Introduction
1.1 Mr. Speaker, I rise to move the motion for the approval of the Estimates of the Public Sector and the Budget for the Financial Year 2016 and, in doing so, I wish to indicate that Cabinet has recommended that the National Assembly proceed upon this motion, pursuant to Article 171 Paragraph 2 of the Constitution of the Co-operative Republic of Guyana.
1.2 Mr. Speaker, this is the second budget of the Coalition Government, following the first, which was presented on August 10, 2015. It is the first full year budget of the Government – the last one being a truncated budget that, nevertheless, had to be presented, if only to fulfill the requirements of the Constitution and the Fiscal Management and Accountability Act. I am pleased to have the honour, as the 10th Minister of Finance, of presenting this budget, in this Year of National Renaissance; in this momentous year of the Golden Jubilee of our Independence.
1.3 Mr. Speaker, this year is a time for great joy and celebration. Nearly fifty years ago, we were birthed as a nation in strife and disunity. Distrust stalked our country. Dark clouds hovered over the land, as if overseeing the political division and ethnic conflict and insecurity that was wreaking the country. Recalling the state of our economy at the time of Independence, His Excellency President David Granger, in his New Year’s Address said that “We subsisted in a dependent colonial economy. We languished as a small, servile satrapy ruled by a colonial governor.” But we became independent, nevertheless. We emerged, slowly, from the mayhem and destruction, to the new reality that we were now masters and mistresses of our own destiny.
1.4 The path to peace and national reconciliation has been long and arduous, but we have weathered the storm to progress to where we are currently. It is written in the Good Book, in Psalm 118:24, “… let us rejoice today and be glad!” Today, there is a lot for which we should be thankful and be glad. From the numerous schools, hospitals, health centres, roads, bridges and sea defence structures to our symbols of nationhood to our search for unity and social cohesion, successive governments have struggled to mould this nation we now call Guyana: Land of Many Waters; the Magnificent Province; Land of the Mighty Roraima; and so many other sobriquets that this fair land has come to be known. For most of us, this is the only home we know. It is where our heart is. We must strive manifestly, therefore, to keep it intact.
1.5 Mr. Speaker, last year was a difficult one for our economy. While I do not wish to chronicle all of the events that were responsible for that state of affairs, suffice it to say that because the characteristics of the economy, bequeathed to us at the time of Independence, has changed little, we suffered tremendously. In 2015, perhaps for the first time in recent history, all of the country’s key industries – sugar, rice, bauxite, gold and forestry – found themselves in various states of distress. Even remittances, which have contributed significantly to income, consumption, investment and employment, and upon which so many of our people depend, was a victim of the slowdown in the world economy. It is obvious that our excessive reliance on these generators of foreign exchange will continue to expose the economy to volatile external developments. It is a tribute to this young Government’s prudent management of the economy, including timely policy interventions, that the economy’s growth trajectory continued; that there were no reported job losses; and, as was evident in the last two months of 2015, the business community’s confidence had been restored. This must come as a bitter disappointment to those in the Opposition and elsewhere whose forecast of gloom and the ‘tanking’ of the economy did not eventuate.
1.6 Mr. Speaker, this budget builds on the policies and programmes which were first outlined in the Manifesto of the APNU+AFC Coalition and, subsequently, extensively elaborated in my maiden budget speech. That presentation focused on the path to realizing our vision that every Guyanese must enjoy the Good Life. This was reiterated recently, on Thursday 14th January, 2016, by His Excellency, President David Granger, during his address to this Honourable House. He was sage in his reasoning that while achieving the good life should not be a dream, its reality would not be easy. It would call for each citizen being given the opportunity to unleash his/her talents to become productive citizens of the Republic. It would entail the removal of inequalities that act as obstacles to economic progress and prosperity. Among the known inequities are the divide: between rich and poor; between the hinterland and the coast; and between the educated and the uneducated. Mr. Speaker, we must close the gaps and bridge the divides wherever they exist. It is our duty; it is part of the reason why we were elected to govern this nation. The year 2016 offers us the opportunity to harness our natural and human resources to build a resilient nation – one in which our people enjoy the Good Life.
1.7 The platform for Budget 2016 is anchored on the five pillars outlined in His Excellency President David Granger’s New Year’s Speech. These are summarized thus:
National Unity: We will implement policies aimed at reducing, if not eliminating, division and divisiveness in the society; and foster a more harmonious environment. In this year of our jubilee celebration, we will strive to reaffirm our motto – ‘One people, One nation, One destiny.’
National Infrastructure: In an effort to foster integration between the coast and hinterland, with a view of increasing access to the resources of the hinterland so as to accelerate the country’s development, we will be renewing, extending and expanding our physical infrastructure.
National Institutions: We will strengthen our national institutions in furtherance of a stable legal and constitutional environment, and will pursue democratic renewal at the local government level to empower our people to better administer their communities.
National Security: We will strengthen the national security network to better protect our country’s patrimony and our citizens from both internal and external threats and aggression.
Public Services: We will improve and extend education, health, sanitation, pure water supply, electricity services, safe and secured communities, affordable housing, adequate recreational facilities, and social protection to vulnerable and disadvantaged groups.
1.8 Mr. Speaker, in keeping with these pillars and the direction in which we are steering the economy, we have chosen the theme for this budget as, Stimulating Growth, Restoring Confidence: The Good Life Beckons. This theme highlights the imperative of growing and ‘greening’ the economy in an atmosphere of renewed hope and expectation for an improved quality of life of the citizenry. As has been the practice, this budget benefitted from widespread consultations with private sector organizations, trade union bodies and women groups, among others. For the first time, youth representatives from all ten (10) regions were invited to participate in shaping a national budget. We were particularly encouraged by our interface with them, as it gave us a first-hand understanding of many of the issues that are of immediate concern to youth. They brought with them, refreshing perspectives and inspiring thoughts that resonated with the ‘fresh approach’ which the Coalition Government has been advocating. It is an approach we commend to the Opposition who, though invited to budget consultations, found it inconvenient to attend. I thank all participants and wish to remind that our door remains open to anyone who would like to make a meaningful contribution to the development of our society.
