Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698070535291.pdf (Guyana)
GUYANA SESSIONAL PAPER N0.1 OF 1999 SEVENTH PARLIAMENT OF GUY ANA UNDER THE CONSTITUTIO N OF GUYANA FIRST SESSION BUDGET SPEECH Honourable Bharrat Jagdeo, M.P Minister of Finance March 26, 1999 TABLE OF CONTENTS l. Introduction 2. Review of the International A.

Developments B.
Developments B.

Outlook in I 998 International for the Economy Economy in 1999 3. Review of the Domestic Economy A.Introduction B.Real Sector C.Balance D.Monetary of Payments and Exchange Market Development Sector Development I.Monetary 2.foreign E.Performance I.

Central 2.
Central 2.

Public Finances Market Development of Non-Financial Public Government Enterprise Investment and Structural Sector Reform the Business Programme Finances Reform Sector F.Public G.Institutional I.Financial 2.Improving 3.Privatisation 4.Other Policy H.Development I.Debt Initiatives Reforms in the Housing Sector Environment 3 3 4 5 5 6 8 9 9 10 11 11 12 12 15 15 16 16 16 17 18 4.
THE POLICY FRAMEWORK FOR 1999 A.Overview B.Macroeconomic Framework and Structural I.Fiscal 2.Monetary, Policies C.External Sector I.Trade Policies 2.External Reform D.Structural Financial Policies and Exchange Debt and HIPC Initiative I.Reforming a.Public b.Guyana National the State Sector Enterprise Cooperative Bank E.Private F.Economic Sector Development Infrastru cture for Accelerated Growth I.Strategic Investment G Job Creation I.Micro Enterprise 2.Labour Intensive 3.Skills Sector Programme Training Development Activities H.Social I.Education 2.Health 3.Water 4.Housing Sector I.Public J.Y2K Related Issues K.Security Modernisation Programme 19 19 Policies 19 20 Rate Policies 20 21 21 21 22 22 22 23 23 24 25 26 26 27 27 27 27 28 29 29 29 30 30 31 31 31 31 31 J:!
32 )� ' ., '' -' _, 33 34 35 3) 35 35 35 36 36 36 36 36 _'>6 '7 .)

' 37 37 38 Targets for the Economy m 1999 A.Fconomic 8 Rcal GDP Cirowth ar,d Financial Policies and Targets I Agriculture 2.Industry 3.Services Inflation t. D.Balance L Fisl:al F. E xp,�nditure Targets (lPublil: G.Targets I argets H of Payments Monetary Targeh Enterprises 6.
Budget Measures A.Measures and Policies to Stimulate Investment ion Rates) Sector Regulation in the Private of the ln Aid of Industry A.ct l.Income Tax { Depreciat ' Property Tax 3.Schedule 4.Stamp Duty 5.Common External 6.Revie\\ 7 louri�m 8 l'oveny 9.Subverit1on Programme of Fiscal Tariff Incentives B.Mea�ures to ?

'-Jeigborhood Labour to Compensate f Democratic Council� l.Ke) and Critical Wage Increases Staf 7.
Conclusion Scheduk of fees and Licnse Appendices Socio-Economic Indicators Index Selected Real Output Central Urban Con::,umer Balance Actual of Payments Price Index ·) 4.

'i 6.

(iovernment financial Operations and Projected External Debt Stock Ii - 1 - Introduction 1.1 Mr. Speaker, I rise to move the motion for the approval of the Estimates of the Public and Sector the Budget for the financial year 1999.
In so doing, I wish to indicate that in concurrence with Article 171, paragraph 2 of the Constitution, the Cabinet has recommended that the National Assembly proceed upon this motion.

1.2 Mr. Speaker, this is the last budget of this century - a century when we broke free from the bondage of colonialism, after a long and painful struggle.

At Independence, our people had high hopes and dreamt big dreams for Guyana.

However, expectations of nationhood were unfulfilled.
'bemocracy was toppled which set the stage for economic and social collapse.

Thousands of our people were forced to flee these shores, when hope was lost, and make other countries their adopted home.

1.3 Nevertheless, the will and commitment of our people to democracy remained strong over the years.

Today, we live in a free and democratic society because of their struggle s. We must zealously guard this new found freedom.
1.4 Mr. Speaker, our commitment to improve the standard of living of our people remains the same as it was in our earlier years in office.

During the past six years, we have charted an economic and social course that has brought renewed hope and tangible benefits to our people.

However, this march to rapid economic development halted and growth was temporarily some last year as the economy suffered setbacks that were due to domestic and international difficulties.
Some of our people suffered because of these difficulties and because we are a caring Government it bothers us greatly.

1.5 This year, in terms of economic growth, we expect to perform better.

This is not to say that there are no risks.

At the domestic level, political and unrest confrontation can affect economic outcome, while level, at the international the financial architecture essential in preventing and minimising future economic crisis is yet in place.
1.6 We see the private sector as an essential partner.

In this light, we have, over the last six years, introduced wide-rang ing, market-oriented, legislative, regulatory and structural rt::forms; and rehabilitated the economic and social infrastruc ture in support of private sector development.

We also view the labour .., movement as another essential partner.

We have \\orked with that body to improve the employment conditions and practices in the country.

I.
I.

7 We are also acutely aware of the limitations of the market.

Markets can neither deal with the root causes of pove11y m•r prevent the gap between rich and poor from widening.

As a caring Government, we must1 That is, why.

among other inHiatives.

we continue to allocate improving more resources towards the quality of education .. health care and water supplies and for our housing programm...:.

1 8 Mr. Speaker.
1 8 Mr. Speaker.

I wish to thank the various organisations and interest to our groups who responded philosophy of consultation and shared their ideas and concerns during the preparation of this year's budget.

Wi.

:: have alv,ays placed high valui.

:: in consultations with our people and this budget reflects many oftheirn.

:w, 1.9 The challenges facing us as a nation on the eve of the next millennium are many.
This budget seeks to set a frame,\ork for the road ahead .. As such, our objectives, this year.

arc to return confidence to 1 the economy.

particular!

: the currcm:y. introduce comprehensive of assistance programme to diversify the economy.

focus on budget cn�ation.

and to improve our social S,'ctor 1.10 t\fr.

Speaker.

our ...:ountry perfonns best when all of our people.

in spite of political or other differenc1.:s.

Wl)rk together.

I hope that we will all commit ourselves to making Guyana.
our Guyana.

a bet1er place.

- 3 - Economy The International 2 in 1998 A Developments 2. l Mr. Speaker, the economic and financial crisis that began in South-East Asia in 1997 and spread rapidly to other economies have had a profound impact on many emerging economies, including Guyana.

Large capital outflows from Asia and Latin America placed the currencies of countries of those regions under intense pressure panic and and led to sharp depreciations.
Investor the loss of confidence, especially in 1ndonesia, Korea, Malaysia, Thailand, and Russia, and in the case of our region, in Argentina, Brazil, Mexico, and Venezuela, led to capital flight and weakened demand.

This combined with serious setbacks in the domestic financial systems, led to steep recessions in these countrie s. 2.2 As a result, \Vorld demand fell sharply.

Output declined from 4.2 percent in 1997 to 2.2 percent in 1998.
The advanced economies of North America and Europe registered an average grmvth rate of 2 percent, compared with 3.2 percent in 1997.

Economic growth in developing countries also fell sharply, from 5.7 percent in 1997 to 2.8 percent in 1998.

By regional groupings, in the Middle East and Europe, output slowed from 4.5 percent, in 1997, to 3.3 percent, in 1998.

In Latin America and the Caribbean, output fell from 5 .1 percent in 1997 to 2. l percent in 1998.
The only region that perfonmed better in 1998 was Africa, where growth increase d marginally from 3.2 percent, in 1997, to 3.6 percent, in 1998.

2.3 Mr. Speaker, the spillover effects of these developments have been massive.

The drastic reduction in demand in the economies that were directly affected, together with the reduction in overall global demand, led to a sharp decline in international commodity prices.
The IMF's overall index of commodity prices, measured in terms of U.S. dollars, fell substantially by over 14 percent over the previous year.

The drop in commodity prices was broad-based, covering most major primary commodities.

2.4 The volume of world trade was also adversely affected.

Exports from developing countries slowed significantly from 11 percent, in 1997, to 4 percent in 1998.
At the same time, imports of developing countries declined by about l percent during 1998, mainly as a n:sult drop in of a 30 percent price of oil.

the international 2.5 Mr. Speaker, the poor were the hardest hit by these developments as the economic crisis 4 translated into a human one.

Widespread hardships ansmg from massive layoffs.

escalating prices of essential commodities.

and large cuts in social expenditure were some of the consequences.

In Asia and Latin America.


tens of millions of people fell from the middle class to below the poverty line and the poor became even poura Above all.

these crises have demonstrated how \Ulnerable open economies are to changes in the global economy.

B.

The Outlook for the International Economy in 1999 .�.6 Mr. Speaker.

the outlook for the world economy continues to be bleak.

is Global output projected at 2 percent in in l 999.

This is well below the historical avuage Gro\\1h of 4 percent.
the industrial economies will slow to about l .5 percent Japan's economy is expected to continue to register negative growth.

\\hile the expansion m the other advanced is countries expected to continue.

but at a slower pace.

2.

7 The economies of the Asian countries are also expected to recover but economic grO\vth will remain negative during 1999.

Output grow1h in Central and Eastern Europe.

and Russia is projected In Latin A.merica to deteriorate further.
and the Caribbean, to slmv to GDP is projected 1.5 percent.

with gro\\1h in Rrazil projected at I percent The economic expansion in Africa is expected to continue, increasing to 3 8 percent in 1999.

2.8 Mr. Speaker.

non-fuel commodity prices are projected to decline even further in 1999.

At the same tllne.

fuel pnces are projected to increase by 8 percent.

This is likely to tum the external terms of trade against primary commodity producing countries, incbding Guyana.
2.9 Achieving even these modest targets will be difficult There remains considerable uncertainty regarding developments in the global economy.

Several risks.

which are related to developments in the international capital markets.

make the current global economic situation s till fragile.

These include the danger of prolonged retreat by international investors and banks from emerging markets, threats to international payments.

and disruptions to trade arising from weakened global demand.
This is the international economic outlook that we faced in shaping this year· s budget .

5.

The Domestic Economy 3 A.

Introduction 3 .1 Mr. Speaker, I will now briefly examine how the global crisis affected our economy during 1998.

Although our financial markets remained untouched, the same could not be said for our commodity markets.

3 .2 Let tne review the specific impact of the global economic crisis on the various production sectors.
"'First, the crisis has exposed the vulnerability of the forestry sector to international market conditions.

Asia serves as a major destination point for our timber exports.\.

The large currency depreciation in that region made our timber products uncompetitive and weakened the demand for them.

As a result, output of forestry products fell by about 24 percent in 1998.

Gold production plummeted was similarly affected, as prices from about US$375 per ounce to US$290 per ounce.
At the same time, domestic cost of production increased, thereby narrowing the attractiveness of gold mining as a viable economic activity.

being With operators increasingly faced with declining profit margins, the future of the industry remains threatened.

