GUYANA’S ECONOMIC PROFILE
INTRODUCTION
Guyana’s economy depends mainly upon the export of agricultural products such as sugar, rice, fruits and other vegetables, as well as mineral resources for instance bauxite and gold, and other renewable resources such as timber and sea products. These products generate the most income in foreign currency and have a considerable impact, both directly and indirectly, on products and employment. However being a member of the Caribbean Community (CARICOM), Guyana depends considerably on the competitive challenges of its products in order to gain access to the markets of the European Union and United States.
Guyana has been applying a relatively cautious monetary policy that aims at maintaining control over inflation. Commercial development and economic diversification are considered as essential elements of the country’s plans for 2008. The contraction that was observed for 2005 of a negative figure of 2% was remarkably surpassed in 2006, obtaining an increase of 4.7%. Gasoline subsidies contributed towards the moderation of inflation, yet the expenses for the preparations of the Cricket World Cup generated certain fiscal expansion.
The growth rates have been maintained relatively low and possibilities for investment seem limited by significantly high production costs and by an external debt that by mid 2007, was for US$ 655 million (a 70% of the GDP –Gross Domestic Production), which corresponds to almost half the level recorded a year before. At present an important reduction resulted due to the cancellation of the debt of US$ 189 million by virtue of the Multilateral Debt Relief Initiative (MDRI) and a US$ 412 million as debt relief granted by the Inter-American Development Bank (IADB). Additionally, the Bolivarian Republic of Venezuela, formally announced that it is realizing the proceedings for the cancellation of Guyana’s debt amounting to US$ 12.5 million.
Between 1976 and 1981, almost 10% of the population emigrated overseas and it is said that the funds that these sent home could have reached 16.6% of the GDP. According to estimates from the Government of Guyana, between 500 thousand to one million Guyanese live oversees, leaving the county with a population of 750 thousand inhabitants. The preferred destination of Guyanese emigrants is the United States, where according to calculations from the government of that country, more than 200 thousand Guyanese resides there.
Guyanese emigrants sent home remittances of US$270 million in 2005, which was an 88.8% more than the previous year. This figure represents a total of US$360 million in remittances per capita, which corresponded to a 322% in 2005 of the official aid for development and nine times the direct foreign investments received by Guyana in 2004.
ECONOMIC POLICIES
Since 1988 Guyana began a program for economic recovery with the fundamental objectives of restoring internal and external balance, to promote greater effectiveness in the utilization of resources and to attain a greater level of international competitiveness. Great improvements were achieved on structural adjustments, including the liberalization of exchange rates and commercial regimes, the abolition of controls and subventions to prices, the elimination of restrictions to the flows of capital and improvements to the fiscal administration, as well as a series of legal and institutional modifications to maintain the economic reform, which included the financial sector, legal and regulatory framework and reform of the judicial system.
The benefits derived from the process of economic reform are evident particularly in areas such as tourism, timber and sea products, which are gaining access to the lucrative markets of the United States. Construction has produced a considerable increase, reflected in the installation of a cement packing plant, resulted from the alliance of TCL (Trinidad Cement Limited) and TCL Guyana Inc., which holds a 60% of the market of local cement with the remaining 40% held by imports from Colombia, Venezuela and Dominican Republic. Nevertheless, currently there is a controversy which resulted from the demands made to the government from these types of companies for the restoration of 15% of the tariff on extra-regional cement, since according to them, they are competing with exporters of Guyanese products who prefers to return with a load of cement instead of an empty vessel.
It was anticipated for 2007 that the economy would record an annual increase of 4.5%, similar to that obtain in 2006 of 4.7%. The annual estimations on inflation escalated to 10.4% (it was at 4.2% in 2006), due to various factors among which are the extraordinary effect of the introduction in January 2007 of the value added tax (VAT) of 16% on the values of products, a move that generated a negative answer from consumers. In spite of the increase of income resulted from this tax, the fiscal deficit has increased, however its final impact on the economy is being the object of study.
Guyana is still immersed in a process of economic reform which entails to a large extent, the reestablishment of the market economy in a country where the State had considerably nationalized or regulated most of the essential sectors. In Guyana economic diversification is considered a pressing necessity, given that some sectors that traditionally served as base to the economy are facing great difficulties. The rice industry is progressively recovering from the serious difficulties it faced during the 2005 floods. Figures show that rice production for 2007 was the highest since 1997, generating an approximated income of US$76 million; however it still could not meet with demands. In 2007, the worldwide consumption of rice exceeded production to three million tons, for this reason it was necessary to resort to stocks in order to meet with demands.
