Guyana - Economy

Economy

The main economic activities in Guyana are agriculture (production of rice and Demerara sugar), bauxite mining, gold mining, timber, shrimp fishing and minerals. Chronic problems include a shortage of skilled labour and a deficient infrastructure. In 2008, the economy witnessed a 3% increase in growth amid the global economic crisis and is expected to grow further in 2009.

Until recently, the government was juggling a sizable external debt against the urgent need for expanded public investment. Low prices for key mining and agricultural commodities combined with troubles in the bauxite and sugar industries had threatened the government's tenuous fiscal position and dimmed prospects for the future. However, the Guyanese economy has rebounded slightly and exhibited moderate economic growth since 1999, thanks to an expansion in the agricultural and mining sectors, a more favorable atmosphere for business initiatives, a more realistic exchange rate, fairly low inflation, and the continued support of international organizations.

The sugar industry, which accounts for 28% of all export earnings, is largely run by the company Guysuco, which employs more people than any other industry. Many industries have a large foreign investment. For example, the mineral industry is heavily invested in by the American company Reynolds Metals and the British-Australian Rio Tinto's Rio Tinto Alcan subsidiary; the Korean/Malaysian Barama Company has a large stake in the logging industry.

The production of balatá (natural latex) was once big business in Guyana. Most of the balata bleeding in Guyana took place in the foothills of the Kanuku Mountains in the Rupununi. Early exploitation also took place in the North West District, but most of the trees in the area were destroyed by illicit bleeding methods that involved cutting down the trees rather than making incisions in them. Uses of balatá included the making of cricket balls, the temporary filling of troublesome tooth cavities, and the crafting of figurines and other decorative items (particularly by the Macushi people of the Kanuku mountains).

Major private sector organizations include the Private Sector Commission (PSC) and the Georgetown Chamber of Commerce & Industry (GCCI);

The government initiated a major overhaul of the tax code in early 2007. The Value Added Tax (VAT) was brought into effect, replacing six different taxes. Prior to the implementation of the VAT, it had been relatively easy to evade sales tax, and many businesses were in violation of tax code. Many businesses were very opposed to VAT introduction because of the extra paperwork required; however, the Government has remained firm on the VAT. By replacing several taxes with one flat tax rate, it will also be easier for government auditors to spot embezzlement. While the adjustment to VAT has been difficult, it may improve day-to-day life because of the significant additional funds the government will have available for public spending.

President Bharrat Jagdeo had made debt relief a foremost priority of his administration. He was quite successful, getting US$800 million of debt written off by the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank (IDB), in addition to millions more from other industrial nations. Jagdeo was lauded by IDB President Moreno for his strong leadership and negotiating skills in pursuing debt relief for Guyana and several other regional countries.