Guyana - Current economic position and prospects (Vol. 1 of 2) : Main report

RETURN TO REPORTS DESK FILE COPYn WITHIN ONE WEEK.-` DOCUMENT OF INTERNATIONAL BANK FOR RtCON-ST-RUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. 242a-GUA CURRENT ECONOMIC POSITION AND PROSPECTS OF GUYANA (in two volumes) Volume I MAIN REPORT December 19, 1973 Latin America and the Caribbean Regional Office This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS Through December, 1971 US$1.00 = G$2.00 G $1.00 = us$o.5o 1972 1/ US$1.00 = G$2.093 G $1.00 = us$o.48 July 31, 1973 US$1.00 = G$2.07 G $1.00 = us$o.48 1/ Floating with pound sterling since July 1972.  F ORWARD This report is based on the findings of an economic mission to Guyana during May-June 1973, composed of F. Z. Jaspersen (Chief), J. U. Richter (General Economist), N. Jetha (Fiscal Economist), M. Agarwal (MIacro-Economic Planning Economist), M. Perkins (Agricultural Economist, Consuiltant) and Mlrs. Anne Muhtasib (Secretary). The draft report was submitted for comments to the Guyanese authorities and later discussed with them in November in Georgetown. The report has been revised in the light of those discussions.   TABLE OF CONTENTS Page No. VOLUME I -- THE MAIN REPORT COUNTRY DATA SUMMARY AND CONCLUSIONS ............................ i- viii I. ECONOMIC GROWTH OF GUYANA .......................... 1 A. Background ..................................... 1 B. Sources of Structural Change .... .............. 2 C. Recent Performance of the Economy .... .......... 9 II. DEVELOPMENT PROSPECTS ............................... 12 A. Sectoral Problems and Policies .... ............. 12 Agriculture ................................... 12 Recent Performance ....................... 15 Agricultural Development Strategy: Policies and Issues .............................. 25 Marketing and Price Policies 6060000e0 27 Agricultural Credit ..D***0****.*0*X*0* 28 Public Administration , 30 Farm Family Settlement 31 Medium Term Outlook o.......e....eeo.e 31 Long-Term Prospects 34 Mining ......... ................................ 36 Recent Performance ........................ 38 Future Prospects .......................... 39 Manufacturing .................................. 41 Constraints to Industrial Development ..... 42 Government Policies ..... .................. 43 Future Prospects .......................... 44 Transportation .................................. 46 Power .......... ................................ 48 Health ......... ................................ 49 Housing . ...................................... 51 Education ...i .................................. 53 B. Growth and Investment .......................... 54 The Development Plan ..... ................. 54 Public Investment ......................... 61 Private Investment ..... ................... 68  TABLE OF CONTENTS (Cont'd) Page No. III. FINANCING ECONOMIC DEVELOPMENT ........................ 71 A. Introduction ......... ............. . 71 B. Role of the Public Sector and, Maj,or Policy Issues. 72 Central.Government-Finances ................. . 74 F'inancing Capital Expenditures of the Central Government ..76 F'inancing Capital.Expenditures of O'ther Public. Sector .. ................ 81 M-obilization of Private Savings . .83 C. Tax:Policy in Guyana ............. ... ............... 84 Issues Constraints and Possibilities ........ 84 Tax Structure Change and the Growth of Tax, Revenue ........... - 84 Tax.Strategy .. ......... 87 Allocation of Resources ..88 Supply of Resources . ............................ 88 Equity .... 89 Income Elasticity ... ......................... 90 Administrative Efficiency .......... ......... 90 Taxation of Personal Income,, Expenditure and Wealth ..................................... 90 Personal Income Tax .. ........ 90 Capital Taxa'tion . .............. 93 Indirect Taxation ....... ................. 94 Taxation of Corporate Income and Wealth .... 96 Income, Corporation and Withholding Taxes . . 96 Net Property Tax . ........................ 97 Double Taxation Agreement and Tax Harmoniza,tion ............ ............ 98 Taxation of Cooperatives . . 98 IV. BALANCE OF PAYMENTS AND CREDITWORTHINESS .... .......... 