Identifier
Created
Classification
Origin
06GEORGETOWN329
2006-04-07 21:01:00
UNCLASSIFIED
Embassy Georgetown
Cable title:  

Guyana Economic/Commercial Round-up: March 2006

Tags:  ECON ETRD EAIR EAGR PREL GY 
pdf how-to read a cable
VZCZCXRO6699
RR RUEHGR
DE RUEHGE #0329/01 0972101
ZNR UUUUU ZZH
R 072101Z APR 06
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC 3357
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0277
RUEHUB/USINT HAVANA
RUEHDG/AMEMBASSY SANTO DOMINGO 1018
UNCLAS SECTION 01 OF 02 GEORGETOWN 000329 

SIPDIS

SANTO DOMINGO FOR FCS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EAIR EAGR PREL GY
SUBJECT: Guyana Economic/Commercial Round-up: March 2006

REF (A) GEORGETOWN 005, (B) GEORGETOWN 045, (C) 05
GEORGETOWN 1055, (D) GEORGETOWN 130, (E) GEORGETOWN 242, (F)
BRIDGETOWN 530 (G) PARAMARIBO 199

Contents of March 2006 Guyana Economic Highlights:
UNCLAS SECTION 01 OF 02 GEORGETOWN 000329

SIPDIS

SANTO DOMINGO FOR FCS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EAIR EAGR PREL GY
SUBJECT: Guyana Economic/Commercial Round-up: March 2006

REF (A) GEORGETOWN 005, (B) GEORGETOWN 045, (C) 05
GEORGETOWN 1055, (D) GEORGETOWN 130, (E) GEORGETOWN 242, (F)
BRIDGETOWN 530 (G) PARAMARIBO 199

Contents of March 2006 Guyana Economic Highlights:

1. Trade: Parliament Passes CSME-Related Bills

2. Agriculture: Bumper Rice Crop Expected, Slight Price
Increase

3. Public Finance: Flat Income Tax at 33 1/3%

4. Investment: Two Airline Investors Considering Guyana

5. Bilateral Economic Activity: Cuban Lightbulbs

--------------
Parliament Passes CSME-related Bills
--------------


1. The National Assembly approved two pieces of legislation
pertaining to Guyana's compatibility with the emerging
Caribbean Single Market and Economy (CSME). The Caribbean
Community (CARICOM) Bill will give effect to the revised
Treaty of Chaguaramas establishing CARICOM, including the
CSME, while the Caribbean Community (CARICOM) Movement of
Factors Bill recognizes the provisions of the Treaty related
to the exercise by nationals of CARICOM of the right of
establishment, the right to provide services to move capital
into, within and out of Guyana to other member states of
CARICOM. The laws apply retroactively from January 1, 2006,
when Guyana became one of 6 initial members of the CSME (Ref
A).

--------------
Rice Harvest Begins in Wake of January Floods
--------------


2. Rice harvesting was ongoing countrywide in early March,
with Region Two (Pomeroon/Supenaam) farmers anticipating a
bumper spring crop. Farmers in Region Five
(Mahaica/Berbice),experienced losses in excess of 19,000
acres due to flooding early in the year (Ref B). Harvesting
in this Region was concentrated mainly in the coastal areas
since the 19,000 acres lost were cultivated in riverain
parts and on other plots which depended on the Mahaica,
Mahaicony and Abary rivers for drainage. Farmers whose
plots were destroyed are preparing to plant for the autumn
crop with the hope of getting assistance with fuel, seed
paddy and fertilizer from the Rice Producers Association

(RPA) or the government. The price for paddy delivered to
the local mills currently ranges from G$1,700 (US$8.45) to
GY$2,200 (US$10.95) per 140-lb. bag. The General Secretary
of the RPA noted that the prices for the grain increased
from GY$1,600 (US$7.96) per bag after the last harvest,
partly because of the floods but primarily as a result of a
rise on the world market where semi-milled rice is US$260
per ton, up from US$200 per ton.

--------------
Flat Income Tax at 33 1/3%
--------------


3. The National Assembly approved the Income Tax Amendment
Bill March 2 after the ruling People's Progressive
Party/Civic (PPP/C) rejected proposed amendments by the main
opposition People's National Congress Reform (PNCR). The
election-year bill raises the income tax threshold to
$25,000 (US$124) per month or G$300,000 (US$1492) per annum
from its previous level of $20,000 (US$100) per month or
$240,000 (US$1194) per annum. In addition, the amendment
removes a graduated tax bracket system in favor of an across
the board 33 and 1/3% income tax rate, previously the
highest rate. The Minister of Finance, Saisnarine Kowlessar,
informed the National Assembly that the new income tax
threshold will relieve some 20,000 persons from paying taxes
and leave about G$800 million (US$4 million) per year more
in the hands of taxpayers. Kowlessar also anticipates a
higher level of tax compliance and that the simplification
of the tax regime will free the Guyana Revenue Authority
(GRA) to focus on other areas of revenue collection.
However, the PNCR, although agreeing in principle with the
increased threshold, pressed for a larger increase in the
threshold and argued that the across-the-board would
effectively increase taxes for some. EmbOff calculations
show this is not true.

--------------
New Interest in Airline Sector
--------------


4. The Guyana Civil Aviation Authority (GCAA) is processing

GEORGETOWN 00000329 002 OF 002


applications for two groups of investors who have indicated
interest in establishing airline operations in Guyana. A
new operation could start in June. Director General of the
GCAA, Chabeelanan Ramphul, said these groups have to satisfy
a number of conditions, including adequate financing and
cash flow projections for the next three years, before
approvals are granted. The GOG is proceeding cautiously in
vetting such investments since the collapse of Universal
Airlines in August 2005 (Ref C) and the collapse of Guyana
2000 and Guyana Airlines before that. North American
Airlines, a U.S.-flag scheduled charter carrier, is the only
service offering non-stop flights to Guyana from the U.S.,
and a recent transport sector study called for a proactive
approach in persuading airlines to operate in and out of
Guyana so as to develop more regional air transport routes.
In addition to North American Airlines, British West Indian
Airlines (BWIA),LIAT, Caribbean Express and Meta (of
Brazil) currently offer services to Guyana.

--------------
Guyana-Cuba Energy Initiative
--------------


5. Prime Minister Sam Hinds launched the "Guyana-Cuba Energy
Saving Initiative", a program which entails replacing
incandescent light bulbs with energy saving lamps at no
charge to consumers. This program is one of several Cuban
government initiatives initiated following a visit by
President Bharrat Jagdeo to Cuba during February 2006 (Ref
D, E) and mirrors Cuban efforts elsewhere in Suriname and
the Eastern Caribbean (Ref F, G). The Government of Cuba has
offered to provide the GOG with almost 600,000 light bulbs
for the program. According to a GOG release, Cuban
technicians will visit homes to replace bulbs. The release
stated that conversion is expected to reduce electricity
consumed by 80 percent. An estimated 800,000 bulbs would be
needed to cover the conversion exercise in areas being
served with electricity across the country. Hinds noted that
the project was launched in Linden because of the high
electricity consumption in that community. The Guyana
Chronicle Newspaper reported that "the bulbs are Chinese
made, with the Philips brand name, and were obtained through
an agreement between Cuba and China". COMMENT: The answer
to the question posed in Ref F is three, according to
photographs in April 6 newspapers depicting a team of Cuban
technicians installing a fluorescent light bulb at the
President's official residence. END COMMENT.

BULLEN