3.3 Mr. Speaker, the bauxite market withstood the weaker demand in Asia and the world steel industry, since prices declined marginally.
However, stiff competition and from Brazil China, shrinking markets in Europe and the USA, and technical difficulties led to at Linmine, lower production of the high-valued calcined bauxite.

3.4 In the case of sugar, prices dropped sharply by 30 percent in 1998.

However, our access markets to preferential in Europe and the United States cushioned effects us from the devastating of this steep decline.
The prospects of achieving higher prices for rice and plans to develop alternative markets are threatened by higher domestic production in Asia, arising from the incentive provided by large currency devaluations in the Asia.

It is estimated that, as a result of these developments, fiscal revenues in Guyana fell by $4.9 billion, while the economy lost about US$70 million in export earnings.

This contributed reserves to a fall in gross international of - 6 .

US$39 million.
US$39 million.

and led to the shrinking of output, loss of jobs, and pressu:�es on the exchange rate 3.5 These developments had maJor consequences on our economy and created severe hardships for our people.

Nevertheless.

a combination of monetary.

fiscal and structural policies dampened the impact of the crisis on Guyana.

The management of the economy during that period received favourable reviews from multilateral financial institutions.

B.
B.

Real Sector 3.6 Mr. Speaker_ the economy declined by 1.3 percent m 1998.

I will now examme the sectoral performance that led to this outtum Agncultural producti on fell by 5.3 percent in 1998.

Due to poor weather conditions, stemming from the lingering effects of the drought, production of cane sugar fell by 7.1 percent.

In the Berbice Estates, output fell by 7.

7 percent.

with all four of the producing estates returning lovver-than-expected In the Demerara output.

Estates.
Estates.

the combined output of LBI and Enmore was about 3. l percent lower than in 1997.

This shortfall.

however.

was more than compensated by the increased output of Wales and Litdugt.

3.8 In the rice sub-sector, overall production was better than expected.

Output fell by more than 24 percent in the first crop of 1998. as a result of adverse weather conditions experienced earlier 180.000 in the year.
Of the estimated acres prepared for sov,ing, only 143,323 acres of land were actually sown in the first crop.

Improvement in weather conditions in the middle of 1998 and provision of paddy seeds to farmers affected by poor weather conditions, helped the industry to recover during the second half of the year.

Second crop production.

last year, was the largest ever recorded in this country.
3.9 Mr. Speaker, as alluded to earlier, performance in the forestry sector in 1998 was one of the worst in recent times.

Despite the robustness of the housing sector.

the effects of a \.Veakened internationa l demand for forestry products and a steep decline in prices, particularly of raw fr)restry products.

resulted in a 24 percent decline in output.

Again, the sharp swings in - 7 - commodity prices have exposed the vulnerability of this sector.
As mentioned in my budget statement last year, the opportunities in this sector are enormous.

It is, therefore, important that we explore avenues for achieving higher value-added from this important .

national resource 3.10 The fisheries sector strong registered growth of 11 percent last year.

Fish catch increased by 8.7 percent; seabobs by 32.1 percent; and prawns by 59 percent.

Given in this the potential sub-sector, we have sought technical assistance to determine the fish biomass This in our waters.
will assist us to develop sustainable policies for the fishing industry and additional attract investment.

3 .11 Production of non-traditional agricultural including products, ground prov1s1on, vegetables and fruits, chicken and eggs increased significantly last year, partly offsetting the decline in the output of the other agricultural sub-sectors.

3 .12 Mr. Speaker, performance m the mining sector was mixed.
Production of raw gold amounted to 454,485 ounces, an increase of 4.2 percent over the previous year.

The output of Omai Gold Mines Limited increased by 5.4 percent while declaration from independent operators registered an increase of 14.9 percent.

In the bauxite sector, overall output declined by .� 8.2 percent.

Calcined and metal grades bauxite recorded steep declines while the output of chemical grade bauxite increased by 40 percent.
3.13 The performance of the manufacturing sector slowed significantly last year.

Despite increases in the production of alcoholic and non·alcoholic beverages, pharmaceuticals, and edible oil, output sector in the manufacturing declined by about 11 percent.

This was due largely to significantly lower production of stoves, refrigerators, laundry soap, corrugated , and cartons other processed food.
Financial difficulties of some manufacturing entities and lower income levels were responsible for the poor performance. "

8 - 3 .14 Mr. Speaker.

the construction sector and engineering showed impressive growth last year.

While public sedor investment projects slowed, increased housing and residential construction resulted in the sector expanding by about 4.7 percent.

:u 5 The services sector int.

:rec1sed by 2.

9 percent.

Rental of dv,ellmgs increased by 5.


7 percent; and finan..:rnl services about 3.2 percent.

However.

hoth government and other services declined by I pcrc�nt and 3.9 percent respectively.

C. The Balam;e of Payments 3.16 Mr. Speaker, the overall balance of our external accounts worsened last year.

There are several reasons for this.

First.

as a result of the diffirnlties encountered in the real sector.

the output export of some of our key commodities.


including forestry products and calcined bauxite were significantly lower than in the previous year.

Second, our external terms of trade deteriorated by 2.5 percent as lower import prices were insufficient.

to olfaet the steeper decline export prices.

Third.

there was a significant shortfall in capital inflows, due mainly to lower of loans.

disbursements 3 .17 Total exports for the year amounted to US$54 7 million.
a decline or 7 .8 of US$46 million percent over the previous year.

Fxcept for non-traditional exports.

which increased by 11 percent, receipts from all major exports fell.

Imports amounted to US$60 I million or about 6.4 percent below the level in 1997.

\Vhik the imports of consumption good�.

increased by about 6 percent, those of inten11ediate goods tell by US$30 million .. reflecting a 28 percent decline in fuel prices.
These developments led to a widening of the trade deficit by US$2.6 million over the previous year.

Nonetheless.

a significant decline in net factor services together with a modest decline in transfers slowed the deterioration of the current account balance, from US$81 mill ion in 1997 to USS86 million in 1998.

- 9.

3.18 Net capital inflows increased by US$12.4 million to US$121 million in 1998.
As a result, the overall balance of payments declined by US$26 million, and this was financed by a reduction in the net foreign assets position of the Bank of Guyana.

D. Monetary and Exchange Market Developments 3.19 Mr. Speaker, during 1998, monetary policy continued to focus on the challenge of maintaining price stability in the context of a contraction in economic activity and the depreciation of the Guyana dollar.
In an effort to stabilise the exchange rate, the Bank of Guyana continued to conduct its monetary operations through the issuance of treasury bills that were aimed at absorbing the excess liquidity of the commercial banks.

It also intervened in the foreign currency market, to smooth out fluctuations, and observe its international gross reserve target.

1.

Monetary Develc�ment 3.20 Base money grew by 12 percent in 1998, compared with 17 percent in 1997.
This was due mainly to a sharp reduction in the growth rate of currency in circulation, from 12 percent in 1997 to 1 percent in 1998.

The deposits of commercial banks at the Bank of Guyana, which continued to include large amounts of excess reserves, grew by 25 percent in 1998.

The Bank of Guyana continued to monitor the level of free reserves very closely, with a view to regulating the growth of money supply.
3 .21 Mr. Speaker, the net foreign assets of the Bank of Guyana increased in 1998, despite a decrease reserve in the gross international target.

The incrt:�ase in the net foreign assets reflects a decline in foreign liabilities, associated with the transfer of quasi-fiscal liabilities totaling US$64 million to the accounts of the Treasury.

TI1is development, together with lower central government revenues, resulted in a reduction in the net domestic assets of the Bank by 11 percent.
3 .22 Broad money grew by 7 percent, compared to 12 percent in 1997, reflecting the decline in economic activity deposits, grew by 8.4 percent, and lower incomes in the economy.

compar7d with 13 percent Quasi money, comprising of time and savings in the previous by year.

Time deposits increased • IO - only 1.3 percent.

compared with 9 percent in 1997, while -.avings depostts grt:v. by 12.4 percent, compared v,ith 15.3 percent in 1997.
This shift in growth rates vvas caused by a narrowing of the spreads bet\veen ti 1111: and savings deposits and by the desire of depo.,;itors to remain flexible in an cnv ironrnent of unstable exchange rate.

Narrov, money continued to decline.

g.rnwing last year.

nnly by 2.5 percent 3.23 Total net dun1estl� credit gre\\ bj $9,5 billion or 40 pen.

;ent in 1998.

1"his represents a decderati")11 from tht· 67 percent increase m l 997.

As m prcvitius years.


the private :,cctnr accounted for the majur share of borrowing \vith the Ciovcmment remaining a net depositor to the banking system.

Loans and advance,-, to the private s-�ctor grev, by 15 4 percent t,) $51.8 billion.

The manufacturing sector rcmaiPed the largest recipient nf credit, folllm-ed hy the household and agricultural sectors.

Credit to the housing: sector tripk1d.

increasing: from $546 million in 1997 to $1.6 billion with the in !

998.
998.

(\msistent growth ind i�.tributir 111. credit to that sector also increased by 13 percent.

3.24 Mr Speaker.

the 91-day treasury-bill rate.

which is tht2 reference rate for the market increased from 8.16 percent at end-1997 to 8.84 percent at end-I 998.

The weighted-average knding rate increased bv 7 basis puints ,,hilc savings mtes declined h_v 33-basis pointi,.

The commercial banks continued to utilise high interest spreads to maximise profits.
as evidenced by JO-basts points i11creast: in the interrrn�d iatir•n spread betv.-een banks' lending rate and small savings· deposit rate.

this \1 r. Speaker, cnntinues to be a source of cc-ncern to depositor;,.

investors.

and tht: Gov emment.

3:25 Mr Speaker.

as a small open economy.

v.itb a market-detcnnint:d exchange rate regime, our econorny invariably markets reflects developments in external and the balance of payments.

Lower export prict:s. lower capital mt1ows.

speculative activities.


and a lack of depth in tht: foreign exchange market resulted in a 15 percent depreciation of the Guyana dollar against the United States dollar during 1998.

3 .26 To smooth out temporary fluctuations in the rate, due to seasonai factors.

and to dissuade speculative a,:tivities on the currencv.

the Bank of Guyana intervened in the foreign currency market on a number of c ... :casiuns These intervt�ntions.
in ..:ombination with tight monetary and fiscal policies, prevented the· exchange rate frum deteriorating further.

This .occurred at a time when the currencies of our much stronger neighbours suffered significant depreciations.

- 1 J - 3.27 The volume of trade of the United States dollar fluctuated around a weekly average of US$13.9 million with the non-bank cambios accounting for about 20 percent of foreign currency transactions.
Taking advantage of the volatile nature of the market, bank and non-bank cambios their increased spreads.

Average spreads between selling and buying rates to $3 .82 for the!

non-bank cambios and $4 for the bank cambios.

E. Performance of the Non-Financial Public Sector 3.28 Mr. Speaker, in 1998, our fiscal projections assumed a real GDP growth rate of 3.2 percent, higher import values, higher gold production and prices, and a higher level of domestic demand.
Since revenue collections for the non-financial public sector depended on these assumptions, the outturn for 1998 was adversely affected by the changed realities of both the domestic and international economic developments.

