GUYANA

Cooperative Republic of Guyana

COUNTRY OVERVIEW

LOCATION AND SIZE.

Guyana is situated on the northeast coast of Latin America, along the Atlantic Ocean. It shares a 600-kilometer (373-mile) border with Suriname to the east, a 743-kilometer (462-mile) border with Venezuela to the northwest, and a 1,119-kilometer (695-mile) border with Brazil to the south and southwest. Guyana covers 214,970 square kilometers (83,000 square miles), making it slightly smaller than the U.S. state of Idaho. Approximately 196,850 square kilometers (76,000 square miles) of Guyana's area is land and 18,120 square kilometers (7,000 square miles) is water. The coastline of Guyana totals 459 kilometers (285 miles). The capital, Georgetown, is located on the coast.

Guyana has 3 distinct geographical zones. It has a narrow coastal belt that is just over 25 kilometers (16 miles) in width. Much of the coastal belt is below sea level, which makes it good for sugar and rice production. Approximately 90 percent of the Guyanese population lives in this region. The high savannah uplands are located further inland. These are mostly thickly forested, hilly, tropical areas where the country's bauxite, diamonds, gold, manganese, and other minerals are found. The highest point is Mount Roraima, which rises to 2,835 meters (9,302 feet). The river basin hosts Guyana's massive rivers, namely the Demerara, Berbice, Courantyne, and Essequibo. Rapids, bars, and other obstacles make navigation very difficult on these waters.

POPULATION.

The population was estimated at 697,181 in 2001, with an average annual growth rate of 0.07 percent in the same year. Recently the population has been falling as a result of out-migration. Half of Guyana's population is descended from Indian workers of the Dutch West Indian Company who first settled there in 1620. One-third of the population descends from native Africans who were brought as slaves in the 18th century. The rest are mostly Amerindians, Europeans, Chinese, and people of mixed races.

Guyana has the highest proportion in South America of people who live in rural areas, with only 35 percent living in urban areas in 1995. English is the official language, although Hindi and Urdu are used by the Indian community. There is religious diversity in Guyana; Protestants constitute 34 percent of the population, 34 percent are Hindu, Catholics are 18 percent, and 9 percent are Muslim.

OVERVIEW OF ECONOMY

Guyana is one of the poorest countries in South America, with a per capita income of US$4,800 in 2000 (figured at purchasing power parity ). After gaining independence from Great Britain in 1966, Guyana followed a socialist model of development. The bauxite, timber, and sugar industries were nationalized in the first half of the 1970s, and by 1976 the state controlled 75 percent of the country's economy. At the same time, regional integration was implemented through the Caribbean Common Market (CARICOM), the Latin American Economic System (SELA), and the Caribbean Merchant Fleet. In 1980 Guyana granted authorization for transnational corporations to carry out oil and uranium explorations.

By 1988 the government controlled over 80 percent of recorded import and export trade and 85 percent of total investment. The government attempted to set prices and fix the exchange rate for currency. With inflation , prices and the exchange rate were soon rendered unrealistically low. At the low prices, more commodities and more foreign exchange were demanded than could be supplied. There were shortages of supplies, and the government instituted a system of rationing. Unofficial markets (some-times called parallel or black markets ) emerged, where the rationed commodities and foreign exchange could be purchased, but at prices higher than the official prices. During the 1980s the real gross domestic product (GDP) continually declined, falling at a yearly average of 2.8 percent, mainly due to economic mismanagement. With the rising share of foreign interest payments, gross national income declined at an even faster rate of 4.9 percent a year.

Technical, organizational, and financial problems in Guyana's key sectors (sugar, rice, and bauxite production) and falling world demand led to stagnation in output and a consequent decline in government revenues in the late 1980s. Inflation accelerated, and there was an increased reliance on external borrowing. While new investments were being made in the public industrial sector, the nation's infrastructure was being neglected and steadily deteriorated.

By 1988 output was only 68 percent of the 1976 level. Since Guyana's external debt is denominated in U.S. dollars, if the exchange rate is reduced (such as by the devaluation in 1989), the value of the debt expressed in Guyanese dollars increases. In 1989, total debt become over 600 percent of the GDP. The severe decline in living standards led to a major migration of talented Guyanese to lucrative jobs abroad.

