IMF advice on overcoming Guyana challenges

Guyana Chronicle
May 24, 2000

INTERNATIONAL Monetary Fund (IMF) Resident Representative in Guyana, Mr Ebrima Faal has said crafting of a system that creates an enabling environment for the development of the Private Sector and strengthening the Public Sector to deliver efficiently the services that only Guyana can provide are the main challenges facing this country in its drive to reshape the Public Service.

However, the objectives must be achieved in a more cost effective way, taking into account the real budget constraint that faces the nation in its decisions on expenditure, he said.

Faal proferred the advice Monday at the opening session of the `Senior Officials' Conference' which is brainstorming approaches to Public Service reform at Hotel Tower, Main Street, Georgetown.

According to him, while it is difficult to accept such a radical shift in the role of the Public Service, it must be embraced first, before a consensus would evolve around a strategy that puts the focus on re-orienting core Government functions.

Simultaneously, the methodology must take into consideration that some key activities will, by necessity, remain the responsibility of Government.

These include, the formulation of sound macro-economic and financial policies, judicial and legislative functions, law enforcement and provision of public goods that the market will not or cannot make available in sufficient quantities, Faal said.

He posited that, if such an accord can be reached, the primary obligation of the Government will be to address issues of equity - poverty reduction and income distribution - beyond that which markets acting alone cannot offer.

Faal said the presence of top managers in Government, the Private Sector and other agencies, at the forum, ought to give a crucial signal to the local and international community that Guyana is taking stock of the bottlenecks hindering continued growth and development.

It means, too, that Guyana is beginning to redress the hurdles, in part, by pushing to alleviate the difficulty of reforming the Public Sector.

Faal said the caucus is timely, given the planned Public Sector Modernisation Programme and the current discussions between the Government and the Inter-American Development Bank (IDB).

He acknowledged that, over the past decade, Guyana has implemented policies that radically changed it from a socialist-based command economy to one that is market-based.

Though difficult and often painful, steps have been taken to reverse the effects of over two decades of economic decline and turmoil, through trade and exchange liberalisation, improving the incentive framework by removing controls and subsidies, reforming public enterprises and bolstering financial systems.

Their collective effect is evidenced by the drastic reduction in inflation, strengthened fiscal and external position and, more importantly, a rise in the per capita income.

In addition, Guyana has regularised its external debt situation with its creditors and, together with economic and structural reforms, put itself to benefit from debt reduction from the Highly Indebted Poor Countries (HPIC) Initiative.

Faal said the restructuring, which might be categorised as first generation reform, has established a broad socio-economic framework that facilitates continued macro-economic stability and confidence and increased involvement of civil society in the formation of policies and programmes.

Driven mainly by fiscal pressures, the reforms tend to accomplish themselves relatively quickly and in a largely technocratic way, he pointed out.

Faal contended, though, that they can be deemed second generation reform, which seeks to address the long term institutional adjustments that are needed to consolidate and sustain what was previously done.

Successful implementation of second generation reforms, amongst them a clear commitment (by all stakeholders) to the process of Public Service reform, is a critical element for the effective consolidation of the economic gains and structural changes accomplished over the last decade.

Minister of Public Service, Mr George Fung-On, who delivered the keynote address, Head of the Presidential Secretariat, Dr Roger Luncheon and Minister in the Office of the President with responsibility for Finance, Mr Saisnarine Kowlessar were in the distinguished gathering listening to the IMF expert.

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