The Government took immediate actions to mitigate their effects on the fiscal position of the public sector by tightening expenditures.

1.
1.

Central Government Finances 3.29 Current revenues amounted to $33.1 billion or about $5 billion below the target for 1998 and about $1 billion less than in 1997.

Collections from the Inland Revenue Department totaled about $14.

l billion, a shortfall of $2.2 billion.

This was due mainly to lower collection of company taxes, arising from lower output and difficulties encountered in collection of arrears.

At the Customs and Excise Department, revenue collection amounted to $15 billion.
This was $2.1 billion below the target.

The general decline in economic activities were responsible and lower-than-anticipated import volumes for the poor perfonnance .

3 .30 Mr. Speaker, to the extent that we had to maintain a robust fiscal balance, this under-perfonnance in revenue collection exerted enonnous pressure on expenditurc;.ls.

Total expenditures (net of principal repayments) amounted to $43.l billion, about $1.8 billion below target.
current Of this, non-interest expenditure totaled $19.7 billion.

Employment costs increased by $860 mill.ion to reach $9.8 billion while expenditures on other charges amounted to $9.9 billion or about 11.4 percent more than the previous year.

Interest payments amounted to $10.4 billion of which $7.4 billion were external payments.

- I 2 - 3.31 Consistent with the lower revenues, adjustments had to he mad,;!

to the capital programme, in particular.

non-foreign funded projects.


Capital expenditure and net lending.

in 1998. amounted to $ l 3 billion, about $1.8 billion below the target and 20 percent iower than the level achieved in 1997.

A substantial amount of money was expended to improve sea defences.

the road !fletwork.

schools and hospitals.

Net lending totaled $1 3 billion, representing transfers to Linmine and Guyana Airways Corporation (GAC) Capital revenues of $425 million fell far sho11 of the target of billion.
reflecting the slow progress of privatisation during the year.

As a result the overall deficit of the Central Government although declinmg relative to 1997, increased to $9.6 billmn or 8.8 percent of GDP.

fhis deficit was partly financed through net inflows from the donor agencies.

2.

Public Enterprise Finances 3.32 Mr. Speaker, the consolidated primary cash balances ,)f the public enterprises (excluding the National Insurance Scheme) amounted to $5.5 billion.

This was $1.1 billion below the target.


The 5hortfall reflected a declme in cash receipt s for Linmine, GAC and Guyoil.

ln addition.

cost overruns at GAC associated with additional payments for the wet leased aircraft and repairs to the dry-leased aircraft.

and higher operational costs at Lmmrne, contributed to the poor performance public of the non-financial enterprises.

J.33 Capital expenditures of the public to $3.4 billion.
enterprises amounted This was about $500 million above the target and reflects higher investment spending by Guysuco The poor revenue performance of the public enterprises also affected their contribution to central government revenues.

Corporation taxes only amounted to only $496 mil11on, about 52 percent in 1997. below collections Dividends and other transfers of $2.2 billion were slightly above ::he target of the previous year.
F. The Public Sector Investment Programme 3 .34 Mr. Speaker, in 1998, we continued to make progress in the imple-mentation of the public sector investment programme (PSIP).

The PSJP recorded an implementation ratio of 88 percent.

with compared the 99 percent achievement in the previous year.

This shortfall was due to the Central Government's programme, which fell by 18 percent, largely on account of lower disbursement of 1Jroject-related loans.
Implementation of the public enterprises' programme exceeded the target.

- l 3 - 3.35 The main thrust of the PSIP over the last several years has been the rehabilitation and improvement of economic and social infrastructure.

This focus was maintained in 1998.

About $10 billion or 68 percent of the capital budget was used to construct, maintain and improve critical productive infrastructure.

Thi.rty-two percent was used to improve, and modernise social services.
3.36 Mr. Speaker, following the negative effects of the El Nino weather on the phenomenon productive sector, a large proportion of the PSIP was directed to the rehabilitation and reconstruction of drainage and irrigation facilities.

About 34 7 miles of drainage and irrigation canals were 19 rehabilitated, sluices and 13 intake and outlet structures were constructed and refurbished.

Also, several out-fall channels were de-silted and dredged.
3.37 Among the more significant works undertaken of sluices in 1998 were the rehabilitation at Zeelandia/Caledonia, Garden-of-Eden, Craig, Vergenoegen, Onderneeming, Helena No.

I, Unity, Cane Grove, Nos.

65, 66, 67 and 73 Villages.

In the Abary Basin and the East Demerara intake Conservancy, and outlets structures were refurbished and/or reconstru cted.

Drainage systems at Canals No.

I and 2, Hubu, Upper Boerasirie, and Shanks Canal were rehabilitated.
In addition, on the re­ works continued surfacing of the major highways and satisfactory progress was made on the Soesdyke/Linden and the Georgetown/Mahaica links including the East Coast Railway embankment.

The Essequibo Coast Road progressed slowly due mainly to the non-perfonnance of the contractor, of the untimely availability quarry products, and poor project management.
Several urban roads, including Camp Street, Regent Street, D'urban Street and North Road, and several bridges in Kitty, were completed.

Approximately 13 miles of farm-to-market and feeder roads in the Corentyne, were the MMA/ADA, and Essequibo completed.

3.38 Construction works commenced on the Esau and Jacob and Washclothes to Mora Point access roads.

Numerous community including roads at Nabaclis, Plaisance, Side Park, Annadale Kersaint roads, Line, Vigilance, Enmore, Mahaica, Hopetown, Bath No.
49 and 51, Toka to Karasabai and Mabaruma to Kumaka, were completed.

In every region and community, evidence of the modernisation and upgrading of our road network is visible.

3.39 Mr. Speaker, in spite of several attempts at international competitive bidding, we have not been able to secure contractors to implement the sea defence projects that are being funded by the multilateral institutions.
The difficulties in implementing these projects continue to pose severe risks on the already - 14 - fragile sea defense system.

Nevertheless, we continue to depend on our lorn!

expertise to implement critical emergency works.

Last year.

\\ e spent in excess of $5 70 mi II ion to rehahi I it ate sea defenses at Sparta, La Belle Alliance, Richmond and Hague among several 1lther locations 3.40 In recognitiL,n of the Government's commitment Lo improve.
continuously, the quality of lifr of every Guyanese and to provide equitable social benefits to all, more resources ·"'ere allocated to the social sector in the PSIP.

In the health sector, several facilities.

including 1-l health posts and health centers at Ban ma, DrcdgL: Creek, Dora Yarrowkahra, Silver Hill, /\melia · s Ward, Kaikan.

Karisparu and Morakohai, and/or were constructed rehabilita ted.

In addition.
In addition.

7 medical officers' quarters, 2 hostels and varying kvcls of rehabilitation work, at mo<;t of our regional hospitals were completed.

In the education scl:tor.

27 nursery, 15 primary and 5 secondary schools V\hile were constructed I.?.

nursery.

12 primary and 7 :,econdary schools were rehabilitated.

Over l 6,000 students are expected to benefit.

3.41 l\'lr.

Speaker.

the production and distribution of potable water tll all the Regions continued apace.
Special attention, however, ""as placed Oil hinterland communities whl.

're the ravages of El Nino caused undue suffenng to c,ur Amerindian brothers and sisters.

To this end.

sume 40 shallow \veils were dug and 35 hand pumps installed at Moruca, Kato, Paramakatoi, Lethem, Calcurn, and the North and South Rupununi Savannahs, among otlwr areas.

New pumps and engines V\ere 111stalkd and operationalised at Horsororo.

Wapaina.

Port Kaituma and Lethem.

In addition.


6 \,indm1lls were refurbished and new ones were installed in Aishalton, Potarinau, Karasabai and Paramakatoi.

3.42 In the coastal regions.

some 20 miles of pipelines were laid and 34 rural water systems were completed and put into operation hnlf new wells were drilkd at Amelia\.

Ward, No.

75 Village and St. Cuther!

Siparuta/ Corent�m: Mission.

In GeorgetOV\.ll, two storage tanks at Mandela Avenue and Sophia were completed and cornrnissiuned.
Distribution and transmission lines were laid in North Ruimveldt Mandela Avenue, Independence Boulevard, King�.ton, Alhouystown in and Prince5,S Street Lodge, among other locations.

The Shelter Belt treatment plant was also rehabilitated.

- 15 - G. Institutional Reforms and Structural 3.43 Mr. Speaker, in spite of the economic difficulties faced in 1998, we implemented wide ranging structural reforms.

These will positively affect the economic and regulatory environment.
The reforms affected the financial sector, the public sector, and the business environment.

Financial Sector Reforms 3.44 Mr. Speaker, in 1998, a new Bank of Guyana Act was passed.

This Act provides for the autonomy, capitalisation and re-organisation of the Bank.

In the area of autonomy, the Act defines the between relationship the Bank and the Government and provide:s for a separation of monetary and fiscal operations.
It makes the Bank much more accountable for mone:tary operations, while clearly identifying fiscal affairs as the purview of the Government.

The Bank is no longer under any obligation to extend credit to the Government that is inconsistent with the inflation and reserve targets.

This forces the Government to pursue prudent fiscal policies.

This, in turn, will boost investor confidence in Government policies.

3 .45 The Act increased the authorised share capital of the Bank to $1 billion.
To demonstrate the Government's seriousness to strengthen the Bank's financial position, the entire authorised capital was paid up.

We also remaining transferred the Government liabilities on the books of Bank of Guyana to the Treasury, after undertaking a similar operation in 1997.

These two actions resulted in a substantial improvement in the Bank's balance sheet.

Indeed, for the first time in over fifteen years, the Bank was able to return a profit.

We are extremely proud of this achievement.


3 .46 In terms of the Bank's re-organisation, the Act provides for continuity of management, through the staggering of appointments of the directors.

It also allows the Bank to attract the required human resources conduct to successfully its operations.
3 .4 7 In addition, the 1966 circulars on reserve requirement and liquid Bank asset ratio of the Central were revised and seven of the nine deposit-taking institutions fully complied with the minimum paid up capital requirements under the Financial Institutions Act.

Also, the Bank fl;!duced th,� reserve requirement of commercial banks from an average 15 percent to 12 percent.
16 3 .48 The restructu ring of the state-owned Guyana :\Jational Cooperative Bank (GNCB) c:ontinued, in 1998. with the signing of a contract to install a ne\.\ management team in the Bank.

3 .49 The other major financial refonn that took place last year concemed the passage of insurance legislation.

The new Insurance Act seeks to strengthen the regulatory aspects of the industry.

including the functioning and powers of the Office of the Commissioner of Insurance.
for the It also provides protection of policyholder s from unscrupulous insurance companies and agents.

and allows the industry to use more of its resources for productive acuvities. ]

Improving the Business Environment 3 .

:50 Mr. Speaker.

legislative steps were taken to improve the business environment.

In particular, laws were passed to establish the securities exchange regulatory framework and to reform the Deeds Registry The impact of these reforms on the business sector is significant.
The reform of the Deeds Registry.

for example, will allow for the use of a more diverse thereby range of collateral, improving the prh ate sector· s access to capital.