In 1988, the government adopted an Economic Recovery Program (ERP) that called for a major redirection in government policy. Specifically, there was a greatly reduced role in the economy by the public sector and a removal of price and exchange controls that led to shortages and unofficial markets.

Few countries have undertaken such a dramatic turnaround in economic policies, and even fewer have implemented such a program with so much speed and determination. Because of the government's efforts, a support group of donors was organized, and Guyana was able to secure financing to clear debts to the multilateral agencies. The government was also able to agree with the International Monetary Fund (IMF), the World Bank, and the Caribbean Development Bank (CDB) on major programs of support. Guyana also reached agreement with the Paris Club (a group of creditor countries who lend to developing countries) on a major program of debt relief .

The government has continued to implement the ERP despite the 1998 drought that severely affected the economy. The GDP growth in 1997 was estimated at 6.3 percent. However, the drought caused the growth rate to fall to-1.5 percent in 1998, but there has been a modest recovery to 1.8 percent in 1999 and 3 percent in 2000.

POLITICS, GOVERNMENT, AND TAXATION

The original inhabitants of what is now Guyana were the Arawaks. They were displaced from the area by the Caribs, warriors who dominated the region before moving on. Both the Arawaks and the Caribs were nomadic, moved primarily in clans of 15-20 people, and lived by fishing and hunting.

Attracted by the legend of El Dorado—a fabled city that was thought to be full of gold and precious jewels— the Dutch built the first fort in present-day Guyana in 1616. They divided Guyana into 3 colonies: Demerara, Berbice, and Essequibo. The territory was captured by Britain in 1796 and renamed British Guiana.

Beginning in 1950, an anti-colonial struggle was spearheaded by the People's Progressive Party (PPP), led by Cheddi Jagan and Forbes Burnham. After the success of the PPP in the elections of 1953 and the introduction of a socialist program, however, the British government suspended the constitution and sent troops into Georgetown. Some members of the PPP were detained or confined to their homes. By the time internal autonomy was granted in 1961, Burnham had split with Jagan to form a more moderate People's National Congress (PNC). After years of struggle and violence, Britain recognized Guyana as an independent state within the British Commonwealth on 26 May 1966. Burnham served as the first prime minister.

On 23 February 1970, Guyana became the first ever Cooperative Republic, with Arthur Chung as its first non-executive president. In October 1980, Prime Minister Forbes Burnham declared himself the executive president. About 2 months later his party, the PNC, won a large majority of votes in the National Assembly election, which was widely condemned as being rigged. It was declared that Burnham was duly elected as president.

When Burnham died in August 1985, Prime Minister Desmond Hoyte succeeded him as president. Like his predecessor, Hoyte was declared duly elected when the PNC gained a large majority during the 1985 election for the National Assembly, although the results were again disputed. However, desperate economic circumstances forced Guyana to seek external aid that came with the condition of restoring credible elections. Cheddi Jagan finally gained power in 1992. Following his death in March 1997, his wife, Janet Jagan, was sworn in as president on 24 December 1997. When Janet Jagan resigned in 1999, Bharrat Jagdeo assumed the presidency.

In 1980 a new constitution was adopted. The constitution established an executive president and a National Assembly, which consists of 53 elected members and 12 members appointed by local government councils. Elections for 5-year terms are held under a single list system of proportional representation , with the whole of the country forming one electoral area and each voter casting a vote for a party list of candidates. Guyana has 10 administrative regions.

The tax system in Guyana is poorly administered, and the level of collection is far below the system's potential. Evasion, avoidance, and corruption are rampant. For example, in 1991 tax revenue from the private sector amounted to only 21 percent of the GDP. Many firms enjoy overly generous tax and tariff holidays as part of the government's attempt to encourage new investment through incentives. Corrupt revenue officials issue lower tax demands as the result of bribery.

