Economy of Guyana
Encyclopedia
With a per capita gross domestic product
of only $4,700 in 2006, Guyana
is one of the poorest countries in the Western Hemisphere. This is evident from the contrast between poor slum areas and elite residential areas with imperious mansions, often built within a few miles of one another. The economy made dramatic progress after President Hoyte's 1989 economic recovery program (ERP). As a result of the ERP, Guyana's GDP increased six percent in 1991 following 15 years of decline. Growth was consistently above six percent until 1995, when it dipped to 5.1 percent. The government reported that the economy grew at a rate of 7.9 percent in 1996, 6.2 percent in 1997, and fell 1.3 percent in 1998. The 1999 growth rate was three percent. The unofficial growth rate in 2005 was 0.5 percent.In 2006, in was 3.2%.
Developed in conjunction with the World Bank and the International Monetary Fund (IMF), the ERP significantly reduced the government's role in the economy, encouraged foreign investment, enabled the government to clear all its arrears on loan repayments to foreign governments and the multilateral banks, and brought about the sale of 15 of the 41 government-owned (parastatal) businesses. The telephone company and assets in the timber, rice, and fishing industries also were privatised. International corporations were hired to manage the huge state sugar company, GUYSUCO, and the largest state bauxite mine. An American company was allowed to open a bauxite mine, and two Canadian companies were permitted to develop the largest open-pit gold mine in South America
. However, efforts to privatise the two state-owned bauxite mining companies, Berbice Mining Company and Linden Mining Company have so far been unsuccessful.
Most price controls were removed, the laws affecting mining and oil exploration were improved, and an investment policy receptive to foreign investment was announced. Tax reforms designed to promote exports and agricultural production in the private sector were enacted.
Agriculture and mining are Guyana'smost important economic activities, with sugar, bauxite, rice, and gold accounting for 70–75 percent of export earnings. However, the rice sector experienced a decline in 2000, with export earnings down 27 percent through the third quarter 2000. Ocean shrimp exports, which were heavily impacted by a one-month import ban to the United States in 1999, accounted for only 3.5 percent of total export earnings that year. Shrimp exports rebounded in 2000, representing 11 percent of export earnings through the third quarter 2000. Other exports include timber, diamonds, garments, rum, and pharmaceuticals. The value of these other exports is increasing.
Since 1986, Guyana has received its entire wheat supply from the United States on concessional terms under a PL 480 Food for Peace
programme. It is now supplied on a grant basis. The Guyanese currency generated by the sale of the wheat is used for purposes agreed upon by the U.S. and Guyana Governments. As with many developing countries, Guyana is heavily indebted. Reduction of the debt burden has been one of the present administration's top priorities. In 1999, through the Paris Club "Lyons terms" and the Heavily Indebted Poor Countries
(HIPC) initiative Guyana managed to negotiate $256 million in debt forgiveness.
In qualifying for HIPC assistance, for the first time, Guyana became eligible for a reduction of its multilateral debt. About half of Guyana's debt is owed to the multilateral development banks and 20% to its neighbour Trinidad and Tobago, which until 1986 was its principal supplier of petroleum products. Almost all debt to the U.S. government has been forgiven. In late 1999, net international reserves were at $123.2 million, down from $254 million in 1994. However, net international reserves had rebounded to $174.1 million by January 2001.
Guyana's extremely high debt burden to foreign creditors has meant limited availability of foreign exchange and reduced capacity to import necessary raw materials, spare parts, and equipment, thereby further reducing production. The increase in global fuel costs also contributed to the country's decline in production and growing trade deficit. The decline of production has increased unemployment. Although no reliable statistics exist, combined unemployment and underemployment are estimated at about 30%.
Emigration, principally to the U.S. and Canada, remains substantial. Net emigration in 1998 was estimated to be about 1.4 percent of the population, and in 1999, this figure totalled 1.2 percent. After years of a state-dominated economy, the mechanisms for private investment, domestic or foreign, are still evolving. The shift from a state-controlled economy to a primarily free market system began under Desmond Hoyte and continued under PPP/CIVIC governments. The current PPP/C administration recognises the need for foreign investment to create jobs, enhance technical capabilities, and generate goods for export.
The foreign exchange market
was fully liberalised in 1991, and currency is now freely traded without restriction. The rate is subject to change on a daily basis, but the Guyana dollar has depreciated 17.6% from 1998 to 2000 and may depreciate further pending the stability of the post-election period.
Guyana is a member of the WTO.