Sim ilarl).

the establishment of a securities market \,\/i It provide new sources of funding for businesses, including small investors 3.
3 .51 Mr. Speaker, last year's continuing political unrest severely hampered the privatisation programme as we los:t the opportunity to privatise the Guyana Electricity Corporation (GEC) and sell several other enterprises.

Nevertheless, the Pri,atisation Lnit continued v,ith its preparatory work on several entities.

which \\ ill be sold or divested this year.

In particular.

Guyana National Primers.

Guyana Stores, Guyana Pharmaceutical Corporation Hermine.

(GPC}.

L1nmine.

Gl':CB Trust.


Guyana Airways Corporation (GAC)_ and the GEC were advertised last year �egotiations for many of the entities are ongoing and the Government expects to conclude their privatisaton by the end of the year.

4.

Other Policy Reforms J.52 Mr. Speaker� in addition to the three areas that I have just revie\,ved� vve committed ourselves to unplement a number of other policy reforms in the 1998 Budget I would like now to report on the status of implementation of those refonns.
- 17 - 3.53 A regulatory framework for Guysuco was completed and a new five year plan was approved, 3.54 The Government met all the requirements for making the Revenue Authority operational, but this was delayed because of a court action.

3.55 The Government undertopk a survey of private sector remuneration and is currently using this infon11ation to develop a remuneration package for the professional staff in the civil service.
Also, the revision of the public service rules was completed and we plan to work with the unions to implement these rules later in 1999.

3.56 Civil service reform was advanced further with the completion of the organisational and restructuring plans of the Ministries of Finance, Education, and Health.

3.57 In addition, we amended the Income Tax (In Aid of Industry Act) to provide for the reintroduction of tax holidays.

3.58 A National Y2K committee was established.


H. Developments in the Housing Sector 3.59 Mr. Speaker, in I 998, we committed ourselves to distribute 3,000 housing land lots, accelerate titling, regularise squatter settlements and enact mortgage finance legislation.

I am pleased to report that we exceeded the limits we set for ourselves.

More than 8,000 house lots were allocated to all strata of the society in widely diverse areas ranging from the Corentyne to Essequibo and Linden and other inland areas.
further Sites and services were developed at Turkeyen\Sophia, Richmond, Henrietta, Charity, Tuschen, Anna Catherina; Meet-Meter-Zorg, Good Hope, Foulis Bath and to name a few.

Bushlot 3 .60 In addition, a vigorous campaign to regularise squattering was undertaken at several locations.

These included Sophia, Prem Nagar, Tuschen North, Mosquito Hall, Ankerville, Corriverton and the Jib in Region No.

2 and along the East Coast Demerara Railway embankment.
- I 8 - 3.61 S:gnificant progress was aho made on the housing finance legislative front The Deeds Registry Reform Bill will expedite the processing of land titles.

The Mortgage Financing Bill and the New Building Societ1 Amendment in 1999 Assembly Bili are also near completion and will be presented to the National I.

Debt Initiatives 3.62 l'v1r.

Speaker.. when \Ve assumed office in 1992, our exh:rnal debt stood .

:it about USS2.

I billion.


Debt service cor1:,umed 87 percent ol central government revenues.

equ1vale11t uf our to about 30 percent exports of w1ods and non-fa.

:tnr services.

Since then, we have made substantia l progress in reducing the stock of external del·,t and the proporiion of revenues that it consumes.

By implementing sound policies and with the assistance of tht: international financial commumty.
\VC have reduced the stock of debt by an incrt:dibk USS I I billion and debt service in terms of revenue by half 3 .63 W.: continued l,) make progre'>S in our debt reduction initiatives in l 998 \Ve signed the grant agreemenr of the commercial debt buy-back programme with the World Bank and sent out invitation circulars ro 1he over 900 creditnrs In addition, the Paying Agent Agreement v,as c;1gned.
These stt:ps have nm" cleared 1hc wa> for the· settlement of arrears of the External Payments Deposits Scheme. "

Further.

a revit:w of the structural and fiscal benchmarks under the HIPC initiative was also completed.

� The multilateral institutions and our bilateral creditors are poised to grant us more debt relief in 1999 in the context of the HI PC Initiative.

This will further reduce the rat to of debt service to revenue.
3.64 We will then:fore continue to implement a prudent debt strategy, seeking grant financing to the maximum extent possible, and limiting ourselves to concessional borrowing, Consistent with this strategy.

the Government in collaboration with Debt Relief International (DRJ).

has commenced a programme to strcngth1.

:n the debt management capacit) of the \1inistry of Finance and the Bank of Guyana.

Last month.

DR!

conducted a cornprd1ensivc training programme for ufficiab invohed in debt managemr.
:nt In Ju1w l 999, the Ciovernrnent \\ ill be holding a debt strategy .vorkshop with the intention of enhancing our debt strategy.

- 19 - The Policy Framework for 1999 4 A. Overview 4.1 Mr. Speaker, while we hope that the worst of the global crisis is now behind us, it is clear that its insidious effects are still being felt around the world.

Globally, it has led to contraction in economic activity, large devaluations, and lower investment flows.
Only a return to macroeconomic stability can sustain grow1h in the global economy.

At the international level, moves are afoot to design a "global financial architecture" that will minimise excessive volatilit y and significant rates.

However, these ideas are at an early stage and will take timt: to mature.

misalignment ·t It is, therefore of exchange imperative that we, in Guyana, continue with our programme of reforms and take strong and decisive actions to mitigate its continued impact on our economy.
4.2 In this regard, Mr. Speaker, in 1999, we will implement policies aimed at reversing the contraction of output and alleviating poverty.

Our policy agenda includes the maintenance of sound macroeconomic policies; the acceleration of structural reforms; continued support to the private sector, improvement in the social conditions, including poverty reduction programmes; and continuation of the public sector modernisation programme.

B.
B.

Macroeconomic Framework and Structural Policies 4.3 Mr. Speaker, continued pursuit of sound macroeconomic policies is central to our plan to ensure sustained economic growth, promote investment, reduce unemployment and poverty.
Consistent with these, the key objectives of the 1999 macroeconomic framework are as follows: • Real GDP is projected to be 1.8 percent, led by a recovery in th1� agricultural sector; • Average inflation is targeted at 5.5 percent • The external balance of payments is anticipated to improve steadily.

Export volume growth should contribute to a somewhat larger external trade surplus.
In addition, external financing from bilateral sources and multilateral for the budgetary program is expected to remain strong; 20 • Ciross external reserves are expected to remain at about four months of imports.

4.4 In suppmt of the above objecttves.

we expect that the international will community approve and deliver HIPC assistance to Guyana.

and that an agreement with external private \Viii creditors be reached on the buyback of debt under the External Payments Deposits Scheme.

1.
1.

Fiscal Policies 4.5 Mr. Speaker.

a lasting improvement in the public sectors fiscal position will be an essential component of our adjustment strategy.

We aim to build on the stabilisation gains achieved over the last six years.

As a result.
As a result.

rhe 1999 budget has been anchored on five planks: • a targeted fiscal stimulus to support demand, especially through higher devi::lopment spending: • decisive measures to rebuild the revenue base over the medium-tenn, • avoiding recourse to domestic bank financing for regular budgetary operations: and.

instead.
instead.

a build­ up on our posit10n as a net credito r with the banking system; • Government secuI1t1es will be issued only to absorb excess liquidity and ease the pressure, on the exchange rate: • an overail pub Iii; sector budget deficit (after grants) of GDP.

of about 3 percent 4.6 In addition, to improve we \viii continue tax administration.

We hope that we can implement the Revenue Authority shortly, since it is an integral component of our strategy to widen the tax base.

Mr. Speaker.
Mr. Speaker.

some of our local companies are facing unfair competition because of smuggling.

I want to take this opportunity to personally assure them that the Government will aggressively pursue the elimination of this practice.

During the year.

we will conclude the feasibility study for introducing a value-added tax.

Monetary, Financiai and Exchange Rate Policies 4.7 Mr Speaker.

maintaining confidence in the economic programme and.

in particular.
in particular.

in the demand for domestic financial assets, is crucial to delivermg the above macroeconomic ob_1ectives.

Monetary policy will be guided by the need to achieve reserve the international and inflation targets.

The - 21 - Bank of Guyana will keep base money firmly under control so as to stabilise prices and reduce volatility in the exchange rate.

4.8 The Bank reviewed and adjusted its monetary policy early in the year.
ln addition, it will start to issue securities longer with maturities than one year in the near tenn. For the immediate period, monetary policy will be guided by a v�ry cautious assessment of money demand.

The adjusted monetary programme and lower currency in circulation have already resulted in some firming of interest rates, and this is expected to impact positively on the exchange rate.
In 1999, the monetary programme will be very restricted \Vith currency in circulation remaining unchanged and broad money projected to grow slower than growth in nominal GDP.

C. External Sector Policies 1.

Trade Policies 4.9 Mr. Speaker, contrary to recent reports, the Government does not intend to ban imports, re­ introduce import or exchange controls nor any other restrictions on the trade and exchange regimes.
We have made significant progress in liberalizing our trade and exchange regimes and we remain fully committ1ed to continue with market-oriented policies.

Instead, we will continue to further accelerate trade refonn in 1999 by reducing the maximum import tariff rate consistent under the with our obligations Common External Tariffs arrangement.

However, we will need to step up our efforts to prevent dumping and the flooding of our market with sub-standard goods.

2.
2.

External Debt and the HIPC Initiative 4.10 Mr. Speaker, the Boards of the multilateral institutions will meet to consider final Guyana's qualification point for the HIPC initiative in May 1999.

The Government will meet with its Paris Club group of creditors in May 1999 to request further debt relief on Guyana's bilateral debt under the Lyons terms.
The HIPC debt initiative is the first one that is dedicated to the reduction of Guyana's debt external outstanding to both multilateral and bilateral creditors.

T�e assistance gained under the HIPC initiative will reduce Guyana's external debt by US$253 million in net present value terms, which translates into debt service relief of US$500 million over the next 20 years.
4.11 In recent months, a number of proposals havc been put forward to provide greater debt relief to HIPC cc,untries than that already offered by the HIPC initiati\e.

Seu:ral nH:mbers 7 of the G- industrialised countries have been instrumental in formulating these debt relief plans.

For e:-.amplc.

the German Government has proposed a cut 111 the number of years needed to qualify for HIPC relief.

Further.
Further.

it has called fur the target figure for the debt to exports ratio to be reduced and to 200 percent that the total debts from official ·developml:.

'.nt aid be cancelled m the Paris Club.

The by the proposal French suggests a 10-ycar freeze on debt service payments.

The British proposal calls for an increase in HIPC relief to LS$50 billion.

while the American proposal could result Ill US$70 billion of relief for reforming countrie,.

Mr. Speaker.
Mr. Speaker.

we welcome these proposals and we \\ i II continue the to canvass international -:ommunity to support further cfforh aimed at redL.cing tlK country·s debt burden.

D. Structural Reforms 4.I� !Vlr.

Speak-.:r.

the government \\ ill continue to improve the environment for private sector participation in the c,:onomy and improve the t:fficicncy of thi: public sl'.ctor.

