Donor fatigue a major challenge: Jagdeo

by Terrence Esseboom
Guyana Chronicle
July 21, 1999

BOLD initiatives will be needed to overcome domestic and global hurdles, according to Finance Minister, Mr. Bharrat Jagdeo.

On the international arena, Jagdeo said Guyana must come up with strategies to circumvent international hostility to small states.

He said, too, that countering widespread `donor fatigue', finding new buyers for local products which are gradually losing their preferential market status, and accessing additional funding for national development programmes will be major challenges for the country.

"...because we are such an open country, we will have to confront an international environment which is increasingly hostile to small countries," he told his audience at Friday's commissioning of the $900M Pouderoyen water project, West Bank Demerara.

The Finance Minister explained that the traditional sources of financing for many small countries are "drying up."

Facilities within financial institutions such as the Inter-American Development Bank (IDB), and the International Development Association (IDA), an arm of the World Bank are no longer replenished as in the past.

Jagdeo explained, "Many of the industrialised countries have budgetary problems and domestic challenges and therefore they are not putting resources into these special facilities which we have traditionally accessed to finance many of our programmes."

He also pointed out that international aid is also drastically reduced because of `donor fatigue'.

However, the Department For International Development (DFID), an agency of the British Government, has been funnelling billions of dollars here to brace this country's development thrust.

The water sector has received more than $5B in aid to accelerate national schemes.

Education also benefited from a $3B, five-year package to fund the Guyana Basic Education Teachers Training (GBET) initiative.

The challenge is for national planners to "take into account...the change in the international environment. They (the preferential markets and access to development funding) might be totally eliminated or be curtailed significantly," Jagdeo warned.

Domestically, Government programmes must reflect the priorities of the people.

"...often we find that the programmes (organised by the Government) counter to the final achievement of these objectives", Jagdeo admitted.

He said this predicament is not peculiar to governments, as non-governmental organisations (NGOs) also face these daunting challenges.

"We have to ensure that we finance our development from growth in the economy, from careful management (and) borrowing for projects that will ensure that the country moves ahead," Jagdeo advised.

He said the country can no longer borrow to finance consumerism.

He blamed the country's current indebtedness on this faulty economic strategy.

"For too long our country has lived above its means. Today we are reaping the consequences of that when we have to spend more than 60 per cent of our revenues on servicing debt," the Finance Minister explained.

"We have to ensure as we move forward in our development programme, that we don't leave that legacy for the children," he continued.

Additional challenges include progressing without destroying the environment through mining and forestry activities, and transforming public sector management.

The latter must be "more supportive" of private sector goals.

Government initiatives must guarantee prosperity of the people and its capital ventures must shift from rehabilitation to expansion, Jagdeo stated.

He said, too, that rewards for innovations, through an updated incentive regime, must also be in place to spur development schemes here.

"That's what it will take to survive in the (domestic and international) environment," the minister counselled.

Political stability and inclusiveness will also be vital if this country is to prosper, Jagdeo said.

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