Global Economic Developments
2.1 Mr. Speaker, according to the World Economic Outlook, global economic growth in 2015 contracted to 3.1 percent. Growth in Advanced Economies was estimated at 2 percent, slightly better than in 2014. Factors responsible for this outcome included modest recovery in the Euro Area, positive growth in Japan, declining oil prices, an accommodative monetary policy and, to some extent, depreciating exchange rates. Developing economies recorded slower growth, as a result of continued low productivity growth, high debt and reduced commodity market prices. Emerging market economies were severely affected by the financial market volatility spike, in August, 2015. That, together with falling commodity prices, led to the weakening of currencies for many emerging markets and contributed to a lower growth rate of 4 percent, in 2015, compared to 4.6 percent, in 2014.
2.2 Mr. Speaker, in the Caribbean region, commodity exporters are projected to have grown by 2.0 percent and tourism dependent economies, by 2.3 percent. However, growth in Latin America and the Caribbean is projected to have declined by 0.3 percent, in 2015. Lower commodity prices have been responsible for a deterioration in the terms of trade, widening current account deficits, exchange rate depreciation and weakening investment in the region.
2.3 Mr. Speaker, prospects for 2016 are far from encouraging. Global economic developments remain hostile, with heightened uncertainties against the backdrop of increased interest rates in USA and economic slowdown in China. As a result, global growth, in 2016, is now pegged at 3.4 percent. Growth in the Advanced Economies is projected at 2.1 percent; Emerging Market and Developing Economies, 4.3 percent; and Latin America and the Caribbean, -0.3 percent. It is this challenging environment that Guyana’s economy will have to navigate and subsist. Given the structure of our domestic economy, with its heavy dependence on primary products, in the expected mix of soft commodity prices and continued tumbling oil prices, focus has to be on accelerating production and, through our various policy measures and reforms, stimulating growth and exports. It is against this background that I now review the performance of our economy, in 2015, and set the stage for the economy to forge ahead in 2016.
Developments in the Domestic Economy in 2015
Real Gross Domestic Product
3.1 Mr. Speaker, the budget for 2015 projected an overall real economic growth rate of 3.4 percent. This target appeared under threat at mid-year, when real economic growth was recorded at a paltry 0.7 percent. However, buoyed by accelerated activities in the rice, sugar, gold and construction sectors, as well as renewed optimism and confidence by the business community, during the second half of the year, the economy rebounded to record real growth of 3.0 percent.
Sectoral Performance
Agriculture, Forestry and Fishing
3.2 Mr. Speaker, the sugar industry returned a creditable performance, in 2015, with production growing by 6.9 percent to 231,145 metric tonnes. Though this level of production is still below the average achieved in the previous decade, the industry is showing encouraging signs of recovery. This, no doubt, can be attributed to new management and the measures taken to increase efficiency and productivity.
3.3 In spite of the uncertainty that prevailed in the rice industry, recorded output was 687,784 metric tonnes, an increase of 8.3 percent. The premature end of the Venezuelan market, which accounted for 37.5 percent of the volume of rice exported in 2014, created great turmoil for both rice farmers and millers. The Government was proactive in its assistance to the rice industry – aiding in the search for new markets and meeting payments to farmers for rice shipped to Venezuela, which could not have been made from the PetroCaribe Fund.
3.4 The livestock sub-sector grew by 5.8 percent, double the rate achieved in the previous year, while the ‘other crops’ sub-sector grew by 2 percent. On the other hand, negative growth was returned by the fisheries sub-sector, 7.2 percent; and forestry, 16.2 percent.
Mining and Quarrying
3.5 Mr. Speaker, in spite of the downturn in bauxite (13.4 percent) and quarrying (0.3 percent), the mining and quarrying sector grew by a strong 9 percent, thanks to a very dominant performance by gold, which grew by 16.4 percent. Though the increase in gold production was attributed to the new entrants – Guyana Goldfields and Troy Inc. – it was the local miners who accounted for over 90 percent of the 451,490 ounces that were declared. The significant incentives granted to the sub-sector by this Government, undoubtedly, played a major part in the substantial increase in declaration. But, Mr. Speaker, we remain troubled by disclosures that as many as 15,000 ounces of gold per week are being smuggled out of the country, thereby robbing the country of vital developmental resources. We have begun to address this matter frontally and expect that all stakeholders in the sub-sector will play their part in bringing an end to this illegal practice.
Manufacturing
3.6 Mr. Speaker, the manufacturing sector achieved a growth rate of 5.3 percent. This was driven by growth in the sugar and rice industries, as well as other manufacturing.
Services
3.7 Mr. Speaker, the services sector expanded by 2.3 percent. Growth was returned in most sub-sectors, including Transport and Storage, Electricity and Water, Information and Communication, Financial and Insurance and Social Services. Negative growth was recorded in Construction and Wholesale and Retail sub sectors.
Balance of Payments
3.8 Mr. Speaker, there was an improvement in the overall deficit of the balance of payments, which contracted by 7.5 percent to US$107.7 million. This was principally the result of a reduction in the merchandise trade deficit, occasioned by a 17.7 percent decline in imports, which was due to lower oil prices.
3.9 Increased export receipts of gold and “other exports”, by 6.7 percent and 9.4 percent respectively, ensured a small 0.2 percent increase in merchandise export earnings, to US$1.2 billion. As expected, there were significant reductions in export receipts for bauxite (16.4 percent), timber (18.5 percent), sugar (8.1 percent), and rice (11.5 percent). The value of merchandise imports declined by 17.7 percent to US$1.5 billion, on account of reductions in all of the categories: consumption goods, 2.7 percent; intermediate goods, 25.4 percent; and capital goods, 15.1 percent. Net payment for services contracted by 16.9 percent to US$255.8 million. Net current transfers decreased by 9 percent to US$416.5 million, reflecting lower inflows to the private sector in the form of workers’ remittances and other current transfers. These developments allowed the current account deficit to improve to US$114.2 million, from US$385.2 million in 2014.
3.10 The capital account surplus fell by 66 percent, largely the result of lower disbursements to the non-financial public sector. The overall deficit was financed from the gross international reserves of the Bank of Guyana and debt forgiveness. The gross international reserves were equivalent to 3.8 months of import cover at end 2015.