1.00 A. Recent Trends' .................. ..... 1.00 Merchandise Trade and Other Current Account Transactions ..... .................. 103 Capital Movements ........ .................... 106 B. Balance of Payments Prospects ..... ............... 108 Exports ........... ........................... 112 Imports ........... .......................... 1,12 Creditworthiness ...... ..................... 114 VOLUME II Appendix I - Statistical Appendix Appendix II - Description of Major Taxes  GUYANA . o G U Y ~A Nf A ep - _ - 0 8 ~~~~~~~~~~~~,'r~l , A,rport - Alluvia coosto IoroOs .t -_ w A,r strips or _ _ S I lan~~~~I.ding pools -~~ Sov--n , <- _ -,O \ ', ....... ...... hwing routes .......-- _ .- . A 'I i \ ' Roads Sugar estates - -- _ __ ----- Tol Lad under iii 0a |Rodays r:e .'u-ni "n~ ~ Cho~rtC*jf R-P'd- o, f--- , - ,,"-E1 - g ,"'';- t~~~~~~~~~~~~~~~~~~~~~~~~~D - .-k.,,g,t4 - = .~~ ~~~~~~~~~ - 4' *r 'X Gol worin rfl'llE '' -:',, Aiipotl 2 r celd iri~~~~~~~~~~~~~~~~~~~~ Id ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ r P r -r L ;~~~~~~~~~~~~~~~~~~~~~~1 .- 1- e_ -MLazS, _- .-a i ki - .mt (r __~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e n@ t'bEPEurL'D-;irtr..v ui.'r 5 5 3i-if4 ~~ir.it.iuMBa~~~~~~~~~~~S R AS T. I, ,. 0 10 20 30 40 50 3 MARCH 1972 ic- -:R 'R2   Page 1 of 2 pages COUNTRY DATA - GUYANA AREA POPULATION DENSITY 214,970 kn2 760,017 (mid-1972) 3.4 per Rate of Growtih. 2.4 (from 1960to 1972) ,, per km2 of arable land POPULATION CHARACTERISTICS (year) 1568 HEALTH (year) 1972 Crude Birth Rate (per 1,000) 36.7 Population per physician 3791 Crude Death Rate (per 1,000) 7-5 Population per hospital bed 213 Infant Mortality (per 1,000 live births) 38.3 INCOME DISTRIBUTION (year) DISTRIBUTION OF LAND OWNERSHIP (year) % of national income, highest quintile .. % owned by top 10% of owners lowest quintile .. % owned by smallest 10% of owners ACCESS TO PIPED WATER (year) 1968 ACCESS TO ELECTRICITY (year) % of population - urban 93 % of population - urban - rural 32 - rural NUTRITION (year) EDUCATION (year) 1970 Calorie intake as % of requirements Adult literacy rate % 85 Per capita protein intake Primary school enrollment % 97 1/ GNP PER CAPITA in 1972 i US $359 GROSS NATIONAL PRODUCT IN 1972 ANNUAL RATE OF GROWTH (%. constant prices) US $ Mln. % 1960-65 1965-70 1971 GNP at Market Prices 270.6 100.0 1.1 4.0 5. Gross Domestic Investment 58.6 21.5 -5.6 2.9 -13.6 Gross National Saving 53.5 19.6 0.2 11.1 15.6 Current Account Balance -5.3 1.9 Exports of Goods, NFS 168.4 61.7 2.4 2.9 2.2 Imports of Goods, NFS 160.8 58.9 0.9 3.0 -4.7 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1970 Value Added Labor 2ore V. A. Per Worker USV$aMlue Add lar Forcer V._A._Per_Worker USricullnr% Th. % us 6 Agriculture 47.9 19 . 3. 7J26 Mining d49.0 20.34 6. 3.2 7, 25, Industry 29.7 12.3 31.96- 16.8 958 Services 113.9 47.4 96 46 1,178 Unallocated I 11.5 5.5 Total/Average 240.5 100.0 210 100.0 1,1145 GOVERNMENT FINANCE General Goverrmuent Central Government ( G$ Mln.) % of GDP ( G$ Mln.) % of GDP 1972 1972 1968-72 1972 1972 1968-72 Current Receipts 200.9 33.9 28.9 157.9 26.6 23.2 Current Expenditure 158.8 26.8 23.9 1ls7.0 24.8 22.2 Current Surplus i i 2.1 7 10 960.6 10.8 9.7 Capital Expenditures 84 9 14.3 12.1 12.7 2.1 3.1 External Assistance (net) 19.8 3.3 3.6 1/ The Per Capita GNP estimate is at 1970 ma;ket prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. 2/ Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable  Page 2 of 2 pages COUNTRY DATA - GUYANA MONEY, CREDIT and PRICES 1965 1969 1970 1971 1972 1972 (Million G$ outstanding end period) Money and Quasi Money 102.2 153.7 165.2 192.6 231.7 Bank Credit to Public Sector 14.7 30.5 34.6 51.9 72.2 Bank Credit to Private Sector 31.0 68.6 81.4 85.9 83.1 (Percentages or Index Numbers) Money and Quasi Money as X of GDP 31.4 35.0 35.3 38.5 44i. Consumer Price Index (1963 = 100) 103.0 113.2 115.7 118.1 124.2 Annual percentage changes in: 2.4 2.2 2.1 5.2 Consumer Price Index Bank credit to Public Sector 100.0 207.5 235.4 353.1 491.2 Bank credit to Private Sector 100.0 221.3 262.6 277.1 26b.1 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 196