Sales taxes are very high for some products (up to 150 percent), though other sectors, such as services, are ignored entirely. Fees charged for public services, which often have not been adjusted for inflation, are very low or simply remain uncollected or are non-existent. The present tariff structure remains protective. While it follows the CARICOM structure, the top tariff rate of 45 percent is high by present standards in Latin America. Many other Latin American countries have reduced tariffs to a maximum of 20 percent. It has been estimated that the system of tariff protection and fiscal incentives cost the country G$150,000 for every job created. However, the Economic Recovery Program (ERP) launched in 1988 began to reverse these policies. It eliminated import licensing, reduced tariffs, and began an overhaul of the entire tax system. Corporate income tax is relatively high at 45 percent. The tax rate on capital gains is 20 percent, and interest and dividends paid by non-resident companies are subject to a 15 percent withholding tax.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Most public sector infrastructure necessary to support the private sector has deteriorated almost to the point of non-existence. Power and water supplies are so erratic that many large private sector firms have invested in their own generators and water sources. The road system has deteriorated, particularly the critical farm-to-market network of feeder roads. In 1996 it was estimated that there were 7,970 kilometers (4,953 miles) of highways, of which only 590 kilometers (367 miles) were paved. Passenger cars numbered 24,000 in 1993, and there were approximately 9,000 commercial vehicles. The sea wall system, which protects the most productive agricultural land, has been breached in several places and patched temporarily but needs major reconstruction. Even in urban areas most of the population lacks access to safe water supplies.

Social services are inadequate to meet the needs of the population. Schools lack basic repairs, books, equipment, and supplies. Hospitals operate with most equipment not working, with no drugs to dispense, insufficient budgets for food, and the inability to carry out simple diagnostic tests, such as X-rays or blood tests. In 1994, there were 30 hospitals (5 private), 162 health centers,

and 14 health posts. In 1997 there were 38.8 hospital beds per 10,000 persons.

Guyana has a small government-owned railway in the northwest region, while the Guyana Mining Enterprise operates a standard gauge railway of 133 kilometers (82.6 miles). The private line runs from Linden, located on the Demerara River, to Huhi and Coomacka. There is an international airport at Georgetown. Guyana has 4 ports, with the major shipping port located in Georgetown. Guyana has an Exclusive Economic Zone (EEZ) of 200 nautical miles.

There is an inland public telegraph and radio communication corporation. In 1997, there were 55,100 telephone main lines (65.2 per 1,000 population). Cellular phone subscribers numbered 1,200 in 1995, and there were 85 post offices. In 1998, electricity production was 325 million kilowatt hours (kWh). More than 98 percent of electricity was produced from fossil fuels and less than 2 percent from hydropower.

Guyana has no domestic petroleum resources. The National Energy Authority (GNE) imports all petroleum products other than those required by the bauxite industry, largely through a Venezuelan line of credit. At present some exploration activity is going on both offshore and in southern Guyana, but no commercially viable resources have yet been located.

ECONOMIC SECTORS

Upon gaining independence, Guyana followed a socialist strategy for development. Major productive sectors were controlled either through government investment or through price controls and foreign exchange rationing. Since 1990 Guyana has pursued an economic policy where state control has been reduced by privatization .

Agriculture accounted for approximately 35 percent of the GDP in 1998, with the main products being sugar, coffee, cocoa, coconut and edible oils, copra, fruit, vegetables, and tobacco. In 1995, the total area of forestland totaled 18.58 million hectares (46 acres). Guyana and neighboring Suriname were the world's most heavily forested countries in 1995. About 25 percent of the country's energy needs are met by woodfuel. Timber production in 1996 was 580,000 cubic meters. Total fish catches in 1995 came to approximately 46,000 metric tons, of which more than 98 percent was from marine sources.

Industry generated 32.5 percent of the GDP in 1998, with the main activities being agro-processing (sugar, rice, timber, and coconut) and mining (gold and diamonds). There is a light manufacturing sector, and textiles and pharmaceuticals are produced by state and private companies.

Services accounted for about 33 percent of the GDP in 1998. The service sector is comprised mainly of banking and financial services, post and telecommunications, transport, tourism, hotels and restaurants, and public administration.

AGRICULTURE

Guyana has a rich and potentially very productive agriculture sector that can make major contributions to the recovery of the economy. There is scope for expansion, as a considerable amount of suitable land is currently not being cultivated. Guyana is mostly self-sufficient in food.

