Economy of Guyana
With a per capita gross domestic product of only $4,700 in 2006, Guyana is one of the poorest countries in the Western Hemisphere. This is evident from the contrast between poor slum areas and elite residential areas with imperious mansions, often built within a few miles of one another. The economy made dramatic progress after President Hoyte's 1989 economic recovery program (ERP). As a result of the ERP, Guyana's GDP increased six percent in 1991 following 15 years of decline. Growth was consistently above six percent until 1995, when it dipped to 5.1 percent. The government reported that the economy grew at a rate of 7.9 percent in 1996, 6.2 percent in 1997, and fell 1.3 percent in 1998. The 1999 growth rate was three percent. The unofficial growth rate in 2005 was 0.5 percent. In 2006, it was 3.2%.
Developed in conjunction with the World Bank and the International Monetary Fund (IMF), the ERP significantly reduced the government's role in the economy, encouraged foreign investment, enabled the government to clear all its arrears on loan repayments to foreign governments and the multilateral banks, and brought about the sale of 15 of the 41 government-owned (parastatal) businesses. The telephone company and assets in the timber, rice, and fishing industries also were privatised. International corporations were hired to manage the huge state sugar company, GuySuCo, and the largest state bauxite mine. An American company was allowed to open a bauxite mine, and two Canadian companies were permitted to develop the largest open-pit gold mine in South America. However, efforts to privatise the two state-owned bauxite mining companies, Berbice Mining Company and Linden Mining Company have so far been unsuccessful.
Most price controls were removed, the laws affecting mining and oil exploration were improved, and an investment policy receptive to foreign investment was announced. Tax reforms designed to promote exports and agricultural production in the private sector were enacted.
Agriculture and mining are Guyana's most important economic activities, with sugar, bauxite, rice, and gold accounting for 70-75 percent of export earnings. However, the rice sector experienced a decline in 2000, with export earnings down 27 percent through the third quarter 2000. Ocean shrimp exports, which were heavily impacted by a one-month import ban to the United States in 1999, accounted for only 3.5 percent of total export earnings that year. Shrimp exports rebounded in 2000, representing 11 percent of export earnings through the third quarter 2000. Other exports include timber, diamonds, garments, rum, and pharmaceuticals. The value of these other exports is increasing.
Guyana's extremely high debt burden to foreign creditors has meant limited availability of foreign exchange and reduced capacity to import necessary raw materials, spare parts, and equipment, thereby further reducing production. The increase in global fuel costs also contributed to the country's decline in production and growing trade deficit. The decline of production has increased unemployment. Although no reliable statistics exist, combined unemployment and underemployment are estimated at about 30%.
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