VZCZCXRO6699
RR RUEHGR
DE RUEHGE #0329/01 0972101
ZNR UUUUU ZZH
R 072101Z APR 06
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC 3357
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0277
RUEHUB/USINT HAVANA
RUEHDG/AMEMBASSY SANTO DOMINGO 1018

UNCLAS SECTION 01 OF 02 GEORGETOWN 000329 
 
SIPDIS 
 
SANTO DOMINGO FOR FCS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAIR EAGR PREL GY
SUBJECT: Guyana Economic/Commercial Round-up: March 2006 
 
     REF (A) GEORGETOWN 005, (B) GEORGETOWN 045, (C) 05 
     GEORGETOWN 1055, (D) GEORGETOWN 130, (E) GEORGETOWN 242, (F) 
     BRIDGETOWN 530 (G) PARAMARIBO 199 
 
     Contents of March 2006 Guyana Economic Highlights: 
     ¶1. Trade: Parliament Passes CSME-Related Bills 
     ¶2. Agriculture: Bumper Rice Crop Expected, Slight Price 
     Increase 
     ¶3. Public Finance: Flat Income Tax at 33 1/3% 
     ¶4. Investment: Two Airline Investors Considering Guyana 
     ¶5. Bilateral Economic Activity: Cuban Lightbulbs 
 
     ------------------------------------ 
     Parliament Passes CSME-related Bills 
     ------------------------------------ 
 
¶1. The National Assembly approved two pieces of legislation 
pertaining to Guyana's compatibility with the emerging 
Caribbean Single Market and Economy (CSME). The Caribbean 
Community (CARICOM) Bill will give effect to the revised 
Treaty of Chaguaramas establishing CARICOM, including the 
CSME, while the Caribbean Community (CARICOM) Movement of 
Factors Bill recognizes the provisions of the Treaty related 
to the exercise by nationals of CARICOM of the right of 
establishment, the right to provide services to move capital 
into, within and out of Guyana to other member states of 
CARICOM. The laws apply retroactively from January 1, 2006, 
when Guyana became one of 6 initial members of the CSME (Ref 
A). 
 
     --------------------------------------------- 
     Rice Harvest Begins in Wake of January Floods 
     --------------------------------------------- 
 
¶2. Rice harvesting was ongoing countrywide in early March, 
with Region Two (Pomeroon/Supenaam) farmers anticipating a 
bumper spring crop. Farmers in Region Five 
(Mahaica/Berbice), experienced losses in excess of 19,000 
acres due to flooding early in the year (Ref B).  Harvesting 
in this Region was concentrated mainly in the coastal areas 
since the 19,000 acres lost were cultivated in riverain 
parts and on other plots which depended on the Mahaica, 
Mahaicony and Abary rivers for drainage.  Farmers whose 
plots were destroyed are preparing to plant for the autumn 
crop with the hope of getting assistance with fuel, seed 
paddy and fertilizer from the Rice Producers Association 
(RPA) or the government. The price for paddy delivered to 
the local mills currently ranges from G$1,700 (US$8.45) to 
GY$2,200 (US$10.95) per 140-lb. bag. The General Secretary 
of the RPA noted that the prices for the grain increased 
from GY$1,600 (US$7.96) per bag after the last harvest, 
partly because of the floods but primarily as a result of a 
rise on the world market where semi-milled rice is US$260 
per ton, up from US$200 per ton. 
 
     -------------------------- 
     Flat Income Tax at 33 1/3% 
     -------------------------- 
 
¶3. The National Assembly approved the Income Tax Amendment 
Bill March 2 after the ruling People's Progressive 
Party/Civic (PPP/C) rejected proposed amendments by the main 
opposition People's National Congress Reform (PNCR). The 
election-year bill raises the income tax threshold to 
$25,000 (US$124) per month or G$300,000 (US$1492) per annum 
from its previous level of $20,000 (US$100) per month or 
$240,000 (US$1194) per annum. In addition, the amendment 
removes a graduated tax bracket system in favor of an across 
the board 33 and 1/3% income tax rate, previously the 
highest rate. The Minister of Finance, Saisnarine Kowlessar, 
informed the National Assembly that the new income tax 
threshold will relieve some 20,000 persons from paying taxes 
and leave about G$800 million (US$4 million) per year more 
in the hands of taxpayers. Kowlessar also anticipates a 
higher level of tax compliance and that the simplification 
of the tax regime will free the Guyana Revenue Authority 
(GRA) to focus on other areas of revenue collection. 
However, the PNCR, although agreeing in principle with the 
increased threshold, pressed for a larger increase in the 
threshold and argued that the across-the-board would 
effectively increase taxes for some.  EmbOff calculations 
show this is not true. 
 
     ------------------------------ 
     New Interest in Airline Sector 
     ------------------------------ 
 
¶4. The Guyana Civil Aviation Authority (GCAA) is processing 
 
GEORGETOWN 00000329  002 OF 002 
 
 
applications for two groups of investors who have indicated 
interest in establishing airline operations in Guyana.  A 
new operation could start in June. Director General of the 
GCAA, Chabeelanan Ramphul, said these groups have to satisfy 
a number of conditions, including adequate financing and 
cash flow projections for the next three years, before 
approvals are granted. The GOG is proceeding cautiously in 
vetting such investments since the collapse of Universal 
Airlines in August 2005 (Ref C) and the collapse of Guyana 
2000 and Guyana Airlines before that. North American 
Airlines, a U.S.-flag scheduled charter carrier, is the only 
service offering non-stop flights to Guyana from the U.S., 
and a recent transport sector study called for a proactive 
approach in persuading airlines to operate in and out of 
Guyana so as to develop more regional air transport routes. 
In addition to North American Airlines, British West Indian 
Airlines (BWIA), LIAT, Caribbean Express and Meta (of 
Brazil) currently offer services to Guyana. 
 
   ------------------------------ 
     Guyana-Cuba Energy Initiative 
     ------------------------------ 
 
¶5. Prime Minister Sam Hinds launched the "Guyana-Cuba Energy 
Saving Initiative", a program which entails replacing 
incandescent light bulbs with energy saving lamps at no 
charge to consumers. This program is one of several Cuban 
government initiatives initiated following a visit by 
President Bharrat Jagdeo to Cuba during February 2006 (Ref 
D, E) and mirrors Cuban efforts elsewhere in Suriname and 
the Eastern Caribbean (Ref F, G). The Government of Cuba has 
offered to provide the GOG with almost 600,000 light bulbs 
for the program.  According to a GOG release, Cuban 
technicians will visit homes to replace bulbs.  The release 
stated that conversion is expected to reduce electricity 
consumed by 80 percent. An estimated 800,000 bulbs would be 
needed to cover the conversion exercise in areas being 
served with electricity across the country. Hinds noted that 
the project was launched in Linden because of the high 
electricity consumption in that community. The Guyana 
Chronicle Newspaper reported that "the bulbs are Chinese 
made, with the Philips brand name, and were obtained through 
an agreement between Cuba and China".  COMMENT: The answer 
to the question posed in Ref F is three, according to 
photographs in April 6 newspapers depicting a team of Cuban 
technicians installing a fluorescent light bulb at the 
President's official residence. END COMMENT. 
 
BULLEN