1.

Refonnrng the State Sector a.

Public enterprises 4.13 .\t1r.

Speaker.


our privatisation programme continues tll be guided by the need to reduce the fiscal burden (,f public enterprisi:s on the treasury.

and inerea:,e the efficiency of the remaining public enterr,nses.

Con.

;;istrnt with thes1: objectives.

we have carried out extensive public reform and enterprise privatisation O\ er the last six year:-.. We intend to redouble our cffo11s to pri\ atise and or restructure the remaining enterprises.

4.14 Mr. Speaker.
4.14 Mr. Speaker.

by 2000, \\e hope to complete the privatisation of all public enterprises.

with the exception of four entities.

namely, Guyana Oil Company.

Guyana National Shipping Crirporatinn.

Guysuco.

and GNCB.

Consi�tent ·with this objective, nine public enterprises were brought to the point of sale in 1998 and early 1999.

They included two bauxite companies.

the national and the airline, electricity corporation.

The negotiations for the privatisation of GAC and GEC arc at an advanced stage.
and it is expected that these will be completed shortly.

-23 - 4.15 The remaining entities will be restructured and closely monitored, with a view to strengthening their management and financial position.

Mr. Speaker, given the threat to the preferential arrangements for sugar, it is of critical importance that we improve the efficiency of our sugar sector.

Consistent with this objective, Government approved in 1998 a five-year restruc:turing plan for Guysuco.
The objectives of the plan are to increase production to over 400,000 tonnes and reduc:e the cost of production from US 19 cents per pound to below US 12 cents per pound.

4.16 Mr. Speaker, initiatives that have been proposed to reach these objectives the include restructuring and amalgamation of contiguous estates, improvements in agricultural practices, mechanisation of factory technology, and better management practices.
The restructuring exercise is expected to cost more than US$200 million and the Government is working with Guysuco the to secure financing needed.

Other potential economic activities that could be generated from the restructuring exercise include co-generation of electricity and brewing.

b. Guyana National Cooperative Bank 4.17 Mr. Speaker, the restructuring of GNCB has reached a decisive stage.

has The Government recruited an international management team to oversee the restructuring exercise.
As a matter of great urgency, the team will review current credit and loan recovery policies, and financial and management systems.

They will then prepare and implement a plan to: establish a system of credit appraisal; improve arrears' collection; rationalise branch operations; and establish financial and management systems.

The management team will also prepare procedure manuals and train staff.

It is expected that at the end of this exercise, the bank will be restored to long term viability.
E. Private Sector �· Mr. Speaker, 4.18 Development in 1999, the Government's strategy for private sector growth will continue to focus on: the establishment of a simple, clear and well-enforced legal framework; improvement to the incentives regime; reinforcing and broadening the financial sector; providing the supporting economic and human infrastructure; and enhancing joint actions by the Government and the private sector in a number of areas.
4.19 In this regard, Mr. Speaker, the Government will appoint a Commissioner of Insurance and supporting staff to implement the legislation that was passed recently; and will establish a securities - 24 - council.

To improve administration and provide a more diverse range of collateral, the government will continue to work to make the new, semi-autonomous Deeds Registry operational.

following the recent passage The Government of necessary legislation.
will also table legislation on bankable property rights.

We will implement the new land tenure policy.

which includes greater conversion of lease-holds to free­ holds; extension of long-term leases beyond 25 years: and increase the sale of state lands.

4.20 In addition to these policies.


the Government will work with the private to: sector • conduct a sector by sector review of the incentives· regime to determine its attractiveness; • improve the institutional framework for trade and investment facilitation; • improve and expand international market access, through placement of trade officers in key Embassies and Missions: • support distressed companies in their efforts to restructure: and • enhance access to term financing from abroad.
including the International Finance Corporation (IFC) and the Inter-American Investment Corporation (I!C).

4.2 I We intend to place special emphasis on the agro-processing and tourism sectors.

These sectors have potential for growth, employment and foreign exchange generation.

To this end, a tourism board will be established and the incentives regime reviewed to ensure its attractiveness to investors.

F.. Economic Infrastructure for Accelerated Growth 4.22 Mr. Speaker.

the Government will.


this year, invest S 1.9 billion sector.

in the agricultural Most of these resources will come from the foreign-funded El Nino project.

Of this amount.

about $879 million will be used to rehabilitate and improve drains.

canals.

sluices and other drainage and irrigation structures The Burma rice mill to Esau and Jacob and Hyde Park to Mora Point farm-to-·market roads will be completed We will also commence the reconstruction of the Parika and Essequibo Coast farm to market roads.
4.23 In addition.

we will rehabilitate the East Demerara Conservancy dam and construction works on the flood control and water management project between Mahaicon)-and \1ahaica Rivers will commence.

A modem fish culture station will be constructed at Mon Repos and further institutional development to the National Drainage and Irrigation Board {NDIB) and the Lands and Survey Department will be pursued.
Extensive research and field extension will be intensified and the intermediate savannahs· programme advanced.

the country.

throughout • in 1999.

-25 - sector, 4.24 In the construction the East Coast Public Road project will be completed.

The Railway Embankment Stage 1, which is the link between Sheriff street and Coldingen , will be completed by the second quarter of this year.

Work has already commenced on the Stage II, which is between Coldingen and Mahaica.
Meanwhile, work on the Soesdyke/Linden Highway continues as programmed.

During 1999, the bridges between Soesdyke and Linden will be completed and the additional link of approximately 2 miles to enter into the town of Linden, will be resurfaced.

4.25 Mr. Speaker, a new US$4l million bridges' programme will commence of this this year.

The objective programme is to rehabilitate and reconstruct all the bridges and structures between Timehri and Rosignol.
The first phase of this programme, which includes the reconstructi on and rehabilitation of approximately 61 bridges and structures, will be tendered.

Also set aside under this programme, is a sum of US$ I I million of the for part financing The feasibility Berbice River Bridge.

study and design work on this bridge is proceeding apace.

4.26 Another new project is the US$25 million Urban Development Programme which will also commence this year.
Under this programme, roads and drains in the six municipalities will be rehabilitatt:d and refurbished.

The programme also caters for the construction of abattoirs and markets, and institutional support to the municipalities, the Ministry of Local Government, and the Valuation Division of the Ministry of Finance.
4.27 Mr. Speaker, as identified Coast Road is plagued in my 1998 review of the PSIP, the Essequibo with several problems, among which are the non-performance of the contractors and poor prc�ect management.

The Government is currently engaged in discussions with the World Bank on a programme to complete the road.
4.28 With regards to our sea defence programme, we will commence, this year, construction works in the Brahn, No.40 village, Trafalger and Mon Chosie areas, and complete remedial works at Anna Regina, Henrietta, Lusignan, Aberdeen, Devonshire Castle and Craig among others.

Expenditure in this sector will amount to $938 million .

I .

Strategic Investment Projects 4.29 Mr. Speaker, preparatory works will continue projects this year on the large infrastructural in the mentioned 1998 Budget.
These include the Berbice River Crossing, the deep water harbour, the Guyana-Brazil Road, and some large drainage and irrigation schemes.

The Government will seek private capital for the development of these projects.

- 26 - G. Job Creation 4.30 Mr. Speaker.

job creation is 0f paramount importance to us thi:, year.

The planned improvement in the economy will result in rnnre jobs becoming available.
Hem-ever, the Government intends to stimulate the jub market through a greater concentration on the development of micro enterprises, the promotion nf labour intensive pub)ic sector investment projects, and skill'> training.

1.

Mic:_ro Enterprise Development 4.31 l\1r.

Speaker.

the micro enlerprise sector holds enormous pokntial in combating unemployment diversifylllg the economy and reducing poverty.
In the last five years .. micro enterprises and small businesses, measured and loans, by the number of company registrations grew by uver 40 percent per year and created in the process over 30,000 jobs.

In additiun, the sector through non-traditional exports has supported the viabii ity of om external accounts by providing opp011un1ties of inc,Jme generating activities to women and youth.
4.32 1 he government recognises the impu11ant role that non-governmental organisations have played in the development of micro enterprise.

However.

the absence of coordination and a regulatory and incentives framework for this sector has sometimes resulted in duplication of activities and the inefficient use of re�.ources.

To nvereomc this problem, thi'> year, we will establish Unit at the an NGO Coordination Ministry of Finance that will work along \\ith NCiOs to support th,� sector.
c.l.33 Mr. Speaker.

the Institute of Private Sector Development ( IPED) has played an excellent role in advancing micro enterprise development.

Through credit facilitation a11d training.

!PED has provided opportunities of inco111e generation to many households.

In a recent seminar organised by IPED in conjunction with the Government several recommendations for micro enterprise development were proposed.
Tile Government will work with !PED and other NGOs to create that will an environment catalyse the sector.

Th is will include the removal of institutional and rL gu latory bottlenecks; sirn pl itied procedures to establish small busincs�cs; an enhanced incentives framework, and improved access to markets.

- 27 - 2.
- 27 - 2.

Labour Intensive Activities 4.34 Mr. Speaker, in addition to stimulating micro enterprise development for job creation, the Ministry of Finance has put forward a number of proposals in a concept paper on job creation.

One of these proposals that we intend to pursue is to give preference to labour intensive bids for public works.

We will discuss these proposals with our social partners with a view to early implementation.

3.
3.

Skills Training 4.35 Mr. Speaker, one of the concerns that have been expressed by the private s,ector is the shortage of certain skills.

The government will pursue aggressive skills training and re-training programme in 1999 to fill this need.

While we are willing to provide targeted training in the private to meet the skills shortage sector, it is also clear that guarantees would have to be provided that persons once trained will secure jobs.
The main target groups for the training programmes are unemployed youths, self-trained artesians and technicians, and civil servants in the lower grades.

In this connection, Government will carry out a survey of private sector labour needs this year in an effort to develop training programmes that will fit the of the requirements private sector.

Various delivery methods will be used, including employer and public sector-based training.
The Government will also support private se,;:tor-delivered programmes, for example, the European Union-funded training programme.

We hope to work in partnership with the labour movement in the implementation of these programmes.

H. Social Sector Programme 4.36 Mr. Speaker, one of the defining features of this government for the is our unapologetic support poor and the less fortunate.
We have done this in the past and will continue to do this in the future regardless of the budgetary constraints that we face.

We are firm in our resolve that every Guyanese should enjoy access to proper health education, and housing, and potable to the water supply.

Allocation social sector has been significantly in 1999. increased l .
Education 4.37 Mr. Speaker, in the area of education, in excess of $3 billion of our budgetary resources has been devoted to the rehabilitation of education infrastructure, and to enhance and improve the delivery of education.

In particular, we will intensify work in both the secondary and primary educati on reform projects.

Under the SSRP we will commence the rehabilitation and extension of 12 secondary schools 28 including Manchester.

Fort Wellington.
Fort Wellington.

Belladrum, Dolphin, Anna Regina, MacKenzie and rucville, among others.

Also.

we will commence another design work to rehabilitate 20 secondary and post primary institutions.

4.38 Mr. Speaker.

phase 1 of the Primary Education Improvement Pr,::iject (PElP) will be completed this year.