MAIN SOCIO ECONOMIC INDICATORS
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INDICATORS
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GUYANA
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Currency
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Guyanese Dollars (GYD) 200 to 1(US$) (22.11.07)
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GDP
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US$ 0.87 billions (2006)
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Per capita
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US$ 1,146.77 (2006)
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GDP Annual Increase
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4.8% (est. 2006)
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External Debt
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US$ 1,094.1 millions (2006)
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Inflation
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6.6% (2006)
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Unemployment rate
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9.1% (2000)
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Population
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769,095 (est. 2006)
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Population Density
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3.9 hab/km2
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Urbana and Rural Population Percentage
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U: 87.4%
R:.12.6%
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Population Pyramid
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26.1% 0-14 years
68.6% 15-64 years
5.3% older than 65 years
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Population Growth
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0.234% (est. 2007)
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Poverty Level
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37%
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Life Expectancy when born
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64 years
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Infant Mortality Rate
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31.35 x 1000
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Minimum wage in US$
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US$ 190
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Main Agricultural Products
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Sugar, rice, tropical fruits and other vegetables
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Animal Production
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Fish and shrimp
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Main Industries
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Timber, bauxite, sugar, rice
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Mining Industry
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Bauxite, Gold, Diamonds
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Main Importing Products
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Manufactured foods, drinks, tobacco, textiles, clothes, shoes, vehicles, auto parts, fuel, lubricants, machinery
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Main Exporting Products
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Timber, bauxite, sugar, rice, gold
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Main Commercial Partners
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European Union, United States, Canada, China, India, Brazil, CARICOM
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Illiteracy Rate
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0.3%
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Religion
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Christian 50%, Hindu 35%, Muslim 10%, Other 5%
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Source: ECLAC, IADB, UNICEF, the UNDP, World Bank, World Trade Organization, the UN.
Note: These are rough data, which basis and analyses obeys various parameters. An exact definition is unknown on the products that are considered of the Guyanese “basic basket".
GUYANA’S RELATION WITH ITS MAIN TRADE PARTNERS
EUROPEAN UNION 
Traditionally the European Union (EU) has been the most favorable market for the export of Guyanese products, with an approximated amount per year of US$201.3 million, recently recording an increase under those bound for France, Ireland, Italy, Portugal, Spain, Switzerland and the United Kingdom. On the other hand, the imports from the European Union to Guyana represent a 6.1% of their total value. The main products exported to this destination are: sugar, rice, timber, bauxite, diamonds, rum, fish and shrimps.
An important aspect in the relations with the EU, is regarding the Sugar Protocol, the only trade agreement negotiated with the ACP countries (Asia, Caribbean and Pacific), on the foundation of a purchasing commitment from the EU, and that of sale from the before mentioned countries, with specific amounts of sugar at high prices. Actually, these special commitments involved substantial monetary transfers and a significant level of stability on the income of sugar exports for some of the ACP countries, especially for those that previously had trade connections with Great Britain. It should be highlighted that some time back, the EU had manifested the necessity of dissolving the referred Protocol, within the framework of the reform of their own Common Agricultural Policy (CAP), indicating that the high prices for sugar from the participating countries could not be justified, when the assistance provided to their own farmers had been reduced. The objective of this reform was to establish a minimum price for sugar, which would have allowed market prices for the EU to be marked by the tendencies of the worldwide market prices for sugar. This subject has generated great concern to the ACP countries, which requires that the EU initiate formal dialogues on the design of the national plans for sugar, with the objective of alleviating the economic and social impact that has developed as a result of this reform, which establishes a cut of 36% on the price for sugar that is imported to these countries.
In this respect, the EU set in motion a plan of assistance for a period of 8 years to help the ACP countries in its transition and adaptation to socioeconomic changes required by these new conditions for the sugar market. In Guyana’s case, this plan has been elaborated between the Ministry of Agriculture and GUYSUCO (a state owned Sugar Company). On the other hand, Guyana has to coordinate this issue with the CARICOM, as them representative in the sugar issues and which is in charge of realizing efforts for the development of a regional strategy in order to deal with the challenges of the referred sugar reform within the Region.
CANADA 
This is the second best destination for the export of Guyanese products, recording about 15.5% and 15.9% of its total value, represented mainly by the following products: gold, rum, fish and tropical fruits. As for imports, there are: flour, grains, machinery and paper.