Monetary Developments
3.11 Mr. Speaker, the monetary aggregates of reserve and broad money grew by 9.7 percent and 1.5 percent, respectively. Reserve money expanded by $12.3 billion to $138.2 billion. This performance was due mainly to an improvement in net domestic assets by $23.8 billion. However, net foreign assets fell by 8.3 percent. Broad money (M2) grew at a slower rate of 1.5 percent, compared to 5.2 percent, in 2014. This performance is explained by a 19.4 percent increase in net domestic credit. Net foreign assets declined by 8.3 percent. Narrow money (M1) fell by 0.7 percent, on account of declines in demand deposits and cashiers’ cheques and acceptances. In contrast, currency in circulation grew by 4.6 percent. Quasi money grew by 2.9 percent.
3.12 Net domestic credit of the banking system grew by 19.4 percent to $185 billion. Loans and advances to the private sector grew by 6.2 percent. Credit to all sectors grew, except for the mining, manufacturing, other services and agriculture sectors. Private sector credit represented 64.1 percent of M2, compared to 61.3 percent in 2014. The public sector, which consists of deposits net of loans and advances, treasury bills and debentures, remained a net depositor with the banking system. The public enterprises (net) deposits amounted to $45.3 billion, a 22 percent increase.
3.13 Total liquid assets of the commercial banks expanded by 14.6 percent to $122.8 billion. The banks’ excess liquid assets amounted to $47.8 billion or 63.8 percent above the required level and reflected the banks’ preference for short-term assets, comprising mainly Government of Guyana treasury bills. Treasury bills accounted for 51.9 percent of total liquid assets.
Prices and Income
Inflation
3.14 Mr. Speaker, at the time of the mid-year review, last year, the economy had already recorded deflation, that is a reduction in the general level of prices, of 0.2 per cent. Prices were expected to remain fairly stable to the end of the year, premised on continued low level of prices of fuel and a range of consumer items, as a result of the removal of the Value Added Tax (VAT). Deflation persisted throughout the year and by end December, it had been recorded at 1.8 percent.
Interest Rates
3.15 Mr. Speaker, interest rates remained low, in 2015. The small savings rate was flat at 1.26 percent throughout the year, while the weighted average lending rate fell slightly, from 10.86 percent in December 2014 to 10.63 percent in December 2015. Treasury bill rates edged up over the year, with the discount rate on 91-day Treasury bills rising from 1.67 percent in December 2014 to 1.92 percent in December 2015. With the projection for global interest rates to rise in the next couple of years, upward pressure would be exerted on domestic interest rates.
Exchange Rate
3.16 The Guyana dollar exchange rate remained stable throughout 2015, at G$206.5 per US$1.
Income
3.17 Mr. Speaker, following our accession to office, in May 2015, the Government immediately set about to improve wages of public servants. As a result, the minimum wage was raised to $50,000, an increase of between 17.1 percent and 26.4 percent, depending on whether the employee was receiving $39,540 or $42,703. Other employees received 5 percent on the salaries as at December 2014 plus an additional $5,000 per month. Further, in December 2015 all public servants earning less than $500,000 were paid a one-off, tax-free bonus of $50,000, a departure from the discriminatory practice employed by the previous Administration of only paying members of the Disciplined Services.
Fiscal Position
Non-Financial Public Sector
3.18 Mr. Speaker, the non-financial public sector performed creditably in 2015, recording a deficit of $1.2 billion (0.2 percent of GDP) compared to a deficit of $36.4 billion (5.7 percent of GDP) in 2014. This outturn would have been worthy of commendation, had it occurred under normal circumstances. But this was not the case, in 2015. The factors which contributed to this improved performance included the late presentation of the 2015 budget, the general compression of expenditure in the first eight months of the year and the low rate of implementation of the public investment programme.
Central Government
3.19 Mr. Speaker, buoyed by the rebound in economic growth in the latter half of 2015, increased transfers from statutory and non-statutory agencies and the closure of several dormant government bank accounts, the total revenue collected was $161.7 billion, 11 percent more than in 2014.
3.20 Tax revenue amounted to $142.9 billion, an increase of 5.2 percent, which was driven primarily by increased collections of personal income taxes (11.1 percent), company income taxes (4.7 percent) and property taxes (33.6 percent). Low compliance by self employed individuals continued to be the main factor why this category lags behind other areas of income tax collection.
3.21 Excise tax collections improved to $33.3 billion, an 18.1 percent increase. Similarly, international and trade transactions increased by $170 million, to reach $14 billion. Value Added Tax collections of $35.4 billion, represented a 5.2 percent decline. One reason for this was the increase in the number of zero-rated items introduced in last year’s budget. Notwithstanding the increased revenue, in 2015, the Guyana Revenue Authority remitted an estimated $47.1 billion. While this figure is substantially lower than the $55.6 billion remitted in 2014, strenuous effort will be exerted in 2016 to monitor concessions that are granted.
3.22 Total non-tax revenues doubled in 2015, as the Government began the phased transfer of the excess cash balances of statutory agencies to the Consolidated Fund. A total of $7.9 billion was transferred from several agencies, including the Guyana Geology and Mines Commission (GGMC) and the National Frequency Management Unit (NFMU). In addition, $1 billion was transferred from the Lotto Fund.
3.23 Mr. Speaker, for reasons identified earlier, total expenditure of the Central Government was severely curtailed, in 2015. Non-interest current expenditure amounted to $141.2 billion, compared to $127.5 billion in 2014. Increases in expenditure were recorded in the following categories: personal emoluments, 5.6 percent; other goods and services, 7.7 percent; and transfer payments, 18.3 percent. However, there was a sharp reduction in capital expenditure, from $51 billion, in 2014, to $30.7 billion, in 2015. These developments resulted in the overall deficit of the central government improving to 1.4 percent of GDP, in 2015, compared to 5.5 percent of GDP in 2014.
Public Enterprises
3.24 Mr. Speaker, the combined operations of the public enterprises resulted in a surplus of $8.1 billion, compared to a deficit of $1.5 billion, in 2014.
Debt Management
3.25 Mr. Speaker, our Government continues to prudently manage the country’s public debt, in order to reduce the debt burden. I am happy to report that this has resulted in the total public debt to GDP ratio reducing from 51.9 percent, in 2014, to 48.6 percent, in 2015. By the end of 2015, the total stock of public debt stood at US$1.5 billion, a reduction of 3.6 percent from its 2014 level.