Schools designated for completion include Good Fo11une, Maigre Tout, West Ruimveldt, St. Pius.

Cropper.

and Hosororo primary.

Phase II of the PUP will also begin this year.


Under this programme, I 7 new schools are earmarked for construction and 24 others will be rehabilitated.

These include Kabakaburi, Eccles.

Golden Grove, Friendship, Graham's Hall, Sheet Anchor, Orealla, and Sophia primary.

The Social Impact Ameriolation Programme (SIMAP) and the Bas.ic Needs Trust Funds (BNTF) will also rehabilitate about 19 nursery schools, 21 primary schools.

and 12 community high and schools .


secondary ..J..39 Accompanying this improved education infrastruccure programme ,\·ill be a marked increase in the recurrent expenditure of the sector.

More than l 00 schools are earmarked for maintenance, and the allocation for materials and supplies including science and laborator y equipment has increased substantially.

In addition, a number of computers will be procured for primary and s,econda1y schools and over 12 school libraries Further, will be rehabilitated.
the laboratorie,; of 27 schools will be fully equipped.

Meanwhile, about 700 candidates will be accepted in teacher training colleges, while 500 teachers will graduate this year.

In addition.

the Government intends to pursue the extension of university education to Berbi,�e.

2.

Healtb 4.40 Mr. Speaker.

in the health sector.

we will continue to focus on the improvement of health infrastructure and the provision of quality health care.

Consistent with these objectives.


we will strengthen the institutional capacity of the health ministry.

To this end.

we have now commenced a two-year institutional support programme within the Health Ministry.

This project will assi5t the Government to develop policies to address institutional, managerial and service delivery problems in the health sector.

4.41 In addition.

we will rehabilitate health facilities including health and distnct regional We centers.
will also upgrade equipment and other facilities at Charity, Skeldon, Banica.

and New West Demerara, Amsterdam ·Hospitals, health centers at Lichfield, Belladrum.

and St Monica and health posts at Kaicumbai.

Rewa, Taruka.

Orealla.

and Baracara.

to name a few.

-29 - 3.

Water 4.42 Mr. Speaker, the provision of potable water is at the heart of our basic human needs programme.

water supply This year, we will launch two of our inter-connected systems.
The first, at Pouderoyen will be substantially completed later in the year while the other, at Rose Hall, will commence in the last quarter.

The hinterland commun,itics especially those that suffered from the El Nino crisis will be given special consideration in the provision of water services.

At the same time, we will continue to expand the network water distribution through SI MAP and GUYW A.

More than $230 million has been earmarked for this.
In Georgetown, the GSWC first phase remedial programme will be completed this year.

We will also begin the negotiations for the Phase II.

The components of the Phase II project will include further rehabilitatio network n of the distribution and the upgrading of the solid waste disposal system.

4.

Housing 4.43 Mr. Speaker, we will continue to pursue aggressively our housing development programme.

Building on our past efforts, we will distribute over 10,000 housing lots this year.
More than $200 million has been budgeted to upgrade and develop sites and services to facilitate the speedy implementation of our housing programme.

Increased efficiency at the Deeds Registry will help to expedite the processing of land titles.

4.44 In addition, we will continue to address the regularisation of squatter settlements in order to bring them into the mainstream of the development process.
Further, Government is working with the Inter­ American Development Bank (IDB) to prepare a US$30 million loan for the housing This sector.

programme will allow the Government to be able to allocate over 30,000 house lots in the medium tenn and to provide for the institutional strengthening of the Central Housing and Planning Authority (CH&PA) .

I.
I.

Public Sector Modernisation Programme 4.45 Mr. Speaker, as I mentioned earlier, the momentu':1 of the public sector reforms must continue to improve the efficiency of the public sector.

In line with this, we have already approached the Inter­ American Development Bank for assistance to undertake far-ranging public reform.

The components of the proposed project include improvement of public sector remuneration, ,vith special emphasis on 30 manageriaL professional and technical staff.
improvement of hunun resource management including perfonrnmc,� appraisal.

and the implementation of ne\v public service rules.

In addition.

be efforts v\ill made to improve the organisational -;tructun: of pub Ii<.

: sector instituti, ms and criteria for the establishment of sem i-autonornous agen<.:i1.

:� \Vi 11 be established.

J. Y2K Relatt:d Issues 4.46 \fr.

Speaker.

the Government has taken concrete steps to deal with the millennium computer problem.

We apphed and rei.
We apphed and rei.

:eived grant assistance from the World Bank to do a National Y2K Assessrnen1 Plan.

Computer hardv,are of about 39 ministries and agencies in ,he finan<.

:iaL productive.

S,)cia I and utilities sc:crors have been identified l�.>r exam inatiun.

An aclion and c,H1tingenL'.y plan vv i 11 be i.:ompleted in Apnl 1999.

-l 4 7 To maintain the integrity of the payroll system.

we have already taken steps to replace the current payrc,11 system with Y ear2000 compliant soft/hard ware.
A prc,jcct execution unit consisting of staff from the Ministry of Financt.

: and the PuhliL'.

Sector Ministry v,as sd up early this year to implement the ne\v payrr,ll software.

Amendments \viii be made tn -;trengthen the Natil11ial Data Management Authority Act to allov, the Authority to deal \\ith Y2K-related activities.

including companies of private sector tlh)SC whose oper:itions are deemed aitical to natirnial seeurity and ecnnom1L'.

intere:,ts.

--IA8 lmplement<1ti,ln of Y2K related ai.


:ti\ itie:-.

would bi.

;gtn in April l 994 The National Y2K Committee and the National Data f\lanagement Authurity will work with 1.:omputer experts to implement the National Y?.K Action and Contingency Plans.

We are seeking donors' assistance to finance these plans.

K.Security 4.•+9 r-..1r.

Speak,cr.

in 1999. the Governm1:11t intends to increase rt.

:S1)urce availahility for �;ecurity and crime fighting.
rhis will enhance the capacit) not only of the police .rnd 01her s,;curity forces, hut also of polii.

:in g and other volunteer groups in fighting crime.

- 3 l - TARGETS FOR THE ECONOMY IN 1999 A.

Economic and Financial Policies and Targets 5.1 Mr. Speaker, based on the policies described in the previous section, the macroeconomic targets for 1999 are as follows: B.
Real GDP Growth 5.2 Mr. Speaker, we expect economic activity to rebound from the negative growth registered in 1998 to grow by 1.8 percent in 1999.

This sectoral breakdown of growth in economic output is as follows: 1.

Agriculture Agricultural output is projected to increase by 3.4 percent in 1999, reflecting the improvement in weather conditions and re-organisation of the sugar industry.

Output of sugar and rice is expected to increase by 5.6 percent and 3 percent, Forestry respectively.
products, specifically logs and sawn timber, are projected to decline from 428,020 cubic metres to 410,900 cubic metre, a decline of 4 percent.

This reflects the continued lower international prices for timber.

Output of traditional crops, livestock and fisheries will continue to grow at 2.2 percent, and 1.9 1.8 percent percent respectively.

2.

Industry sector 5.3 Industrial output, comprising of mining, manufacturing to and construction is projected remain flat.
The mining and quarrying sector is projected to decline by 3.6 percent reflecting lower prices of gold, and increased competition in the international bauxite market.

The sub-sector production levels are as follows: Calcined bauxite is targeted at 196,000 metric tons Metal grade or dried bauxite is targeted tons at 2 million Chemical grade bauxite is projected tons at 160,000 Gold is projected at 437,105 ounces, a decline of 3.9 percent.

5.4 The manufacturing sector is projected to grmv by I percent.
wh':le construction is estimated to grow by 4 percent based on a higher level of public investment and faster gro\\1h in residential housing, 3.

Sen·ices The services sector.

led by trading, financial and business services, and tourism.
is targeted to gro\\ by 2,2 percent C. Inflation 5 .5 Mr. Speaker, the target rate of inflation is 5 5 percent The increase in the averagt� rate during l 999 reflects expected increases oil prices in utility tariffs and international D. Balance of Payments 5.6 !\,fr, Speaker.

the balance of payments is projected to improve in 1999.

Higher export volumes will contribute to larger extnnal trade surplus and external financing from bilateral and multilateral sources is expected to increase this year.
Merchandise exports are targeted at US$574 million, a 5 percent increase over 1998 Imports are projected to rise by 1.2 percent to reach US$620 million.

The merchandise trade deficit is, therefore.

expected to fall to l!S$46 million, on account of lower import growth, Net transfers are projected to reach US$57 rniliion.

or about the same level as in 1998, 5.7 Net disbursement public to the non-financial sector is pro_iected at lfS$39 million.

'Net private 1;apital at l .. is targeted S$46 million.
Debt service of the non-financial public sector will amount to US$ 30 million.

The deficit of the overall balance of payments is projected to improve Gross to US$4 million.

external reserves are projected to remain at about 4 months of imports IE.

f'iscal Targets S.8 Mr. Speaker.

current revenue is budgeted to increase to $34.9 billion, or by 5.5 percent.

Revenue collection from Inland Revenue Department is budgeted to grew.

by 5.7 percent.

At the to $14.9 billion.


same time collections by the Customs and Excise Department is budgeted to grow by 7.3 percent to $16.

l billion.

Other current revenues are projected to decline by 2 percent.

to reach $4 billion in I 999.

-33 - F. Expenditure Targets 5.9 Mr. Speaker, total expenditure is budgeted at $51 billion or about $400 million less than realised in I 998.
However, the budgeted expenditure excludes expenditure on increased the wages which is still subject between of negotiations the Government and the unions operating in the Public Service.

Nevertheless, of the amount btldgeted, about $16.

7 billion has been set aside to meet statutory expenditure.

Excluding the negotiated wage increases, current non-interest expenditure is projected to grow by 12.6 percent to reach $22.2 billion.
Interest payments are targeted at $10.3 billion, of which external interest payments are budgeted at $6.6 billion.

5.10 The rise in expenditure reflects largely the additio nal costs of social sector spending and public sector reform envisaged under the HIPC Initiative.

The 1999 budget will increase allocations for social spending to $12.9 billion from $10.2 billion in 1998.
5.11 As a result, the current account balance of the Central Government is targeted to decline by $620 million, to reach $2.4 billion.

Income from privatisation is projected at $3 billion, while capital expenditure is budgeted at $12.8 billion.

Excluding external debt amortization of $4 billion, the overall deficit (after grants) in the financial account of the central Government is expected to improve substantially to $7.3 billion in 1999, from $9.5 billion in 1998.
G. Targets of Public Enterprises 5.12 Mr. Speaker, the operating surplus of the public enterprise:s is expected to rise from $5.5 billion in 1998 to 7 billion in 1999.

Revenue from public enterprises is projected to decline from $45 to $42 billion, billion in 1998, on account of the removal of the enterprises which will be privatised in 1999.

5.13 Expenditure of the public enterprises is projected to decline by 12.5 percent Taxes to $35 billion.
paid to the Central Government are projected to amount to $1.3 billion while dividends and other transfers are targeted at $2 billion.

- J..i - H. Monetary Targets 514 Mr. Speaker, in line \vith our inflation and balance of payment:,; targets.

the growth in broad money is projected to be sluwerthan that of nominal CiDP.

