Donors back key poverty reduction strategy By Mark Ramotar
Guyana Chronicle
October 30, 2001

`Our goal is simple but ambitious - it is to establish the PRSP as the basis for our assistance (and) once this is confirmed as your poverty strategy, we will support it fully' - UNDP Representative, Mr. Richard Olver

GUYANA received full backing from the donor community yesterday as it moved closer to refining its poverty reduction strategy expected to open the way for further international development assistance.

The support came as representatives from the country's 10 administrative regions and others gathered at Le Meridien Pegasus Hotel in Georgetown for the national review of the final draft of the Poverty Reduction Strategy Paper (PRSP).

Once completed and submitted to the boards of the World Bank and the International Monetary Fund (IMF), the ultimate goal of the PRSP is for Guyana to benefit from further debt relief totalling US$25M annually.

President Bharrat Jagdeo told the gathering he was confident Guyana will benefit from the important debt relief which is expected to enable this country to spend US$25M more annually through initiatives outlined in the PRSP document.

The President extended the Guyana Government's sincere gratitude to all the participants in the strategy process, including the community groups, the target groups, individuals, the steering committee and the donor community for their invaluable contributions.

"We could not have been here today with this quality document had you not participated in this generous way," he told the large gathering.

"If we approach many of the programmes that we have in place as we've done the strategy - as a big Guyanese effort - regardless of politics or whatever else we perceive ourselves to be except Guyanese, if we all approach the task before us in the same way, then this country has a far way to go...and we can accelerate all of these things that we are talking about rather than (using) our energy on things that are not productive and which do not bring the kinds of results that we want," he said.

"If we focus all of our energy on constructive issues our country will realise its potential (and) I am sure that there are many areas that we have to work at improving and if we do it together, we will do it well," the President said.

He said that once the exercise is completed, Guyana will take the document to the boards of the IMF and the World Bank quickly and the resources will start flowing from next year.

He pointed out that the longer this process takes, the more money Guyana was paying back which means less relief. In this regard, he told the gathering that it was in their interest that there was swift movement to complete this document.

"We have a good product (PRSP document) now (and when) compared to many countries that have gone to the boards of these institutions, we have a superior product," he proudly declared.

In thanking the donor community, he pointed out that their involvement was in a way which is appreciated very much.

He noted that often people are very wary about the donor community's involvement and they see that as an imposition of views and that it could go against developing homegrown policies.

"...but in this case I want to thank you for the way that you were involved, not pushing, not imposing any particular view but helping us to refine many of the suggestions that came forward and making your own suggestions as to how we can better the document and the process," the President observed.

He also thanked all the members of the PRSP Secretariat and Head of the Presidential Secretariat, Dr. Roger Luncheon for playing important and critical roles in the entire process so far.

The Guyanese Head of State said too that Guyana still has a budget that is financed from borrowing with expenditure greater than revenue.

He said over the years the Government has managed to reduce that but Guyana still has a budget that is in deficit and still has to borrow to fill that gap.

He pointed out too that although there has been a number of useful suggestions, it always comes back to the question of resources to implement the programmes.

"Some could be done with very little financial resources, like changing a law here or there or improving processes...but a majority of the recommendations require money and unfortunately, because of the state of our country (we do not have the financial resources since) we're a poor third world country that still uses until now about 40 per cent of its revenue to service debt and we have to live within that economic reality in spite of all the progress that we've made," President Jagdeo said.

The President, in focussing on the possible "risks" to the PRSP, pointed out that any number of targets can be set but if the conditions were not there to move in this direction, these will not be met.

He said internal cohesion was of absolute importance.

"It is absolutely important that we have a stable society for us to achieve the targets that we set."

This was one reason why Guyana was still this poor, he said.

"...we have not, over the many years of our existence as an independent state, been able to have strong internal cohesion for various reasons, some of which might be objective but some very personal and subjective while some do not take the interest of the people as a whole," Mr. Jagdeo said.

To minimise this risk of internal cohesion and national consensus, the strategy contemplates the establishment of an institutional framework with broad participation of the various actors of society through which a continuous strengthening of dialogue is expected as a means to reconcile differences of opinion.

It is not possible to reach a total consensus, partly because of the lack of sufficient national and external resources to address all demands but also because of deep-seated mistrust in the body politic, the PRSP stated.

It was noted that the consultation process in Guyana with civil society has had a breadth and depth never seen before in Guyana, establishing a positive momentum for a process of dialogue that can continue to be consolidated and strengthened as a mechanism for examining and finding solutions to the many challenges facing the country.

However, it is possible that a sufficient degree of consensus may not have been reached to implement the PRS in a sustainable manner, especially with respect to the speed and depth of the reforms in the economic and social areas, or the significant relocations of public resources that are needed

President Jagdeo said the second factor has to do with trends in the world and developments that are taking place outside of Guyana, factors which this country has no control over.