The main agricultural exports are sugar, rice, and shrimp. Sugar production has risen from 162,573 metric tons in 1991 to 280,066 metric tons in 1996. Approximately 255,655 metric tons of sugar were produced in 1998 despite the severe drought. Most of the sugar is exported to Europe under the Lomé Convention (an agreement by the European Union under which preferential trade terms are offered to certain developing countries). Most of the rice is produced by small-scale farmers, unlike sugar production, which is mainly a plantation activity. Other agricultural products are coffee, cocoa, cotton, coconut, copra, fruit, vegetables, and tobacco.

There is some cattle ranching, and pigs, sheep, and poultry are also raised. The fishing industry, which supplies both the domestic and export markets, is expanding. A big fisheries complex that is being constructed on the Demerara River will provide freezing and packing facilities. Forestry covers around 75 percent of the country. Large areas are, therefore, inaccessible, and agricultural development is hindered by the lack of electricity and economic transport.

Most agricultural output is derived from a thin belt of land close to the sea, most of which is below sea level. The sea wall system, which prevents inundation at high tide, is in danger of collapse due to lack of maintenance and wave damage during storms. Repairs to the sea wall are critical, and the immediate action program will cost about US$36 million, a large sum relative to the Guyanese economy.

The country's drainage and irrigation systems are in need of repair and currently are poorly managed. The divestment of state-owned land and the provision of adequate land titles to privately owned farms is a daunting but essential task if the market system is to raise agricultural productivity.

Agriculture provides the raw materials for Guyana's agro-based industries. The major crops include rice, sugar, coffee, cocoa, coconuts, edible oils, copra, fruit, vegetables, and tobacco. Livestock include cattle, sheep, pigs, goats, and chickens.

INDUSTRY

The main industries in Guyana are agro-processing (sugar, rice, timber, and coconut) and mining (gold and diamonds). There is a light-manufacturing sector, and textile and pharmaceuticals are produced by state and private companies. Manufacturing constituted 7.3 percent of the GDP in 1996. Manufacturing output declined at 3.9 percent annually between 1977 and 1987. The manufacturing sector then recovered through a government reform program and expanded at 8.8 percent annually between 1988 and 1998. About 75 percent of production is comprised of processing primary products (rice, coconut, sugar, bauxite, gold, diamonds, and timber). There are also many small workshops and factories producing flour, footwear, clothing, soap, cigarettes, and soft drinks. Mining and quarrying contributed about 16.5 percent of the GDP in 1996. Outdated equipment and the industry's indebtedness have hampered the bauxite/alumina industry.

SERVICES

Guyana has a small but significant tourism sector, which generated about US$39 million from 93,000 visitors in 1997. Many of the tourists were expatriate Guyanese. Guyana has great potential for adventure and nature-watch holidays, with the Kaieteur Falls especially offering considerable tourist potential. Hotel accommodation is available in Georgetown but does not meet demand. There are camps and resorts in the interior of the country, most of which are connected with Georgetown hotels. Tours by light aircraft are also available.

INTERNATIONAL TRADE

Guyana's economic situation remains constrained by its difficulties in external payments, although exports are beginning to respond to recent adjustments in the exchange rate. In 1991, the current account deficit amounted to 52 percent of the GDP. Guyana's external debt in early 1998 was US$1.65 billion. Interest payments on external debt took up 20 percent of export earnings in 1998.

In 1991, total exports increased by 17 percent largely because of better results in the bauxite, sugar, and rice sectors. Imports, however, increased by the same amount, reflecting an increase in the level of investment, particularly in the public sector and general recovery of the economy. By 2000, exports were valued at US$570 million and imports at US$660 million.

Principal commodities exported in 1996 were sugar, US$150.7 million; gold, US$105.9 million; rice, US$93.7

million; and bauxite, US$86.0 million. Other important exports include shrimp, timber, and rum. The main export markets in 1998 were the United States (25 percent), Canada (24 percent), the United Kingdom (19 percent), Netherlands Antilles (11 percent), and Jamaica (5 percent).

Most imports consist of capital goods (about 45 percent of the total in 1990) and intermediate goods (42 percent). Fuels and lubricants are the principal intermediate goods. Imports in 1998 came from the United States (28 percent), Trinidad and Tobago (21 percent), Netherlands Antilles (14 percent), the United Kingdom (7 percent), and Japan (8 percent).