With the projected buildup ofpuhlic sector deposits in the banking system.

bat1k credit to the private sector will ri,e hy about 12 percent.
The public sector 1s expected to make net repayrnents to the banking system of about $4.8 billion.

- 35 - BUDGET MEASURES AND POLICIES 6 6.1 '.\,fr.

Speaker, there will be no new taxes in 1999.

A.

Measures Sector to stimulate Investment in the Private 1.

Income Tax (Depreciation Rates) Regulation 6.2 Mr. Speaker, these regulations allow the Commissioner of Inland Revenue in his discretion to grant higher than the normal rates, as set out in the schedule.
However, it is the intention of my Government to amend these regulations, in order to allow for a rate that is higher than is currently allowed for electrical equipment, including computer equipment.

The rate that applies currently is 20%.

I will be presenting to the House, Mr. Speaker, the necessary amendments to the Income Tax (Depreciatio n rates) Regulations, in order to give effect to a 50% rate of allowance for such equipment, commencing January l, 1999.

2.
2.

Property Tax 6.3 Mr. Speaker, the property tax laws of this country, requires the filing of a return where the net property arrived at by allowing all liabilities at the end of the year to be offset against total assets revalued at I '1 January, 1991, if it exceeds $500,000 for individuals.

Assets acquired at the after 1991 are included cost of acquisition and improveme nts made thereafter.
We propose to amend the law so those individuals will only be required to file returns if they possess net assets in excess of$ I .Sm illion.

6.4 Mr. Speaker, we will also increase the tax-exempt threshold for both individuals and companies.

The amounts currently exempted from taxes are $5 million and $500,000 respectively.

We will be increasing these amounts to reflect exemption of $7.5 million and $1.5 million respectively to take effect from January 1, 1999.

3.
3.

Schedule of the ln Aid oflndustry Act 6.5 Mr. Speaker, in order to continue to attract non-traditional investments for new industries by granting favourable accelerated allowances in accordance with the In Aid of Industry Act, I will table in 36 this Hc>use.

amendments to the first schedule made under the principal such Acl, in order to include industries engaged in the production of Ceramic!->.

Sanitary etc.

Napkins.

4.

Stamp Duty 6.6 Mr. Speaker.


we intend to reduce to table legislation the Stamp Duty shortly.

This would bring relief to companies seeking to increase their capital base.

5.

The Common External Tan ff 6.7 The maximum external tariff will be reduced to 20 percent, from 25 percent.

The legislation to gi\>c effect to this change will be tabled shoitly.

We hope that this reduction will benefit the consuming pub!JC.

6. Review of Fiscal Incentives.

6.8 Mr. Speaker.


the Government will conduct a sector be sector review of in..:entive regimes to detennine the attractiveness of existing regimes of each sector relative tu the res1 of the countries in the region.

7.

Tourism 6.9 Mr. Speaker.

to further encourage development in the tourism sector, the Government will establish a Tourism Board with a sub\ ention of$ l 5 million during l Q99.

Once the Board is established.


a review of the incenli\es· regime will he conducted with its partKipatio11 8.

Poverty JJ:.ogramme 6. l O Mr. Speaker.

'5119 million has been budgeted to continue the poverty alleviation programme durin.<?

1999.

Q Sub\>ention to Neighborhood Democratic Councils and Municipalitie 2 6. l I \.fr.

Speaker.

$250 million has been budgeted to assist these bodies in the implementation of their programmes.

-37 - H. Measures to Compensate Labour 1.


Key and Critical Supplement 6.12 Mr. Speaker, the Government has committed itself to pay $180 million over 3 years to certain categories of officers whose post are deemed to be vital to the civil service.

We have budgeted another $70 million to continue this programme in 1999.

2.

Wage Increase 6.13 Mr. Speaker, increase in wages for public servants are currently being negotiated with the Cnions.

As such, no increase can be announced at this stage.
However, let me re-assure all workers that once the negotiations are completed, the Government will be returning to this House for supplementary n:sources to meet the obligation.

As in the past, workers outside of the traditional Public Service, such as forces the disciplined and teachers, and pensioners, can expect to benefit from increases in 1999.

38 Conclusion 7 .1 Mr. Speaker.


the policie s and measures contained in thb budget mark another stage m our quest to improve the standards of living of our people.

When \Ve came to office in 1992, the deficit and the debt burden were at unsustainable leveb.

foday.

through prudent macroe,:onom1c management and tireless efforts at lobbying the internat10nal cnmmunit;,.

we have been able t<.)

restore a sound macroeconomic framework.

rebuild ,)ur infrastructure and improve social conditio ns.
7 .2 Nevertheless, the needs of our people are many and ass;stance from a caring government is always expected.

We cannot du everything for e,·eryone at the same timi:.

Semng priorities and focussing on areas that will make a difference to our people is very important That is what we have done.

Through strong macroeconomic policies.

structural reforms.

support to the private sector.

job crearion policies, and programmes to improve health.

education.

water and housing.


\Vt hope w return our economy to buoyancy in 1944 7.J Mr. Speaker.

de�pite the pl)litical 1nd1scretions that surface from time tD time.

v,ith their accompanying consequem:es on our society and ecc•nom;,.

I firm I) believe that progress has been made on the political from.

I have an abiding faith in our peopk that we \viii \\Ork together for the good of Guyana.

7.4 Therdi.ire.

as the new millennium dra\\S closer.


l hope thai: we that a new can say with confidence bt!ginning is trul_y at hand.

We must refuse to -;et limits on \\hat we can accomplish Our challenge is to n:ake our motto-one people.

one nation.

one destiny- a reality 7.5 Guyana·s future is in our hands.
Thank you APPENDIC�ES APPENDIX 1 SELECTED SOCIO -ECONOMIC INDICATORS 0 1.0 NATIONAL ACCOUNTS AGGREGATES ITEM 1998 1997 1996 1995 1994 cost (US$M) cost (US$M) 1.1 Growth Rate of Real GDP 1.2 GDP at factor 1.3 GNP at factor 1.4 Per capita 1.5 Per capita 1.6 Gross National 1.7 Private 1.8 Public Consumptio Consumptio GDP (US$) GNP (US$) .
Disposable Income (US$M) n as% of Gross Domestic n as% of Gross Domestic Expenditure 44.4 41.4 42.1 Expenditure 19.3 18.5 16.5 - Balance Account of Goods and Non-Factor of Goods and Non-Factor 2.0 EXTERNAL TRADE AND FINANCE (US$M) 2.1 BOP Current 2.2 Imports 2.3 Exports 2.4 Resource 2.5 Imports 2.
7 Exports 2.8 Net International 2.9 External Balance of G&NFS/GDP(%) of G&NFS/GDP(%) Reserves Public Debt Outstanding (G&NFS) Services Services (G&NFS) of Bank of Guyana & OUTPUT (% changed in Urban CPI) 3.0 PRICES, WAGES 3.1 Rate of Inflation 3.2 Public 3.3 % Growth Rate 3.4 Electricity Sector Monthly Generation (in M.W.H) Minimum Wage in G$(e.o.p) & VITAL STATISTICS ('000) ('000) Population Growth Rate (e.o.p) 4.0 POPULATION 4 .1 Mid-Year 4.2 Population 4.3 Net Migration Arrivals 4.4 Visitor 4.5 Crude Birt�1 4.6 Crude Death Rate (per 1,000 persons) 4.7 Crude Marriage Mortality 4.8 Infant 4.9 Under 5 mortality Rate (per 1,000 persons) Rate (per 1,000 live births) Rate (per 1,000 persons) ('000) Rate (pE,r 1,000 live births) -96.5-105.1 -53.8 -775 708.8 663.5 690.8 637.4 621.0 -84.2 -71.4 -42.5 -125.9 -113.1 112.4 112.2 101.7 105.2 122.2 149.9 153.9 1496.51513.0 1537.0 -94.9 -100.8 626.9 576.2 579.0 526.4 -47.9 - -15.2 -16.3 -8.0 65.6 75.7 97.1 27.0 28.2 29.2 6.8 6.8 7.3 6.5 8.7 760.4 746.0 1.3 2.2 -7.5 0.3 107.6 112.8 29.8 29.2 7.1 7.1 5.2 5.2 24.2 30.3 27.8 28.8 24.6 28.8 .. - - - - on: Budget as % of National 5.0 HEAL TH AND EDUCATION 5.1 Public Expenditure 5.1.1 Education 5.1.2 Health as % of National 5.2 Number of Physicians 5.3 Number of Nurses per Ten Thousand 5.4 Number of Hospital 5.5 Low birth-we 5.6 Severely
 5.
7 Moderately 5.8 Underweight malnourised malnourised Beds per Ten Budget per Ten Thousand Population Population Thousand ight babies (<2500g.)
as a % of live births 11.9 6.8 7.3 5.9 7.3 6.3 4.3 2.8 3.8 15.3 9.4 8.0 Population 42.3 38.8 35.9 - 14.8 14.6 - 0.9 0.9 - - 4.5 4.5 18.2 15.2 6.7 7.3 8.3 7.4 3.0 3.1 8.0 6.3 35.9 35.9 15.3 19.2 1.1 8.0 20.6 15.2 5.6 3.6 6.0 IMMUNIZATION COVERAGE 6.1 1 year olds Immunized against 6.2 1 year olds Immunized 6.3 1 year olds Immunized 6.4 1 year olds Immunized DPT (%) measles(%) polio (%) TB(%) against against against 7.0 CRIME 7 .1 Reported Serious 7.2 of which: Homicides Crimes 90 88.0 83.0 93.3 82.0 91.1 90 88.5 83.0 92.5 94.0 88.4 86.0 89.7 84.1 82.8 87.0 90.1 93.3 93.5 - 3233.0 4563.0 - 99.0 88.0 3425.0 5188.0 109.0 108.0 Source: Bureau of Statistics and Ministry of J=inance 39 Budget Speech Appendices APPENDIX 11 REAL OUTPUT INDEX SECTOR Budget Revised Budget 1997 1996 1995 1999 1998 1998 TOTAL 149.5 146.9 153.6 148.9 144.6 129.9 Sugar Rice 1 ;i9 5 151.0 157 4 163 3 164.6 149.6 266.1 258.4 242.3 259.2 257 3 239.2 Livestock 118.3 116 0 124.3 117 8 193.4 89.7 Other Agriculture 149 3 146 4 143.5 137 1 130 1 125.1 Fishing Forestry 136.4 133 9 126 2 12C.5 154.5 109.5 247.1 2500 1 34!
:: 0 �130.0 307 7 284.9 Mining & Quarryin9 172.9 179 1 I 183 5 �744 155 0 131.6 Manufacturing 106 5 104 8 123.2 : 17 9 113.0 109.7 Distribution 155.9 151 3 1 150 3 143.8 136.3 129.8 Transport & Communicat1on 149.9 Engineering & Construction 199 3 147 0 159 7 151 7 139 2 125.4 191.6 202.9 � 82.8 162.0 142.0 Rent & Dwellings 149 1 143.1 143 1 135.4 126.1 119.0 Financial Services 163.1 159.1 160 0 154 1 147.4 134.6 Other Services Government - 154.7 1 o:z 1 150.2 152 8 102.5 103 8 144 8 102.7 137.9 128.3 97.9 99 9 Base Year: 1988=100 Source: Bureau of Statistics 40 Budget Speech Appendices APPENDIX 111 CENTRAL GOVERNMENT FINANCIAL OPERATIONS (ECONOMIC CLASSIFICATION) ITEM %CHANGE BUDGET REVISED BUDGET ACTUAL OVER 1999 1998 1998 1997 REVISED 1998 Revenues Revenue 1.0 Current 1.1 Inland 1.2 Customs 1.3 Sugar Levy 1.4 Other 1/ & Excise 2.0 Current Expenditure s Cost 2.1 Employment 1/ 2.2 Other Charges (Non-Interest) -4.912,765.2 13,.424.4 Primary 3.0 Current Balance 5.5 34,939.0 33,121.2 38,010.0 34,082.9 5.7 14,912.7 14.106.3 16,260.3 14,403.1 7.3 16,057.8 14,965.3 17,121.4 15,153.1 -10.01,800.0 1,999.6 2,000.0 2,000.0 5.8 2,168.5 2,050.0 2,628.3 2,526.7 12.622,173.8 19,696.8 20,495.9 17,823.7 5.510,327.6 9,790.9 9,754.5 8,931.0 19.611,846.2 9,905.9 10,741.4 8,892.7 17,514.1 16,259.2 4.0 Interest 2/ 4.1 Internal 4.2 External (Scheduled) 5.0 Current Balance -3.013,932.3 14,355.8 12,665.5 14,742.0 27.43,770.7 2,958.7 3,211.1 3,880.8 -10.810,161.6 11,397.1 9,454.4 10,861.2 25.3 (1,167.1) (931.4) 4,848.6 1,517.2 Revenues
 6.0 Capital 6.1 Grants 6.2 Proceeds from Divestment 6.3 Other incl.
Sale of Assets 255.6 4,308.3 1,211.4 3,725.3 2,973.6 64.2 1,292.0 786.9 1,476.4 2,662.8 720.9 2,951.3 359.5 2,178.9 225.8 0.0 65.0 65.0 70.0 85.0 -1.912,786.7 13,033.8 14,845.1 16,379.0 7.812,679.7 11,761.7 14,835.1 14,418.9 Enterprises -92.1 100.0 1,269.1 0.0 1,827.0 7.0 Capital Expenditures 7.1 Central 7.2 Transfers 7.3 Other Government to Public 8.0 OVERALL BALANCE 9.0 Total Financing 10.0 Net External Borrowing 10.
1 Disbursements of Loans 10.2 Debt Repayment Debt Relief 10.3 Interest Debt Relief 10.4 Principal (Scheduled) 11.0 Net Domestic Borrowing (6,271.2) (12,753.8) 133.3 7.0 3.0 10.0 133.1 -24.4(9,645.5) -24.49,645.5 12,753.8 6,271.2 11,888.2 60.410,781.9 6,720.4 10,654.4 8,877.8 45.211,149.5 7,681.2 11,388.5 8,751.8 -28.64,032.8 5,649.3 3,835.2 4,482.0 -9.6 3,60'1.3 3,985.4 3,059.5 4,484.4 -90.9 6:t9 703.1 41.6 123.6 (11,888.2) -165.5(4,096.4) -204.6(6,270.9) 5,995.7 (7,214.2) 2,773.6 6,256.3 (6,228.2) (591.0) 11.1 Net Advances 11 2 Net Increase 11.3 Net Increase in Treasury in Debentures Bill Holdings 114.42,174.5 1,014.3 564.0 (1,605.9) -100.0 0.0 (753.7) 422.0 (1,758.7) 12.0 Non-Project Balance of Payments 47.92,960.0 2,001.6 1,845.0 3,081.6 Grants 3/ 13.0 Other Financing -100.0 0.0 (2,:224.5) 0.0 519.8 Total Domestic and Scneauted Debt Service as a % of Current Revenues External 51A% 62.7% 42.3%1 61.6% 1.Excludes 2.
Excludes 3.