"So with the best intentions in the world and with the strongest support from donors, we could see much of the progress that we've made reversed and never being able to accomplish these targets that we set which is reducing poverty by half over a defined period."

According to him, if some of the trends in world trade, world finance and the world economic system persist, the whole process of poverty reduction may be reversed.

"So we do not need only support in financial terms from the international community, we need a policy and a world environment that would allow us if we work hard in this country to succeed and to achieve these outcomes," President Jagdeo said.

He said this requires highly coordinated policies, not policies that conflict with each other.

"So there is a big risk that we may have all the goodwill in the world and we may work very hard, we may implement all of these programmes but because of one action that's taken in another country and in another part of the world, in another organisation, it could bring all of our efforts to there is that risk to our strategy too."

He told participants at the review that had to be aware of these risks and try to re-orient the country to them.

The strategy notes that globalisation presents both new opportunities and threats to Guyana.

Full participation in the world economy is an essential element for achieving the PRS targets.

However, given the openness of the Guyanese economy, participation also implies that the domestic economy must face several new risks, such as world recessions, financial crisis, dramatic swings in the prices of key export and import commodities, and lack of appropriate access to key markets.

Guyana cannot control these external threats. However, the strategy document said the country can minimise the effects by maintaining sound macro-economic policies, sector policies that encourage the production of export products, and relatively high level of foreign exchange reserves that help mitigate the impacts of an unfavourable international environment.

In this connection, the PRS proposes a series of measures directed to achieving the development of sectors of high productive potential, within a framework of macro-economic viability.

The third area of risk to the strategy that President Jagdeo touched on is the flow of resources.

He said he was also pleased to hear from the donors that this document could be used to better coordinate donor activities.

"I know for sure that some countries have been very helpful in this regard, they have already started to reorient their programme to supporting the thrust that you have outlined in this area," the President said.

It was noted in the strategy document that Guyana will continue to depend greatly on international aid for many years to finance a rapid and sustained process of social and economic development and poverty reduction

United Nations Representative to Guyana, Mr. Richard Olver pledged full donor support for the final draft of the PRSP.

"We have intentionally refrained from second guessing the people of Guyana (because) for us, it is most important that Guyana's (PRS) be effective," he said.

He recognised too that national ownership is the most critical element for a truly effective strategy.

As this is and must be a truly national strategy, the IMF and World Bank Boards will examine this paper and hopefully agree that it is a sound basis for HIPC debt relief, Olver noted.

According to him, the donors have only three primary criteria for judging the PRSP - the first being whether the strategy has been developed using the nation's best ideas for reducing poverty within its limited means.

And whether there has been an extensive and meaningful consultative process through which the voices of the widest array of people have been heard, especially those of the poorer themselves.

Regarding the first criteria, Olver said the donors are in fact more than impressed and satisfied that the consultative processes had given voices to people and communities all across the country.

The second criteria, he said, is whether the Government has listened to inputs through the consultative process, the extent to the sometimes conflicting advice that is heard, and modified its strategy to take new insights into account to assist in its overall approach.

Regarding this second criterion, Olver said the donors were quite impressed with the nature and extent of the changes that have been made in the strategy document as a result of the consultations.

"Important changes have been made in many areas," he said.

One example he gave to which great importance is attached is the new emphasis on the decentralisation of Government, empowerment of communities and improvements in public services and accountability.

"These are encouraging signs for the consultation and it helped to forge a new national understanding on poverty," the UNDP Representative said.

The third criteria, he said, is whether there has been a way to provide adequate and continuing feedback on the strategy during implementation so that it can be modified, improved and expanded to meet new gains.

Regarding this third criteria, Olver said the donors were satisfied that coordination mechanisms they had established with the Government and other groups to guide their joint work will result in much re-direction of their donor-funded programmes towards support of the PRS.

"Our goal is simple but ambitious - it is to establish the PRSP as the basis for our assistance (and) once this is confirmed as your poverty strategy, we will support it fully," he said.

Olver also said the donors were heartened that there has been such commitment to the creation of such a truly national poverty strategy.

He, however, noted that this was only the end of the first stage of the journey.

"We the donors look forward to (yesterday's) proceedings with great anticipation and hope to redouble our efforts in support of the goal of cutting poverty by half in Guyana by 2015," he added.

Among those at the opening were members of Cabinet, Members of Parliament, other members of the Diplomatic Corp, special invitees and representatives of the 10 administrative regions and non governmental organisations.

The Government's interim Poverty Reduction Strategy Paper (I-PRSP) was accepted by the Boards of the World Bank and the IMF in December 2000.

Since then the Government began a comprehensive public participation process towards the finalisation of the PRSP that ended this month.

A comprehensive plan on public participation with the focus on face-to-face consultation was developed and adopted by large sections of the civil society and the donor community.

A Poverty Reduction Strategy Secretariat (PRSS) was established in the Office of the President to implement the Participatory Action Plan (PAP).