MONEY

The unit of currency is the Guyanese dollar (G$), which is divided into 100 cents. The Guyanese dollar became a floating currency in 1991 in order to curb the large-scale illegal trade in foreign currency. It then depreciated rapidly from G$40=US$1 in 1990 to G$143=US$1 at the start of 1995. The value of the Guyanese dollar held steady from 1995 to 1997. It began to fall again in 1998 due to falling commodity prices and domestic political uncertainty. By mid-2001 it had depreciated to G$180.5=US$1. The depreciation meant that, as compared with 1990, imported goods cost over 4 times as much. There has been a major push to make do with locally produced substitutes for imports. For exports,

the revenue in Guyanese dollars for producing a kilogram of gold became more than 4 times greater, providing a major incentive to produce more for export.

POVERTY AND WEALTH

It is difficult to know exactly the nature and the extent of poverty in Guyana. Since the 1980s, thankfully, out-migration has resulted in a low population growth rate, so a growing population is not among Guyana's problems. At the same time, the real GDP has fallen by 24 percent, and consumption spending has fallen by 22 percent. The incidence of underweight children suggests that about 16 percent of the population was below the dollar-a-day poverty line in 1998.

The measure of per capita GDP using the purchasing power parity conversion (which makes allowance for the low price of basic commodities in Guyana) was US$4,800 in 2000 which puts Guyana near the top of the low-income group of countries. The United Nations Human Development Index (which combines measures of income, health, and education) ranked Guyana as 96th out of 174 countries in 1998, and Guyana was judged to have a medium level of human development. Thus, Guyana is placed among those countries with levels of income, health provision, and educational facilities that

are mid-way between the high human development countries of Europe and North America and the countries that are the poorest and most deprived.

WORKING CONDITIONS

The labor force was 245,492 in 1992 with an unemployment rate of 12 percent, a rate that remained the same in 1999. However, the majority of the population relies on agriculture for their livelihoods, and there is probably considerable "disguised unemployment" in small-scale farming. There is relatively little work to do for much of the year in subsistence farming , and the work is shared among the family members. During planting and harvesting there is more work to be done, and everyone is more fully occupied. Even in these periods, however, there may be more than enough labor to do the tasks, and the work is again shared by many. Everyone who shares the work appears to have an occupation in agriculture, but in fact workers are not engaged full time for the entire year, hence the "disguised unemployment."

There is no regulation of working conditions in the small-scale farming sector. In other sectors of the economy regulation is not enforced, and minimum wage levels have been rendered obsolete by inflation. Guyanese workers generally possess very low skills levels, as most skilled workers have left the country for better jobs elsewhere. There are active labor unions that exist in nearly every organized industry, but they have not been very effective in attaining better conditions for their laborers.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1600. The Dutch begin to settle along the coast of Guyana.

1796. The Dutch are ousted by the British.

1831. Britain consolidates the area as the colony of British Guiana.

1966. Guyana becomes a self-governing dominion within the British Commonwealth; Forbes Burnham becomes prime minister.

1968. Burnham's People's National Congress (PNC) wins electoral victory following the controversial enfranchisement of overseas Guyanese. The United Force (UF) leaves the coalition, protesting irregularities in the elections.

1970. Guyana is proclaimed a Cooperative Republic; the post of governor-general is abolished. Supreme Court Justice Arthur Chung is elected president.

1971. The Demerara Bauxite Company is nationalized.

1973. Legislation is passed permitting preventive detention without trial and restricting freedom of movement.

1974. By the Declaration of Sophia, the PNC is transformed into a socialist party committed to nationalization of all foreign enterprises and redistribution of land.

1975. The Reynolds Guyana Mines are nationalized.

1976. The Booker Sugar Estates are nationalized. The government announces plans to nationalize the school system.

1977. Burnham rejects the plan of Cheddi Jagan, leader of the opposition People's Progressive Party (PPP), for a national coalition government. A strike by sugar workers becomes violent as the government uses police force to break it.

1978. Jonestown, Guyana is the scene of a mass suicide by over 900 members of the People's Temple commune, led by U.S. cultist, Jim Jones.