3.26 A key component of public debt is the stock of external debt, which reduced by 6 percent, to US$1.1 billion, at the end of 2015. This was due largely to repayments of the oil debt under the Guyana-Venezuela Rice Trade Arrangement. In 2015, Guyana concluded negotiations for two Debt Compensation Agreements with Venezuela, which reduced the oil debt by a further US$88.7 million. In September 2015, one debt compensation agreement was signed for the amount of US$44.9 million. The total external debt service payments also fell by 41 percent to US$98.4 million, in 2015.
3.27 On the other hand, there was an increase of 4.2 percent in the domestic debt stock, from US$379.8 million, in 2014, to US$395.6 million. This increase was primarily due to higher issuance of Treasury Bills. The actual domestic debt service payment totaled US$8.5 million, an increase by 10.9 percent compared.
Agenda 2016: Stimulating Growth, Restoring Confidence
Introduction
4.1 Mr. Speaker, the policies, programmes, reforms and measures envisaged in this budget are designed to stimulate the economy to achieve higher growth rates. It is an economy which is growing at ever higher rates, with the benefits being more equitably distributed, which will enable us to bring the “good life” closer to reality. We cannot continue to have the see-saw growth that has been witnessed over the past three decades and expect to solve pressing issues such as unemployment and poverty. We have to be innovative in our approach and bold in our measures, if we are to build an economy that stands on a foundation of granite. It is our view that the Agenda for 2016 provides the building blocks for a resilient economy, capable of withstanding global shocks and climate change. The Agenda also establishes a pathway for our people to face the future with renewed hope and confidence.
Macroeconomic Stability
4.2 Mr. Speaker, in my 2015 budget presentation, I noted that the “good life” could only be achieved on the foundation of macroeconomic stability. Last year, deliberate efforts by Government led to continued positive economic growth, stable prices and exchange rate, and a reduced debt-to-GDP ratio, while maintaining a long term debt sustainable position. Further, expansion in private sector credit reflected initial signs of improved private sector confidence in our economy.
4.3 The Ministry of Finance instituted a macro-fiscal framework to aid in the fiscal diagnosis of the economy and projections for the real sector in the medium term. Mr. Speaker, in 2016, the Government will continue to maintain macroeconomic stability, and improve the capacity for analysis that underpins economic policy decisions. Growth projections remain positive and inflation is targeted to be within low single digits. Prudent and targeted expenditure, coupled with more effective revenue collection, and anchored by a debt sustainable position, will underpin fiscal policy. Diversification will continue in all sectors of our economy, as we aim to remove our country’s vulnerability to swings in global commodity prices and climate-related challenges here at home.
National Unity
Culture and the Arts
4.4 Mr. Speaker, the Guyanese culture reflects a rich blend, born of six peoples. Whether Emancipation or Diwali, pepperpot or curry, cookup or chowmein, ginger beer or swank, we all enjoy and celebrate together. Through these lens, Mr. Speaker, there is far more that unites us than divides us. I would like us all to remember this as we consider these national estimates within this Honourable House.
4.5 This year, the Government will focus on reviewing, enhancing and implementing a National Cultural Policy, subsequent to meaningful consultation with cultural heritage and creative industry stakeholders. Whilst the policy implementation period will cover two five year cycles, specific programme initiatives will fall under a biennial 2016-2017 work programme. The policy will be premised on three areas: mainstreaming culture in national development, cultural heritage preservation, and creative industries development.
Social Cohesion
4.6 Mr. Speaker, while past governments have employed the rhetoric of unity, none have successfully made significant efforts in this regard nor dedicated any deliberate aspect of its day-to-day governance towards its realization. Our Government is initiating strategic actions to pursue a social cohesion agenda in Guyana. In its commitment to bridge the gaps created by social, economic and ethnic divides, the Government held the inaugural Social Cohesion Roundtable (SCR), in 2015. The event featured both local and international experts, and was designed to engage, and gather contributions from citizens. Also, it examined inequalities within society, while simultaneously creating national awareness and sensitization among stakeholders on issues of social unity.
4.7 Mr. Speaker, Government will be deepening initiatives designed towards building and sustaining the momentum for long term social programming. Stakeholder meetings and consultations throughout the regions of Guyana will continue, and training and capacity building for social cohesion programming and management will commence. The aim is to ensure that national institutions are empowered to address issues of diversity. These initiatives will also create an enabling environment for citizens to work collaboratively within their communities to improve their socio-economic conditions.
Gender Equality – Equal Rights for All
4.8 Mr. Speaker, promoting gender equality has been established globally as a development strategy for reducing poverty levels among women and men, improving health and living standards and enhancing efficiency of public investments. Our Government is working assiduously to develop a society in which all girls and boys, women and men live together in safety and harmony, with dignity and mutual respect.
4.9 To enable all Guyanese to thrive in an environment in which they achieve their full potential and are equal partners in the decision-making processes, the Government is committed to establishing a national consultative process, to create a national policy on gender and development. This undertaking is expected to strengthen gender responsive structures, processes and mechanisms supporting development in which both women and men participate equally in the development efforts and have access to and benefit from the utilization of the country’s resources. The National Gender Policy will be launched, in 2016.
Hinterland Development & Preservation of Indigenous Culture
4.10 Mr. Speaker, the hinterland, home to our Indigenous peoples, spreads across three-quarters of our nation’s landmass. In His Excellency’s address to the 2015 National Toshaos’ Council meeting, he cautioned about the general perception, hostile attitude and divisive polices meted out to our Indigenous peoples in the past, which undermined, to quote him, “…our sense of solidarity and impoverished a large section of our population alienating the hinterland regions and gradually creating ‘two countries’ instead of cementing our people into one nation.” It is, therefore, imperative that there is integration between the hinterland and the coastland. This thematic bridging of the divide between the inequity of hinterland and coastal development initiatives forms a substantial thrust of our Government’s 2016 budget prescription for corrective measures. Substantial financial provision has been made to promote the preservation of indigenous cultural identity, social integration, economic prosperity, physical infrastructure, green energy, sustainable development and the protection of Indigenous lands.
4.11 Mr. Speaker, in 2016, , the Government will be investing over $4 billion, in support of the Plan of Action for Hinterland Development. In excess of $280 million has been allocated to promote economic prosperity, tourism development and preserving cultural identity. This sum is inclusive of grants for 211 Indigenous communities that will build village economies and fund eco-tourism projects specifically for our nation’s 50th Independence celebration. It also includes support to women’s groups, the construction of community centres and the procurement of musical instruments, sports gear and sewing machines.
