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French Guiana Economy

After assuming power in the fall of 1996, the Wijdenbosch government ended the structural adjustment program of the previous government, claiming it was unfair to the poorer elements of society. Tax revenues fell as old taxes lapsed and the government failed to implement new tax alternatives. By the end of 1997, the allocation of new Dutch development funds was frozen as French Guianase Government relations with the Netherlands deteriorated.

Economic growth slowed in 1998, with decline in the mining, construction and utility sectors. Rampant government expenditures, poor tax collection, a bloated civil service, and reduced foreign aid in 1999 contributed to the fiscal deficit, estimated at 11% of GDP. The government sought to cover this deficit through monetary expansion, which led to a dramatic increase in inflation.

The economy of French Guiana is dominated by the bauxite industry, which accounts for more than 15% of GDP and 70% of export earnings. Other main export products include rice, bananas and shrimp. French Guiana has recently started exploiting some of its sizeable oil and gold reserves. About a quarter of the people work in the agricultural sector. The French Guianase economy is very dependent on commerce, its main trade partners being the Netherlands, the United States, Canada and Caribbean countries.

In recent years, the tourism sector has flourished. By the end of 2006, tourism had grown by 400% compared with 2005. In the last years big hotels have been built all over the country to satisfy the needs of the growing tourism sector.

Gold mining is relatively unregulated by the government, and this important part of the informal economy, estimated as much as 100% of GDP. The mining process is very bad for the environmental, making the water used by the local people undrinkable because of the use of some chemicals. French Guiana has attracted the attention of international companies in gold exploration and exploitation. Companies present include Blue Ribbon Resouces Ltd, Cambior, Canarc Resource Corporation, IAMGOLD, Golden Star Resources Ltd.

Some big companies are getting the hardwood out of the jungle. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists both in French Guiana and abroad.


Economy - overview
The economy is dominated by the mining industry, with exports of alumina, gold, and oil accounting for about 85% of exports and 25% of government revenues, making the economy highly vulnerable to mineral price volatility. The short-term economic outlook depends on the government's ability to control inflation and on the development of projects in the bauxite and gold mining sectors. French Guiana has received aid for these projects from Netherlands, Belgium, and the European Development Fund. French Guiana's economic prospects for the medium term will depend on continued commitment to responsible monetary and fiscal policies and to the introduction of structural reforms to liberalise markets and promote competition. In 2000, the government of Ronald VENETIAAN, returned to office and inherited an economy with inflation of over 100% and a growing fiscal deficit. He quickly implemented an austerity program, raised taxes, attempted to control spending, and tamed inflation. These economic policies are likely to remain in effect during VENETIAAN's third term. Prospects for local onshore oil production are good as a drilling program is underway. Offshore oil drilling was given a boost in 2004 when the State Oil Company (Staatsolie) signed exploration agreements with Repsol, Maersk, and Occidental. Bidding on these new offshore blocks was completed in July 2006.

GDP (purchasing power parity)
$3.846 billion (2007 est.)

GDP (official exchange rate)
$2.404 billion (2007 est.)

GDP - real growth rate
5.1% (2007 est.)

GDP - per capita (PPP)
$8,700 (2007 est.)

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