1980. Guyana adopts the presidential form of government when a new constitution is approved; Burnham becomes the first president under the new constitution.

1985. Burnham dies and is succeeded in office by Hugh Hoyte, who promises to continue Burnham's leftist policies. In national elections, Hoyte is elected president, and the PNC wins with a massive majority.

1990. Guyana accepts IMF conditions and begins receiving assistance. The World Bank and the Caribbean Development Bank resume lending.

1991. Guyana becomes a member of the Organization of American States (OAS).

1992. In elections held in October, the PPP/Civic Congress, still led by Dr. Cheddi Jagan, wins 54 percent of the vote and gains 28 seats. The PNC wins 23 seats and 2 seats are won by other parties.

1997. Jagan dies from a heart attack in March. Elections held in December are won by the PPP/Civic Congress with 56 percent of officially counted votes. Jagan's widow becomes Guyana's first female president.

1998. Violent PNC-supported protests over election results rock the country in mid-January. The PNC agrees to join parliament in July following a CARICOM summit in St. Lucia.

1999. An agreement between members of the PPP/Civic Congress and PNC is reached to draft a new constitution focusing on limiting the powers of the president and making the electoral process more transparent. President Jagan resigns in August because of illness and nominates Bharrat Jagdeo as president.

2001. National Assembly elections give the PPP/Civic Congress 35 seats, the PNC 27 seats, and other parties 4 seats.

FUTURE TRENDS

The long-term outlook for Guyana continues to be discouraging. The problems of shortages caused by setting prices and fixing the exchange rate have ended with the abolition of these regulations, but economic recovery will remain slow until the government earns the full confidence of the international community. The country still suffers from the accumulated costs of past policies, including an external debt that is over 240 percent of the GDP and a very low per capita income in comparison to the rest of Latin America and the Caribbean.

Severe drought and political turmoil caused Guyana to report a negative growth rate of-1.5 percent in 1998, following 6 straight years of growth of 5 percent or higher. Growth rebounded to 1.8 percent in 1999 and 3 percent in 2000. Underlying factors in the GDP growth have included expansion in the key agricultural and mining sectors, a more favorable atmosphere for business initiative, a realistic exchange rate, a moderate inflation rate , and continued support from international organizations. President Jagdeo, the former finance minister, is taking steps to reform the economy, including drafting an investment code and restructuring the inefficient and unresponsive public sector. Problems hindering the economy include a shortage of skilled labor and an inadequate and poorly maintained transportation system. Electricity has been in short supply, but the privatization of the sector in 1999 is expected to improve prospects.

Guyana is rich in minerals, especially bauxite, gold, and diamonds. In comparison to general worldwide deforestation, Guyana has suffered little and until 1990, only a small fraction of the extensive forests had been felled. An improved infrastructure will harness the potential in mining and forestry and enable Guyana to experience steady progress.

DEPENDENCIES

Guyana has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Guyana. London: Economist Intelligence Unit, 2001.

Embassy of the Republic of Guyana, Washington, D.C. <http://www.guyana.org/govt/embassy.html>. Accessed October 2001.

Guyana News and Information. <http://www.guyana.org>. Accessed October 2001.

Jeffrey, Henry B. Guyana: Politics, Economics, and Society: Beyond the Burnham Era. Boulder, Colorado: Rienner Publishers, 1986.

U.S. Central Intelligence Agency. World Factbook 2001. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed September 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Guyana. <http://www.state.gov/www/about_state/business/com_guides/2001/wha/index.html>. Accessed October 2001.

—Allan C. K. Mukungu

CAPITAL:

Georgetown.

MONETARY UNIT:

Guyanese dollar (G$). One Guyanese dollar equals 100 cents. Notes come in denominations of 20, 100, 500, and 1,000 dollars. Coins come in denominations of 1, 5, 50, and 100 cents. U.S. currency is also accepted in Guyana.

CHIEF EXPORTS:

Sugar, gold, bauxite/alumina, rice, shrimp, molasses, rum, and timber.

CHIEF IMPORTS:

Manufactures, machinery, petroleum, and food.

GROSS DOMESTIC PRODUCT:

US$3.4 billion (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$570 million (f.o.b., 2000 est.). Imports: US$660 million (f.o.b., 2000 est.).