4.12 Mr. Speaker, the Ministry of Indigenous Peoples’ Affairs will work with communities to prioritize the outcomes they want to achieve, and identify the key barriers to achieving them. The Ministry will assist communities in designing projects that take a comprehensive approach to addressing their particular challenges. It will help communities develop plans to mitigate risks to development projects, and plans for maintaining valuable community assets. Finally, the Ministry will help communities develop evaluation plans to assess whether their objectives were achieved, and identify lessons learned to improve future project implementation.
4.13 Mr. Speaker, in order to support hinterland education, the Government has made provision for the design of a new dormitory at Liliendaal, to accommodate students with interest in enrolling in institutions of higher learning. There will also be support to the Bina Hill Institute and the procurement of buses for the transportation of school children. Additionally, nearly $1 billion has been budgeted for the Hinterland Employment and Youth Service (HEYS) project. Launched in October 2015, the project will prepare youth for leadership roles in their communities. In 2016, the project will provide training for more than 1,000 hinterland youths in areas such as garment construction, carpentry, joinery and entrepreneurship. It will entail six months of classroom training and six months of practical training. Participants will benefit from a stipend (part of which will be saved on a monthly basis) as well as business mentoring. On completion of the training, participants will have the opportunity to develop viable business plans, which will be awarded grants for start-up. Moreover, education assistance for hinterland students will be fortified with the provision of school uniforms for over 30,000 school children at a cost of over $89 million and over 450 hinterland students will benefit from the Hinterland Scholarship Programme.
4.14 Mr. Speaker, lack of access to markets is often a key barrier to community development. Communities will not benefit from new technologies or training if they cannot sell their products to a market for a profit. Costly transportation makes it difficult for hinterland communities to market their products and sell them at a competitive price. To help narrow the gap in living standards of residents of our coastal and hinterland regions, the Government has allocated over $2 billion for the establishment and improvement of physical infrastructure throughout the hinterland regions, in 2016. Of this amount, the sum of $1.7 billion has been identified for the rehabilitation and surfacing of roads in areas such as Mahdia, Bartica, Ituni, Kurupukari, Tabatinga and Port Kaituma. Additionally, provision is made for the rehabilitation of Bartica stelling. Under the Hinterland Electrification Programme, over 6,000 solar home systems have been installed in communities in Regions 1, 7, 8 and 9. During this year, electricity systems in St. Cuthbert’s Mission, in Region 4; Orealla and Siparuta, in Region 6; and Culvert City, in Region 9, will be extended. The extension of these networks is intended to enhance the capacity of the grid to serve a larger segment of the population residing in these communities.
4.15 Mr. Speaker, it is essential that public services touch every corner of our country. To make this possible, the provision to the National Communication Network has been increased to cater for the establishment of new communication stations in the hinterland regions. The intent is to extend the frequency of national radio and television to our Indigenous brothers and sisters in near and far flung areas. New stations will help to promote our Indigenous languages, culture and way of life while bridging the divide between coast and hinterland.
50th Anniversary of Independence
4.16 Mr. Speaker, His Excellency President David Granger has charged the members of this Honourable House to “open avenues of cooperation and agreement so that we can join hearts and hands for the common good”. As we collectively strengthen ties of unity, this year, we call on all Guyanese to reflect on the journey of the past 50 years, taking into account the people and experiences that have shaped our history and the lessons learnt, while mindful of the opportunities we have missed. This is a time of reflection and celebration, even as we provide inspiration and tools for our young people to dream bigger and reach higher over the next 50 years. The generation that pauses to reflect during our Centenary Celebrations must be able to savour the legacy of the last 50 years. This year is the beginning of the creation that legacy. Mr. Speaker, notwithstanding the allocation for the specific events surrounding our 50th Anniversary, Budget 2016 – indeed, all future budgets – is dedicated to ensuring the path to the good life is secured for generations to come. A sum of $300 million has been budgeted to support activities in celebration of our Golden Jubilee year.
National Infrastructure
Knowledge-Driven Government and Industries
4.17 Mr. Speaker, information and communication technologies (ICTs) have changed the way the world does business. In fact, His Excellency President David Granger adverted to this when he noted, “Data and information and communication technologies, increasingly, will become drivers of economic growth. They will allow us to develop new products and services, improve competitiveness and transform the business, health and education sectors. We will ensure that more teachers, more students and more schools go online over the next decade.” Mr. Speaker, in providing a better life for all Guyanese, the Government is dedicated to investing in ICT infrastructure and related services, to ensure knowledge-driven government and industries.
4.18 Last year, we invested $2.5 billion in the ICT sector. This year, we propose investing, through the Guyana REDD+ Investment Fund (GRIF), about $3.1 billion for the ICT Access and E-Services for Hinterland, Poor and Remote Communities Project. The project will provide infrastructure, equipment, hardware and software, so as to enable access to quality ICT, training and e-services, including distance learning, with particular focus on our vulnerable groups. It will ensure the development of a digital knowledge-based society, enhance national efficiency and competitiveness, and promote sustainable growth and development.
4.19 This year, the Government has allocated an initial $25 million for the establishment of a Centre of Excellence in Information Technology (CEIT). The Centre forms the basis for the requisite education of ICT professionals and knowledge workers in the public sector and partner agencies. Additionally, the e-Government initiative will improve the efficiency and transparency of governance in Guyana, by using ICT to facilitate better communication and data sharing among agencies, and to achieve seamless service delivery to all stakeholders for any service across government agencies. In 2016, provision has been made for the upgrade of the software used by government agencies; modernizing and digitizing the operations of the companies, land and civil registries. Also, the Integrated Crime Information System (ICIS) will be expanded to divisions and subdivisions of the Guyana Police Force. These are all necessary foundation elements in the drive to deliver on the commitment of a single window to “One Government” by 2020.
4.20 Mr. Speaker, the Government will conclude negotiations with ATN and GT&T, with a view of bringing to an end GT&T’s claim to a monopoly over international voice and data transmissions and domestic wireline service. Draft legislation (Bills, Regulations, and Model Licences) have already been developed that will inform and govern a liberalized telecommunications regime. The Government is committed to having these Bills tabled and passed this year.
