Identifier
Created
Classification
Origin
07GEORGETOWN175
2007-02-14 20:26:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Georgetown
Cable title:  

GUYANA'S 2007 BUDGET: THE VIEW THROUGH ROSE-TINTED

Tags:  PGOV ECON EAID GY 
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R 142026Z FEB 07
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TO RUEHC/SECSTATE WASHDC 4787
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC
UNCLAS GEORGETOWN 000175 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON EAID GY
SUBJECT: GUYANA'S 2007 BUDGET: THE VIEW THROUGH ROSE-TINTED
LENSES

UNCLAS GEORGETOWN 000175

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON EAID GY
SUBJECT: GUYANA'S 2007 BUDGET: THE VIEW THROUGH ROSE-TINTED
LENSES


1. (SBU) Summary: Minister of Finance Ashni Singh
presented the GoG's 2007 budget to parliament on February 2
under the banner of "Building a Modern and Prosperous
Guyana." He said spending would hit US$500 million, or about
2.9 less than last year. At the same time, he forecast GDP
growth at 4.9 percent, led by sugar, rice, mining and
expected revenues from hosting several international events.
The package included beefed-up spending in education, health,
security and infrastructure. The assumptions underlying
Singh's relative optimism have not been tested and may not be
entirely valid. End Summary.


2. (U) Finance Minister Ashni Singh unveiled the GoG's 2007
spending plan on February 2 to a standing room only
parliament. Calling it a blueprint for "Building a Modern
and Prosperous Guyana," Singh said the GoG will spend US$500
million (GY$ 100 billion),or about 2.9 percent less than
last year. Reduced capital transfers to the parastatal sugar
company GUYSUCO explain the difference. At the same time,
Singh signaled that the GDP likely will grow 4.9 percent in
2007, led by a 9.8 increase in sugar production, a 4.6
percent increase in rice output, and a 5 percent climb in
forestry products. He added that the moribund mining
industry--bauxite, gold and diamonds--will regain strength
and grow by a collective 3.6 percent. Finally, Singh
predicted an inflation rate of 5.2 percent.


3. (U) Singh also projected significant revenues associated
with the Rio Summit, the Cricket World Cup, and the
Commonwealth Finance Ministers Conference, all slated for
Guyana in 2007. New hotels, roads and a stadium pushed
construction productivity up by about 5 percent, and the GoG
is counting on Georgetown's new shine and a just passed
casino gambling bill to attract more tourists.


4. (U) The budget also anticipates revenues of about
US$324.5 million (GY$64.9 billion),a spike of 4 percent over
last year. Due to debt relief, the capital account is likely
to see an inflow of US$235 million and a hoped-for increase
in foreign direct investment, principally in mining, forestry
and telecommunications. Singh said customs and trade taxes
are slated to earn US$29 million and earnings from the VAT
and excise taxes should reach US$124 million. Guyana expects
to see a US$41 million surplus in balance of payments.


5. (U) The spending plan invests heavily in education,
health and public assistance programs, including US$78
million for developing a new primary and secondary school
curriculum, teacher training, and school construction. The
health sector will receive US$50 million, including US$1.67
million for HIV/AIDS programs. The GoG increased the
personal income tax allowance from US$1,500 to US$1,700 per
year, which will relieve approximately 16,000 from paying the
tax. The police and defense budget, including programs to
fight narcotics, arms smuggling and trafficking in persons,
is funded at US$46.5 million, a modest increase. Crime in
Guyana is one of the biggest obstacles to attracting private
investment.


6. (SBU) Comment: Singh left parliamentarians with a sunny
forecast, and he probably overstated the case. So far,
ticket sales for Cricket World Cup are sluggish and neither
the Rio Summit nor the Commonwealth Finance Ministers
Conference are likely to bring in as many participants as the
GoG would like. At the same time, inflation is ooutpacing
growth, casino gambling will attract only a local crowd, and
traditional agriculture is struggling, particularly rice and
sugar. Darkening those storm clouds, Singh and his budget
failed to offer any incentives to foreign investment or to
collapse well-known barriers to doing business with Guyana.
The 2007 budget is more likely to keep Guyana limping along
in its present state than to maneuver it toward a modern and
prosperous future. End Comment.


Robinson