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
of only $4,700 in 2006, Guyana
Guyana
Guyana , officially the Co-operative Republic of Guyana, previously the colony of British Guiana, is a sovereign state on the northern coast of South America that is culturally part of the Anglophone Caribbean. Guyana was a former colony of the Dutch and of the British...
is one of the poorest countries in the Western Hemisphere. This is evident from the contrast between poor slum areas and elite residential areas with imperious mansions, often built within a few miles of one another. The economy made dramatic progress after President Hoyte's 1989 economic recovery program (ERP). As a result of the ERP, Guyana's GDP increased six percent in 1991 following 15 years of decline. Growth was consistently above six percent until 1995, when it dipped to 5.1 percent. The government reported that the economy grew at a rate of 7.9 percent in 1996, 6.2 percent in 1997, and fell 1.3 percent in 1998. The 1999 growth rate was three percent. The unofficial growth rate in 2005 was 0.5 percent.In 2006, in was 3.2%.
Developed in conjunction with the World Bank and the International Monetary Fund (IMF), the ERP significantly reduced the government's role in the economy, encouraged foreign investment, enabled the government to clear all its arrears on loan repayments to foreign governments and the multilateral banks, and brought about the sale of 15 of the 41 government-owned (parastatal) businesses. The telephone company and assets in the timber, rice, and fishing industries also were privatised. International corporations were hired to manage the huge state sugar company, GUYSUCO, and the largest state bauxite mine. An American company was allowed to open a bauxite mine, and two Canadian companies were permitted to develop the largest open-pit gold mine in South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
. However, efforts to privatise the two state-owned bauxite mining companies, Berbice Mining Company and Linden Mining Company have so far been unsuccessful.
Most price controls were removed, the laws affecting mining and oil exploration were improved, and an investment policy receptive to foreign investment was announced. Tax reforms designed to promote exports and agricultural production in the private sector were enacted.
Agriculture and mining are Guyana's
Since 1986, Guyana has received its entire wheat supply from the United States on concessional terms under a PL 480 Food for Peace
Food for Peace
Public Law 480 also known as Food for Peace is a funding avenue by which U.S. food can be used for overseas aid....
programme. It is now supplied on a grant basis. The Guyanese currency generated by the sale of the wheat is used for purposes agreed upon by the U.S. and Guyana Governments. As with many developing countries, Guyana is heavily indebted. Reduction of the debt burden has been one of the present administration's top priorities. In 1999, through the Paris Club "Lyons terms" and the Heavily Indebted Poor Countries
Heavily Indebted Poor Countries
Heavily Indebted Poor Countries is a group of 40 developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund and the World Bank.- History and structure :...
(HIPC) initiative Guyana managed to negotiate $256 million in debt forgiveness.
In qualifying for HIPC assistance, for the first time, Guyana became eligible for a reduction of its multilateral debt. About half of Guyana's debt is owed to the multilateral development banks and 20% to its neighbour Trinidad and Tobago, which until 1986 was its principal supplier of petroleum products. Almost all debt to the U.S. government has been forgiven. In late 1999, net international reserves were at $123.2 million, down from $254 million in 1994. However, net international reserves had rebounded to $174.1 million by January 2001.
Guyana's extremely high debt burden to foreign creditors has meant limited availability of foreign exchange and reduced capacity to import necessary raw materials, spare parts, and equipment, thereby further reducing production. The increase in global fuel costs also contributed to the country's decline in production and growing trade deficit. The decline of production has increased unemployment. Although no reliable statistics exist, combined unemployment and underemployment are estimated at about 30%.
Emigration, principally to the U.S. and Canada, remains substantial. Net emigration in 1998 was estimated to be about 1.4 percent of the population, and in 1999, this figure totalled 1.2 percent. After years of a state-dominated economy, the mechanisms for private investment, domestic or foreign, are still evolving. The shift from a state-controlled economy to a primarily free market system began under Desmond Hoyte and continued under PPP/CIVIC governments. The current PPP/C administration recognises the need for foreign investment to create jobs, enhance technical capabilities, and generate goods for export.
The foreign exchange market
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
was fully liberalised in 1991, and currency is now freely traded without restriction. The rate is subject to change on a daily basis, but the Guyana dollar has depreciated 17.6% from 1998 to 2000 and may depreciate further pending the stability of the post-election period.
Guyana is a member of the WTO.
See also
- GuyanaGuyanaGuyana , officially the Co-operative Republic of Guyana, previously the colony of British Guiana, is a sovereign state on the northern coast of South America that is culturally part of the Anglophone Caribbean. Guyana was a former colony of the Dutch and of the British...
- Economy of South AmericaEconomy of South AmericaThe economy of South America comprises around 382 million people living in twelve nations and three territories. It contributes 6% of the world's population.-Economic development:...
- South America Life Quality Rankings - Economy and Finance