4.21 Mr. Speaker, as part of creating the enabling environment for full electronic commerce and electronic government, we will table legislation governing electronic transactions and digital signatures, utilizing comprehensive model laws already developed for our region. In keeping with our philosophy of accountable government, and with due regard to the risks associated with automation, we will also table privacy and data protection legislation that will bind both government and private sector operators, who hold sensitive personal data, to the same standards of care.
Business and Investment
4.22 Mr. Speaker, to make Guyana more business-friendly, the Government will support private businesses by cutting bureaucratic red tape and making official procedures easier to navigate. We will seek financing to implement the Single Window Automated Processing System (SWAPS). When established, the SWAPS will link licensing bodies to the Custom and Trade Administration to facilitate the sharing of information and to enhance the efficiency with which trade transactions are carried out. These improved procedures will not only reduce the amount of time that private businesses spend mired in paperwork, but also increase government accountability, reduce corruption, and make data and information more accessible. The Ministry of Business is also establishing a Help Desk for businesses, which will act as a single point of contact for information and advice for businesses, traders, and the Government.
4.23 Mr. Speaker, while consumers and large businesses can access loans, small businesses commonly face a financing gap. Our Government, in 2016, intends to further reduce bottlenecks in accessing finance through the implementation of the Micro and Small Enterprise Development (MSED) initiative. To build both generic and sector specific skills, training opportunities for entrepreneurs will be expanded to cover all ten administrative regions, with special emphasis on business operators in the mining and forestry sectors. This year, 400 entrepreneurs will be targeted to benefit from training.
4.24 Mr. Speaker, as a small economy, we must work to enhance our brand and visibility as an investment destination. GO-Invest is working to improve agency websites and develop partnerships with other investment promotion agencies worldwide. In 2016, GO-Invest will increase its engagements with the diaspora to re-invest at home. Publicizing Guyana’s unique advantages will attract new and diverse industries. In 2015, GO-Invest facilitated 148 projects across 7 economic sectors, namely, agriculture, light manufacturing, tourism, services, forestry, information and communication technology and energy. The potential value of investment facilitated amounted to $89.3 billion, while the total potential jobs numbered about 8,400. GO-Invest also facilitated 44 Foreign Direct Investments. In 2016, the agency hopes to facilitate 160 new investments worth a total of $11 billion.
4.25 Mr. Speaker, another challenge that investors in Guyana face is finding adequate facilities with full utility services. Our Government is addressing this problem by upgrading and building industrial estates at Belvedere and Lethem will facilitate business ventures in such areas as light manufacturing, woodworking and fabrication, creating over 3,000 new jobs.
Managing the Extractive Sector
4.26 Mr. Speaker, the extractive sector plays a crucial role in underpinning our economy. Our mineral and non-mineral commodities provide untapped opportunities that when fully realized, will undoubtedly provide revenue for both current and future generations. Although our extractive industries were hindered by low global prices in 2015, there were many positive developments. For instance, the gold industry achieved unprecedented levels of production, spurred by the coming on stream of two large gold operations. Permanent and temporary employment will continue to be generated as these two gold companies continue their expansion within the mining industry. Such bold investments are vital for economic growth and development and will be encouraged by this administration. Notwithstanding, the small and medium scaled operators in the sector have struggled somewhat, due to low commodity prices. In addition, many small-scale miners, who received concessions in 2015, were unable to take up these opportunities due to lack of tax compliance. This is indeed a cause for concern, as every Guyanese must pay their fair share of taxes. We intend to work closely with the gold mining sector to ensure sensitization on this issue. Despite these challenges, the valiant efforts of our local miners must be applauded, for it is the gold industry that will continue to drive growth in the economy over the medium term. The Government will continue to work with the extractive sectors to support increased production that is environmentally and socially sustainable.
4.27 Mr. Speaker, petroleum is poised to become an important industry for Guyana. Following earlier discoveries, Exxon Mobil will undertake further exploratory drilling of the Liza Well. Additionally, a Petroleum Prospecting Licence and Production Sharing Agreement have been signed, recently, with Tullow Guyana B.V. and Eco (Atlantic) Guyana Inc. for a small concession called the Orinduik Block, just offshore of Guyana and close to Exxon Mobil’s discovery. Despite low oil prices, which are expected to continue through next year, all licensed operators remain committed and new venture interests are considered on a regular basis. These investments will bring fruitful rewards to the Guyanese, people through increased revenues, employment and income, which will propel Guyana towards achieving national as well as sustainable development goals. The preparedness of Guyanese to respond to the needs of this growing sector is critical, and as such, much emphasis will be placed on capacity building during the year.
4.28 The bauxite sector underperformed in 2015, largely due to low commodity prices. During 2016, the sector will continue to face challenges, as commodity prices are expected to remain low. Work is presently underway to stimulate greater foreign and local investment in the forestry sector, especially in value added activities. Sustainable management of the forestry resources will continue through community training and capacity building, which will target over 400 persons. The Government, through the Ministry of Natural Resources, will continue to work along with the international community to develop a comprehensive, equitable and sustainable international regime of compensation for the provision of climate amelioration services provided by Guyana.
4.29 Mr. Speaker, it is important that the extractive industries that fuel our growth today also provide for the future of our children tomorrow. In an effort to ensure that the benefits accrued from this sector reach every Guyanese for generations to come, the Government will finalize the framework for a Sovereign Wealth Fund in 2016.
Production Transformation and Agricultural Diversification
4.30 Mr. Speaker, Guyana’s vision for agriculture by 2020 is to promote the sector as a wealth generator and entrepreneurial enterprise, producing food and non-food commodities to meet the needs of the country and our regional and international partners. Issues of national and regional food security mandate that we must diversify into new crops and open up new lands for agriculture in areas not prone to flooding. The promotion of non-traditional agriculture, aquaculture, and food processing, alongside the commodities that have traditionally dominated our agricultural landscape, must bear fruit in coming years. The Government, therefore, remains committed to the promotion of agricultural diversification initiatives, while also restoring the competitiveness of the traditional agricultural sectors.
