At June this year, value-added and excise tax collections amounted to G$23.2B, an increase of 9.1% over the corresponding period last year, the government’s mid-year report says.
The increase was based on demand for commodities by the construction, trading and manufacturing sectors.
However, excise tax collections were lower as compared to that of 2009, lower receipts from petroleum products due to lower excise taxes rates for both gasoline and diesel use cited a key factor.
The records also indicated customs and trade taxes totaling G$3.9B at June this year, reflecting an increase of 13.1% over the same period in 2009, with import duty collections accounting for 88.8% of the amount, an increase of G$377.8M over 2009.
Despite difficulties in the sugar industry, continued adverse movement in commodity prices and the effects of a sliding Euro, the economy experienced a steady growth in the first half of 2010.
According to the mid-year report of the Ministry of Finance on the state of the economy for the first half of this year which was tabled in Parliament yesterday, the economy continued to record positive growth through the first half of 2010, when placed against the backdrop of a global outlook characterized by uncertainty with the developed economies still seeking to balance policies aimed at stimulating output and measures required to contain debt and achieve fiscal sustainability.
In the first half of the year, the economy recorded real growth of 2.8%, with the inflation rate at the end of the June being 2%, movement in the food category being the primary factor. According to the report, price increases in the latter arose mainly from supply constraints of poultry meat, which was caused by more moderate prices developments in other categories of the consumer price index.
In the February budget presentation the inflation target was announced by the Minister of Finance as being 4%, however based on developments in the first half of the year, the new target has climbed to 4.5%.
Guyana’s total external public debt was US$966.2M at the end of June, an increase by US$33.2M from the end of December last year. The increase in external debt stock by 3.5% reflects new disbursements of approximately US$48.2M of which US$39.8M was obtained from the IDB and Venezuela, as well as principal repayments of about US$6.4M in the first half of the year.
Performance of the sectors
Sugar sector
Production on the first crop declined by 1.8% to 81,864 tonnes, with the prolonged dry season playing a primary role as a result of reduced sucrose content and the lack of water in the canals hampered the transportation of canes from field to factory.
With the aforementioned and other factors being taken into consideration, the target for the year has been revised downwards from 280,000 tonnes to 260,000 tonnes. At the same time projected growth as presented at the budget in February, has been revised from 19.8% to 11.2%.
Works continue on the turnaround plan announced by the authorities for the industry which would see the realization of increased acreage under cultivation and improvements in the cane to sugar ratio, with industrial relations playing an underpinning role.
Export earnings for the sector declined by 21% to US$36.8M compared to US$47.8M earned at the end of June last year, the figures being attributed to a 22.2% decline in the average export price to US$494.2 per tonne, which reflects the final step of EU price cuts which became effective in October last year.
Rice sector
Export earnings for rice amounted to US$68.6M at June this year, 15.5% above the US$59.4M earned in the corresponding period in 2009.The figures reflected a significant increase of 26.5% in export quantity of rice of 157,234 tonnes from 124,277 tonnes.
Forest sector
Marked improvement in forest operator’s compliance with verification systems allowing for more timely issuance of permits, leading to early harvesting was one of several factors contributing to a ‘recorded robust growth’ of 11.8% in the industry. A combination of market, policy and environmental conditions contributed to the industry’s performance for the first half of 2010.
Timber export earnings totalled US$24.5M at June this year, 48.3 % above the level for the corresponding period lat year, primarily on the account of an increase in both plywood and other timber exports.
Bauxite/diamond/gold sector
For 2010, the bauxite industry was projected to grow by 5.7%, gold declaration by 4% and diamond declaration by 4.2%, and overall projection being 4.2%. However, up to June, an opposite trend was recorded resulting in a decline of 4.1% in the value-added sectors. According to the report, for the bauxite industry, production growth level fell in all other grades, except for Chemical Grade Bauxite (CGB) which benefitted from enhanced market demand.
Bauxite earnings amounted to US$56.6M at June this year, some 30.1% above the level at end of June last year, favourable world market prices playing a key role.
For the gold industry, production showed an increase of 8.1% at the end of June, and the budget projection of a 4% increase for the year is maintained. The price of gold on the market drove increased production and at the end of June, the monthly average price of the metal on the international market showed an 8.7% increase over the December 2009 monthly average.
The price of gold is expected to remain above US$1000 per ounce over the next 6 months, the report stated.
Export earnings for gold amounted to US$146.7M, some 22.4% above the level for the corresponding period last year, a 26.3% increase in average export prices playing a role. This figure is above the combined total for sugar and rice.
The surge of gold production this year came at the expense of diamond production and the comparative decline of diamonds to gold is expected to continue throughout the year to the extent of ‘Other Mining activities’, of which diamond production is a major component. A record decline of 22% for the year is projected, compared to 3.6% as budgeted to grow early this year.
$762M was expended on further upgrade and maintenance of sea and river defences in Regions 2 to 6 in June this year, compared to $264.5M in 2009.Works are continuing in areas across the coastland, the report stated.