UNITED STATES OF AMERICA 
This market traditionally has represented about 13.4% and 17.3% of the total exports, in comparison to the imports received from this destination that has represented approximately a 27.3% of its total value, with the main products exported being: fish, shellfish, bauxite, sugar and timber. In addition, the main products imported are: powder milk, wheat, eggs, flour, lubricants and spare parts.
CARICOM 
Exports to the CARICOM countries represents an 18.2% of its total value, unlike imports which represents a 35.9%, with the main partners Jamaica and Trinidad and Tobago, in first and second place respectively, also Barbados, Dominica and Surinam. The main products exported to the CARICOM are: sugar, rice, fish and timber. The products imported are: fuel, machinery, cement, manufactured foods, detergent and chemical agents.
OTHERS
Israel was another important partner of Guyana, representing a 1.6% of its total exports. The imports from Asia represented 8.5% (China, Japan and India), which includes: vehicles, shoes, auto parts and pharmaceutical products.
Brazil is also a great trade partner with nearly a 30% of the imports to Guyana, among which are: agricultural machinery, cement, coffee and other agricultural products.
TRADE RELATIONS BETWEEN VENEZUELA-GUYANA
Since the State Visit of President Hugo Chávez to Guyana in 2004, both governments assumed the commitment of promoting trade relations, emphasizing on the importance of trade for regional development and requested the speedy renewal of negotiations destined to strengthen the trade agreements between Venezuela and the CARICOM. In addition, important strategies were proposed for this purpose, such as the accomplishment of a feasibility study for the construction of the Guyana-Venezuela Road Link to which it was agreed to jointly look for the necessary international resources for the execution of this project. The Presidents acknowledged the importance of creating a favorable atmosphere for the development of the economic potentials of the regions which will emerge as a result of the construction of the road link, to which moreinformation could be found under the Political Section. Both Presidents agreed to adopt measures and policies to motivate the economic activities, so as to guarantee the viability of the proposed road link. However, trade relations between Venezuela and Guyana, even though limited, has survived in spite of a series of factors that directly affect these, such as: the contraband of products through the border, high transport costs via Trinidad or Miami, political tensions, among others.
Figures show that trade between Venezuela and Guyana, around 1997 to 2006, has not exceeded US$50,000, in exception of the year 2005 which for exports from Venezuela recorded an amount superior to US$250,000. This variation can be attributed to the effects to the economy caused by the floods that affected great part of the country during that year.
Among the main products that are exported from Venezuela to Guyana in exception to fuel, there are: common metals and products made from this, chemical agents, mineral products, drinks and tobacco. On the other hand, the main products imported from Guyana to Venezuela are: timber, cork, charcoal and products made from this.
PETROCARIBE
Guyana has benefited from the provision of 5.2 thousand barrels daily, from the PETROCARIBE agreement, distributed in the following way: Diesel Oil 1.53 TBD (Thousand of barrels daily), Mogas 95 Ron 0.98 TBD, Jet Fuel 0.23 TBD, Fuel Oil 2.47 TBD. All of this within the framework of this agreement recorded the provision up to the 31/10/2007 of 278.6 TB (Thousands of barrels), for a cost of US$ 24.5 million, with a finance of US$ 9.8 millions. The Government of Guyana has manifested its concern over the cost of the cargos from Curacao, unlike the cargoes from Trinidad and Tobago. A study is actually being prepared to improve these costs. Greater details can be found on the PETROCARIBE Agreement under the "Bilateral Relations" section.
TRADE AGREEMENTS SIGNED BY GUYANA
1) Treaty of Chaguaramas (provides a channel for the establishment of zones for free trade within the Caribbean Region).
2) Trade and Investment Agreement between Caricom-Venezuela.
3) Partial Scope Agreement between Venezuela-Guyana.
4) Trade, Economic and Technical Cooperation Agreement between Caricom-Colombia.
5) Trade and Investment Agreement Guyana -United Kingdom.
6) Trade and Economic Agreement between Caricom-Cuba.
7) Caribbean Basin Extended Initiative (CBEI).
8) Trade Agreement of the Caribbean and Canada (CARIBCAN).
9) Free Trade Agreement between Caricom - Dominican Republic.
10) Trade and Investment Agreement between China-Guyana.
11) Partial Scope Agreement between Brazil-Guyana.
12) Trade and Investment Agreement between Thailand-Guyana.
13) Trade Agreement between Argentina-Guyana.
14) Trade Agreement between Jordan-Guyana.
15) World Trade Organization.
16) Agreement between the European Union and the African, Caribbean and Pacific countries (Economic Associations).
17) Free Trade Zone of the Americas.
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