyana – and the difficult international conditions – trade tensions and uncertainty as well as challenging financial circumstances.”
With regards to the sectors, the report said that the agriculture, fishing and forestry sectors grew by 1.5 percent in 2018, 0.4 percentage points better than the previous forecast.
This was due to significantly higher production of sugar, livestock and timber, which resulted in growth in these industries being revised upwards by 4.8 percentage points, 1.9 percentage points and 1.6 percentage points, respectively.
Sugar improved?
“The upturn in sugar production was as a result of better-than expected performance of the second crop, which saw the three operational sugar estates – Albion, Blairmont and Uitvlugt – surpassing the production levels achieved in 2017.”
In the forestry sub-sector, production in the last two months of 2018 surpassed expectations, it was reported.
The good news continued in the mining and quarrying sector, which recorded growth of 2.9 percent in 2018, 5.2 percentage points above the previous forecast.
“The reversal in this sector was primarily due to higher gold declaration, which exceeded the previous projection by 7.9 percent. After lower-than-expected production for much of the second half of 2018, Guyana Goldfields saw an increase in December 2018, with output rising to its highest level since August 2018.”
According to the ministry, the manufacturing sector realized growth of 1.0 percent in 2018, 0.1 percentage points higher than estimated in Budget 2019, due to the better-than-anticipated outturn in sugar production.
Other manufacturing, which comprises mainly light manufacturing, performed in line with its projection, growing by 5.2 percent over 2017.
The construction sector grew by 11.0 percent in 2018, 1 percentage point lower than projected in Budget 2019. This was primarily due to slower-than-expected execution of the Public Sector Investment Programme towards the end of 2018.
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Over the 12 months, ending December 2018, net domestic credit in the economy increased by 16.3 percent, to approximately $254.9 billion. This was faster than the 14.6 percent growth rate projected in Budget 2019 and was supported by higher loans and advances to both the private and public sectors.
“Credit to the former grew 0.3 percentage points faster than the 3.9 percent projected in Budget 2019, to reach $233.6 billion. This was driven by a stronger-than-expected expansion in credit to business enterprises in the agriculture sector, and a smaller-than-anticipated contraction in credit to the mining and quarrying, and manufacturing sectors. Loans and advances to the agriculture sector grew by 17 percent to $13.3 billion, faster than the 12 percent projected in Budget 2019.”
However, credit to the mining and quarrying, and manufacturing sectors declined by
4.1 percent and 0.3 percent to $5.1 billion and $24.5 billion, respectively, more slowly than the anticipated contractions of 11.9 percent and 3.7 percent in Budget 2019.
On the other hand, loans and advances to the services sector grew by 5.9 percent to $69.8 billion, slightly less than the 6.1 percent estimated in Budget 2019.
As it relates to individuals, credit to households expanded by 4.1 percent to $31.7 billion, 2.0 percentage points above the Budget 2019 projection.
In December 2018, the 12-month inflation rate was 1.6 percent, instead of the 2.0 percent reported in Budget 2019.
“This was due to all major components of the Consumer Price Index (CPI) returning lower levels than previously estimated.”