Figures reimbursable interest Rice Levy (a).

reflect counterpart funds which are used in the capital expenditure Budget.

on GNCB debentures, which are offset by repayments to Govemrrient, and payments on Sinking Fund holdings.
Figures: Guyana $m Source: Ministry of Finance 41 Budget Speech Appendices APPENDIX IV ALL URBAN CONSUMER PRICE INDEX (including GEORGETOWN) �- GROUP 1997 1998 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ALL ITEMS 143.6 142.7 145.4 146.3 146.3 146.7 147 6 148.0 147 6 148.1 147.9 148 9 150.2 FOOD (incl Alcoholic Beverages) CLOTHING FOOTWEAR HOUSING FURNITURE T RANSPORT & COMMUNICATION 130.5 131 0 165.4 165 4 161 8 161.5 162.8 166.0 165 7 164.6 165 3 165 9 166.1 MEDICAL & PERSONAL CARE 129.4 1322 131.8 134 5 134 3 134.2 135 5 136 5 135.9 136.7 136.6 136.7 142.3 EDUCATION, CUL.
RECREATION.

137 6 1402 139.9 140.9 1410 141.2 1412 141.4 141 3 141.3 142.9 143 5 143.6 OTHER GOODS ANO SERVICES 131.3 131.9 132.8 132 6 132 6 134.7 137 9 135.2 136 9 136 9 137.3 137 8 138.9 Base Year: Dec 1994 = 100 Source: Bureau of Statistics 42 Budget Speech Appendices APPENDIXV BALANCE OF PAYMENTS ANALYTIC SUMMARY ITEM Budget Revised Budget 1999 1998 1998 Actual 1997 Actual 1996 A Current Account -88.0-85.5-88.0 -81.1 -48.2 (Net) 1.0 Merchandise (f.o.b.)
1.1 Exports 1.1.1 Bauxite 1.1.2 Sugar 1.1.3 Rice 1.1.4 Gold 1.

1.5 Other 1.

1.

6 Re-exports 1.2 Imports (c.i.f.)

1.

2.

1 Fuel & Lubricants 1.2.2 Other (Net} 2.0 Services 2.
1 Factor 2.2 Non Factor (Net) 3.0 Transfers 3.1 Official 3.2 Privatei B Capital Account 1.0 Capital Transfers -46.0-54.2-36.0 574.0547.0616.0 78.0 78.5 92.0 135.0129.0138.0 -48.2 593.4 89.4 133.4 -20.2 574.8 86.0 150.7 81.0 ?3.3 78.0 122.0 124.0 140.0 136.0 120.2 151.0 22.0 22.0 17.0 -620.0-601.2-652.0 -66.0-?2.0-105.0 -554.0-529.2-547.0 84.7 139.5 125.8 20.6 -641.6 -100.0 -541.6 93.7 104.1 118.3 22.0 -595.0 -89.9 -505.1 -91.0-88.3-92.0 -57.0-56.2-50.0 -34.0-32.
1 -42.0 -96.9 -73.7 -23.2 -86.0 -54.0 -32.0 49.0 57.0 40.0 8.0 13.0 16.0 41.0 44.0 24.0 64.0 24.0 40.0 58.0 17.0 41.0 84.0 69.5 133.0 101.7 53.9 2.0 Medium and Long Term Capital (Net) Sector Capital Public 2.

1 Non -Financial 2.

1.

1 Disbursements 2.1.2 Amortization 2.

1.3 Other o.o 0.0 7.0 85.0 70.5 119.0 (Net) 39.0 13.9 69.0 69.0 59.7 97.0 -30.0-45.8-28.0 0.0 0.0 0.0 0.0 618.0 89.7 35.0 65.0 -30.0 0.0 -558.5 -611.9 40.2 -34.
1 -618.0 2.2 Private Sector (Net) 46.0 56.6 50.0 54.7 53.4 3.0 Short Term Capital -1.0 -1.0 7.0 12.0 -5.6 C Errors and Ommissions 0.0 �6.0 0.0 -16.6 -7.1 D OVERALL BALANCE E Financing -4.0 -22.0 45.0 4.0 22.0 -45.0 4.0 -4.0 -1.4 1.4 1.0 Bank of Guyana net foreign assets 1.1 Assets(increase-) 1.
2 Liabilities -22.022.0-227.0 -9.0 39.0 -41.0 -13.0-17.0-186.0 -22.0 3.0 -25.0 -14.0 -14.0 0.0 2.0 Exceptional Financing 2.1 Debt Relief 2.2 Balance of Payments Support US$m Figures: Ministl)r Source: Bureau of Statistics of Finance, and Bank of Guyana 26.0 0.0 182.0 26.0 0 0 182.0 0.0 0.0 0.0 18.0 18.0 15.4 15.4 0.0 0.0 43 Budget Speech Appendices APPENDIX VI ACTUAL AND PROJECTED EXTERNAL DEBT STOCK ---------------- Preliminary ITEM 1999 (After HIPC) Actual 1--- Actual Actual ---, "1998 1996 1997 TOTAL EXTERNAL DEBT 1.0 Multilateral 7 1,348.
5 1 496 49 IBRD IDA IADB COB CMCF IMF Others 1i 2.0 Bilateral 2.1 Paris Club Creditors: USA UK Canada Germany Netr1erlands :>enmark l\loiway Sweden Frar.ce Jap,m T&T OthEirS 2/ I 2.2 Non-Paris Club Creditors: Venezuela Argentina Kuwait Libya Others 3i 3.0 Private Creditors 3 1 Suppliers 3.2 Financial 4/ Markets/Bonds 5/ 910 79 965 33 95305 15130r 4.
�,7 1.90 6 75 6<'.2 145 000 000 166 1 16 176 94 37 53 7 1.53 02 980 13 26.561 214 81 l 299.39 52 35 129.781 168 39 I 88.85 1 7 441 0 I 7 302 7 0 l 61 4.98 I 0.57 I 1.9 7 5 6.

6.22 \ o oo I 145i o.oo I 1.66 1.

17 7 6.94 1 1 31.

12 116.41 124 04 140.64 138.94 6.57 7 9 6.


38.90 29 47 34.67 9.95 6 79 36 16 32 52 38 62 34.98 90.11 0 34 34.64 - 54.36 3576 13 51 6 79 34.44 32.27 53641 110 �8 I 58.991 51 ·19 1 15.92 7 9 6.

32.26 1 31.43 52 55 115.19 64.61 50.59 Notes.

11 Includes 21 Includes 3i Includes 4/ ln:ludes 5/ ln:lud,is CDC and KFW Loa:1s EEC.

EIB.

IFAD and OPEC Loam, PL 480 Credits DPRK, Russia.

Brazil.

C'lma, UAI:: !TT.

Caterpillar Mc Connell.


B,)oker Loans India and Yugoslavia and EPDS debts Bank (0/D) a�d BosKalis Lloyds N1ssho lwa,/Kornatsu, Bonds, Bank of Nova Scotia.

Americas, Ba,Glays Bank debts Figures: US$m Source: Ministry of Finance 44 Budget Speech Appendices