4.31 The Ministry of Agriculture has adopted a strategy which focuses on five F’s: food security, fiber and nutritious food, fuel production, fashion and health products, and furniture and craft. Mr. Speaker, in this budget, we are putting forward a set of practical action plans, linked to measurable targets, in all of these five areas. In total, $20.3 billion has been allocated to the agricultural sector to create an economic environment in which farming and agro-processing operations can grow the economy and create employment. To this end, in excess of $598 million is allocated to enhance diversified agriculture in the hinterland, riverain communities and the intermediate and Rupununi savannahs.
4.32 Mr. Speaker, diversification will make our agricultural sector more resilient to economic shocks. The Government proposes to establish several research, training and extension facilities in such locations as Ebini, Hosororo, Manari and Bina Hill, to promote sustainable food production systems that can help maintain the ecosystem and strengthen the capacity for adaptation to climate change, drought, flooding and other disasters.
4.33 Mr. Speaker, as the agricultural sector moves forward, our traditional industries—sugar and rice—must not be forgotten. Although GuySuCo surpassed its 2015 production targets, the industry is threatened by weakening sugar prices, aged machinery and high production costs. In 2016, the Government will inject $9 billion to assist the industry in its recovery and modernization programme. Similarly, though surpassing its target last year, the rice industry remains challenged in terms of cost of production and competitiveness. The Government will continue to support the industry to access new trade partners, following the collapse of the lucrative Venezuelan market.
4.34 Mr. Speaker, livestock production is another important industry within the agricultural sector. The Government intends to re-energize the cattle industry through the development of a milk pasteurization plant. Additionally, plans are underway for the development of 4,000 acres of state lands, situated in Region 9, for the purpose of constructing an agriculture station. This station will serve as a pilot for the sustainable harvesting of surface water for agriculture in this region. The land will be utilized for the rearing of cattle and small ruminants; aquaculture; and planting of rice and vegetables. The livestock sub-sector will be further fortified with increased focus on animal health to address known and emerging diseases.
4.35 Mr. Speaker, Guyana is blessed not only with lush growing conditions, but also with bountiful rivers and the sea. Increased focus in the fisheries sector will see the promotion of the sustainability of the marine fishery resources through continued efforts to attain Marine Stewardship Certification for the sea bob sub-sector. This will be complemented with the full implementation of the Vessel Monitoring System on all trawlers and the enforcement of no-trawl zones and the harvest control rule. Further, the Government will support innovation in sustainable aquaculture and inland fisheries sector with research and promotion of new marketable species.
4.36 Mr. Speaker, our Golden Jubilee Year marks an opportunity for us to welcome visitors, new and old. Later this year, a four-day Jubilee Festival will be held at the national stadium, complemented by local events across the country, showcasing Guyanese musical, cultural and craft traditions. Marketing efforts will focus on campaigns such as the ‘Home Coming Guyana’ initiative, which will be targeted to the Guyanese Diaspora. Other events planned for 2016 include the Coconut Festival, an agri-tourism event promoting coconut products and the development of their value chain.
4.37 The Government has engaged the Caribbean Tourism Organization to guide the production of tourism satellite accounting to generate meaningful data about the industry, including its contribution to GDP. Going forward, the Government will develop an operational plan to realize the intent of the recently revised National Tourism Policy, which will lay a foundation for tourism development and ensure collaboration between Government and all stakeholders. It will focus on areas such as bird watching, eco-tourism, adventure tourism, wildlife watching, community based tourism, sports fishing, sports tourism, yachting and cruise visits, entertainment and events and heritage/cultural tourism. This policy and operational plan will emphasize the role of tourism in providing jobs and economic growth throughout Guyana, but especially in the hinterlands.
Addressing the Infrastructure Deficit
4.38 Mr. Speaker, the absence of well-developed infrastructure has impeded the country’s development in several ways. Inadequate transport linkages across Guyana have increased production costs, making many of our products uncompetitive in world markets. Limited road, water and air access across Guyana has obstructed our ability to fully exploit the abundant opportunities in our tourism and natural resources sectors. Skewed transport road network development systems have thwarted the creation of employment opportunities in areas outside of the coastland. Sub-optimal infrastructure in housing settlements has prevented the development of sustainable communities. We have recognized these impediments. This is why this budget has placed a high priority on infrastructural development.
4.39 Mr. Speaker, our existing road network is incapable of meeting the rapid growth in vehicular traffic over the last decade. The consequences of this mismatch are many, including frustration of all road users; lost time and productivity due to delays; and frequent accidents, many of them deadly. The recently-expanded East Bank Demerara Road is already incapable of accommodating the flow of traffic into the country’s capital, while the East Coast and West Coast Roads can be harrowing during rush hours.
4.40 To address this lacuna, the Government has concluded a sustainable urban transport plan, which includes, among other things, a traffic model for Georgetown, a parking management plan, regularization of mini-bus operations, provision of public transport facilities, and the use of public transport and non-motorised modes in the most congested areas. In addition, we have budgeted $14.4 billion to continue the upgrade, expansion and rehabilitation of our network of roads and bridges. The Government is finalizing negotiations with the Government of China for the construction of the East Coast Highway, from Better Hope to Belfield. In collaboration with the IDB, the Government will, this year, conduct studies and designs for an improved East Coast Railway Embankment Road, entailing the construction of bridges between Sheriff Street and Mahaica; the upgrade of the current embankment road, from Sheriff Street to Enmore; and the extension of the embankment road, from Enmore to Mahaica. Additionally, we will be investing over $5.0 billion in the reconstruction of Sheriff Street that will facilitate improved traffic safety features, including pedestrian overhead crossings at strategic locations.
4.41 Shortly, a US$50 million loan will be signed with the Government of India to construct a new road link between Ogle on the East Coast of Demerara and Diamond on the East Bank of Demerara. The proposed new road will intersect several communities, including Sophia, South and North Ruimveldt, Eccles and Providence, creating an alternative access route to these densely populated areas, expanding business opportunities and opening new lands for housing development. Overtime, it is the vision of the Government to extend this East Bank-East Coast road link, to connect the Ogle International Airport and the Cheddi Jagan International Airport. We will invest $2.3 billion to upgrade the West Coast Demerara Road, from Parika to Vreed-en-Hoop. The works include widening the corridor and improving road safety features.
4.42 Mr. Speaker, connectivity between West Demerara and Essequibo Coast and Islands is severely challenged by the current aged floating bridge across the Demerara River. The daily traffic bottlenecks to access and exit the city create untold hardships for commuters and business alike. We must construct a fixed high-level bridge to facilitate easy commute and allow for improved river navigation. We are committed to this project and, in this regard, have made provision, in this budget, for the conduct of the feasibility study. This is the first step to realizing a public-private-partnership for construction of the bridge.
