on the money
Guyanese Finance Minister Promotes Economic Diversification
solated for years because of economic mismanagement, Guyana is now firmly back in the good graces of the world’s international financial institutions — and is working diligently to diversify its economy away from its traditional dependence on sugar, rice and bauxite exports. That’s the verdict from Finance Minister Ashni Singh, who’s held that position since 2006 and is now in his second term. “Our relationship with the IMF has strengthened significantly over the years,” Singh told us in an interview at his Georgetown office. “Since the return of democracy in 1992, we’ve spent a number of years in successive IMF structural reform programs. And while we’re not currently in a program now, we in fact have maintained very close engagement, characterized by a country that manages its economy responsibly.” Singh, who holds a doctorate in accounting and finance from Britain’s University of Lancaster, concurrently represents Guyana on the Boards of Governors of the International Monetary Fund, the World Bank Group, the Inter-American Development Bank and the Caribbean Development Bank. Two decades ago, he said, the typical IMF report on Guyana complained of macroeconomic chaos and extremely heavy indebtedness. Back then, Guyana’s debt-to-GDP ratio was 500 percent. Today, the nation’s debt-to-GDP ratio has been slashed to 60 to 70 percent. Bank of Guyana “Prior to 1992, Guyana had in Georgetown essentially stopped servicing its debt, to the point that most IFIs [international financial institutions] stopped doing business with Guyana. So our first priority was restoring Guyana’s creditworthiness. That involved putting in place a responsible credit framework, implementing that framework, and investing in infrastructure.” These days, he explained, commodity exports have benefitted from strong prices, helping to lift the Guyanese economy to levels not seen in decades. “Our debt is sustainable and our real economic growth is steady at 4.5 percent — and it’s been uninterrupted since 2006. This is not a trivial
achievement. Most small Caribbean countries are struggling to grow at all.” As a result of steady growth, the government has been better able to provide for its citizens. The recently released 2013 budget, totaling $208.8 billion, is the largest ever presented in Guyana. Among its investments: strengthening democracy and state institutions, expanding infrastructure, improving social services, and diversifying the economy. “What you see now in Guyana is the result of our ongoing efforts to diversify the economy,” said Singh, who released the budget on March 25.
“Whereas 15 or 20 years ago, the economy was primarily sugar, rice and bauxite, today it’s much more diversified, with minerals playing a significant part. The gold industry has been doing very well,
Finance Minister Ashni Singh and European Union Ambassador to Guyana Robert Kopecky sign two multibillion-dollar financing agreements that were formalized on May 25, 2012.
driven by strong external prices. Gold mining brings in government revenues and creates thousands of jobs. Minerals tend to attract a lot of attention, but other sectors are showing tremendous dynamism too. Over the last eight years, the ICT [information and communications technology] sector has created about 3,000 jobs in call centers and is on the verge of a major expansion.” Singh noted that Guyana is an active member of both the Inter-American Development Bank, based in Washington, D.C., and the Caribbean Development Bank, based in Barbados. The IDB is Guyana’s largest lender — having extended hundreds of millions of dollars for roads, bridges, schools, hospitals and other basic infrastructure, while the CDB has a much smaller portfolio “but has the advantage of being a small, regional bank that is very familiar with our region.” Singh concluded: “Investor confidence in the local economy has increased. We welcome investors from anywhere in the world, as long as they comply with our laws.”
Our debt is sustainable and our real economic growth is steady at 4.5 percent — and it’s been uninterrupted since 2006. This is not a trivial achievement. Most small Caribbean countries are struggling to grow at all. — Ashni Singh, minister of finance for Guyana
Photo: courtesy of Ministry of Finance
April • May 2013