Political, social tensions retarded economy from '97
- Hinds
Stabroek News
March 26, 2002

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Political and social tensions and the pre-occupation with them have caused the country over the last years to be taking one step forward and two step backwards so that essentially the country's economy is where it was in 1997, Prime Minister Sam Hind said yesterday.

Kicking off debate on the 2002 budget in a sitting boycotted by the main opposition PNC/R, Hinds said the image that comes to mind was that of an economy that wanted to gallop away but is hampered by self-inflicting wounds. He feels that last year's 1.9% growth rate was an indication of the potential to achieve higher growth rates with the foundations that have been laid.

Hinds said that to some extent the country's economy has been marking time since the run up to the general elections of 1997.

It was important, he said, for the country to come to terms with the situation and to start the process of recovery quickly. It is time that political parties, he said, put aside the squabbling and work to reconcile internal issues so as to avoid the dangers inherent in the global scenario.

The growth rate for a number of years up to 1997 averaged 5%, but the rate for 1998 was -1.8%, plus 3% in 1999 when there was some easing of tensions, -1.4% in 2000, and now a growth rate of 1.9% in 2001.

Well you can listen to me: With Parliament devoid of PNC/R MPs, PM Sam Hinds turned his attention to the Speaker of the National Assembly, Ralph Ramkarran and the Clerk Frank Narain as he led off debate on the 2002 budget yesterday.

Apart from the destruction of public property and the spirit of the people, Hinds said that the wounds inflicted were not only internal but external such as the horrific events of September 11 on the US that served as a knock-down blow to a world economy that was already in decline.

Speaking on the range of issues which come under his portfolio, Hinds said that the $2 billion to be expended in the fight against poverty reduction is an indication of the PPP/Civic commitment to stimulate growth to encourage economic development and reduce poverty by providing the "fish and hook".

Speaking of the operations of companies whether privately or state-owned in an economy which was marking time, Hinds said that in addition to the internal problems, generally adverse changes in terms of trade in the international market for commodities produced locally would have led to the difficult situation for many enterprises. Words of sympathy, he said, need to be extended to those in difficulties. While inefficiency and ineptitude may be accepted in booming times it could not be so in difficult times.

Declared gold production of 456,089 ounces for 2001, he pointed out, was the highest ever and diamond declaration too of 178,698 carats was the highest ever for over 75 years. He noted the shift to diamond production from gold.

In spite of the increased production, he cautioned that Omai Gold Mines Limited registered its highest output last year but its production from here on was projected to fall as its current reserves were expected to last for another four and to five years. Omai is currently seeking incentives to pursue prospecting in an adjacent property, exploration which Hinds hopes could lead to more substantial finds.

As the population and activities increase in the hinterland areas, Hinds said that there was the potential for increasing conflict among different sectors. Government, he said was working to reduce those effects through the Guyana Environmental Capacity Development Programme (GENCAPD) funded by the Canadian International Development Agency. This includes dry mining being encouraged instead of hydraulic mining and medium scale operations in this area are developing.

In addition, Hinds noted that current budget incentives were being offered to smaller gold and diamond miners and despite much talk about Brazilian miners working in the mining sector, he noted that the technology local miners use has come from the Brazilian miners. The issue of regularising the Brazilian and other non-national miners and their operations, he said was being addressed.

On the issue of bauxite, he noted that prices for bauxite continue to be low but government continues to support the Linden Mining Enterprise with some $2 billion to be expended, the same as last year.

He expressed the hope that a preliminary study on a market survey of the industry being carried out by Cambior, the major shareholder in Omai Gold Mines Limited will be encouraging.

The Berbice Mining Enterprise, too, he said was experiencing difficulties but will benefit from recapitalisation funds.

The Aroaima Bauxite Company, he said will see itself through for another year without recourse to the national budget.

On the issue of petroleum, Hinds said that essentially all offshore prospecting areas on lease are on hold. Holders with leases to the eastern and western shores of Guyana are all expressing concern. As such, Hinds said that government is looking forward to positive outcomes from President Bharrat Jagdeo's visit to Suriname earlier this year and to Venezuela's President Hugo Chavez's proposed visit to Guyana later this year. He hoped that the visits could lead to accords which will enable prospecting to go forward.

In relation to electricity and energy, Hinds said that the government would bring electrification to all areas in Guyana by the year 2005. He said that nearly 220 communities have knocked at his door regularly and have asked for electrification. Some criteria, he said were being developed in order to tackle the issue. This, he said, was being done in collaboration with the Housing Ministry.

He said that no one would deny that electricity supply has continued to improve. But government cannot ignore complaints that improvements have been too slow and tariffs have been more than they should be.

During 2001, he noted there were power outages, problems of transmission and distribution, problems with meter readers and meter reading, disconnection and tardy reconnections and losses in electricity estimated at 40% coupled with widespread demands for electrification. Plans, he noted, are in train to improve all these areas.

The government, too, he said was looking at whether the managers were overpaid for the work they were doing and whether expertise should be sought elsewhere.

In terms of investment in power generated by hydro-electricity, Hinds said that there were other investors in addition to the group working on the Amaila Falls. These include a hydro project on the Mazaruni River to the Tortuga location. The investor with interest there is looking at exporting power to Brazil. A Japanese group is also looking at the Upper Mazaruni area and hopes that by 2007 the company would be in a position to make a decision as to whether it could provide some 2001 megawatts of power. Government also has an agreement with Delta Caribbean to test its power potential at Hope Estate on the East Coast of Demerara. Citing the examples, Hinds said that government was diligently look at a full range of potential sources of power. (Miranda La Rose)