4.43 Addressing the deplorable and underdeveloped infrastructural facilities in the hinterland region is paramount on the Government’s infrastructural development agenda. The Government will pursue several initiatives, in an effort to expand the integration of road networks into our intermediate savannahs, thereby helping to bridge the divide between our vast rural and hinterland communities and the coastland. A total of $6.72 billion has been allocated for the improvement of hinterland, rural and urban community roads in Bartica, Mahdia, Ituni/Kwakwani, Puruni/Itaballi, Mabaruma and Port Kaituma/Baramita and the Sophia ring road, among others. In collaboration with the IDB, we will commence activities to facilitate the complete rehabilitation of the 47 year old Soesdyke/Linden Highway. In the meanwhile, critical works will be undertaken to preserve its upkeep. Concurrently, maintenance works will be undertaken on the Linden/Kwakwani corridor. Over the longer term, we aim to fully pave this road so as to open access to communities in Ituni, Aroraima, Kwakwani, Ebini, Kimbia and other remote areas along the Berbice River. A feasibility study for the reconstruction of the existing bridge which links the communities of Wismar and MacKenzie will also be carried out.
4.44 An alternative link to Bartica and other hinterland communities would be created when on-going negotiations with our development partners to construct the Parika/Goshen road are finalized. Additional resources have been made available to expand efforts currently being undertaken to improve farm-to-market access roads at Parika, Ruby and Laluni. We are in discussions with the same donor for new farm access interventions in Triumph, Buxton and Ithaca, in order to stimulate micro-farms and small scale agro- processing initiatives.
4.45 Mr. Speaker, the full potential of residents living on the banks of our numerous rivers and waterways has been inhibited by the poor and inadequate river transport network. To vastly improve river connections between the coast and riverain areas and remote regions, the ageing fleet of vessels must be replaced. In this regard, the Government expects to conclude arrangements, soon, with the Government of India, for financing to procure new river transport vessels. In addition, private financing is being explored for the purchase of at least two, semi-new vessels. To complement spending on the new fleet of ferries, emphasis will be placed on navigational aids and improving stellings and wharves. To this end, the Government has started preparations to access the UK–Caribbean Infrastructure Fund (CIF), to upgrade and reconstruct several facilities in Georgetown, Parika, Port Kaituma, Kumaka and Bartica, among other areas.
4.46 Mr. Speaker, on a related and very important matter, navigation of Port Georgetown is severely hampered because of the siltation of the channel and the presence of several wreckages. This has led to restrictions in container traffic and increased cost of shipping. Similarly, our main rivers and creeks are clogged and, oft times, are inaccessible to our ferries and water taxis. To avert a potential crisis, the Government will aim to secure funding, through the UK-CIF, to purchase a dredge. It is expected that the dredge will be managed and operated in collaboration with Maritime Administration Department (MARAD) and the Shipping Association of Guyana (SAG). In 2016, an amount of $1.3 billion is budgeted for works to commence on the rehabilitation of the Bartica stelling and the goods wharf at Kingston; docking of dredges and ferry vessels; dredging of the Demerara and Essequibo Rivers; and installation and maintenance of navigational aids.
4.47 Mr. Speaker, works will begin on a phased waterfront development programme over the next 5 years. This investment, estimated to cost over $1.6 billion, will see the development of state-of-the-art waterfront facilities, which will be on par with those in the Caribbean. This development will target Kitty, Kingston, Stabroek, Vreed-en-Hoop, Supenaam and Skeldon. The proposed project will include boardwalks; recreational areas; modernized ramps for ferries and water taxis; and a dockyard for yachts. The initiative will serve as a recreational and tourist attraction, and will create opportunities for small business development.
4.48 Mr. Speaker, the growth of the air services industry, with injections of new and improved technologies and the ever-expanding list of travel destinations being offered to our people, has induced Government to undertake a massive upgrade of our airports and aerodromes. An allocation of $5.2 billion has been made for the continued development of the air services industry, including the expansion of the Cheddi Jagan International Airport. The improved facilities at the Ogle International Airport has led to increased services to multiple local and overseas destinations, inclusive of commercial flights at nights. The extension and upgrade of the Ogle runway has transformed the airport into a Regional hub, linking Georgetown to Suriname, Barbados and Trinidad. We are currently pursuing financing, in an effort to upgrade many of our hinterland airstrips at Eteringbang, Annai, Paramakatoi, Kurupung, Kato, Kopinang, Monkey Mountain and other locations. The Government is earmarking over $2 billion, in the medium term, for its Airstrips and Aerodromes Improvement Programme.
4.49 Mr. Speaker, similar to the experiences of Small Island Developing States (SIDs), Guyana is most vulnerable to climate change impacts. We continue to be threatened by rising sea levels and an aged and weakened sea defence system. With the heart of Guyana, Georgetown, being in the sight of the mighty Atlantic Ocean, significant investments must be made to protect people, property, livelihoods and infrastructure. The Government has developed long term sea and river interventions with several donors. We have negotiated sea and river defence programmes amounting to over $6 billion to erect and strengthen our bulwarks as well as to fashion a comprehensive instrument for coexisting harmoniously with our ocean and rivers. To support these efforts, the Mangrove Restoration Project and the Shorezone Management Plan will focus on developing natural mangrove regeneration initiatives that facilitate eco-friendly solutions while preserving the livelihood of people living in close proximity to the sea.
Energy
4.50 Mr. Speaker, the current fluctuation and volatility of oil prices has convinced the Government of the correctness of its policy of “greening” the economy through adopting clean energy solutions. The Government is currently collaborating with the IDB to define an energy matrix that will determine the best blend of energy options to ultimately boost the resilience of the energy sector. A draft of this matrix has been completed and it is expected to be finalized this year. One option that has been presented in the matrix is the Amaila Falls Hydro Project, which was determined by the Coalition Government to be not viable in its current configuration. The Government of Guyana and the Kingdom of Norway are currently engaged in discussions for a final review and determination of the future of this Project.
4.51 Mr. Speaker, the Government’s thrust towards creating sustainable cities and communities that are powered by green energy solutions is being act