Tough IMF talks loom - President warns by Michelle Elphage Guyana Chronicle November 26, 1999 PRESIDENT Bharrat Jagdeo is lobbying support from Guyana's financial backers for tough negotiations with the International Monetary Fund (IMF) on a continuing economic support programme. He yesterday said the talks starting next week for more structural adjustment aid would be under challenging circumstances. Opening the Institute for Private Enterprise Development's micro-credit and entrepreneurial development and training centres, the President said the talks will be tough against the background of the arbitral award for public sector pay hikes earlier this year. He explained that because of the salary increases awarded to the public service employees, the country has had some difficulties with the finalisation of the second annual arrangement under the Enhanced Structural Adjustment Facility (ESAF) with the IMF. "In the negotiations that we have ahead, difficult ones starting next week with the IMF...we hope that we can have the support of many of the countries here, the United States of America, Canada, the United Kingdom and other countries, but especially those countries that have enormous say on the Board of Directors of the IMF and the World Bank, (for) their representation to understand the specifics of our country," the President urged western diplomats at the ceremony. "Many of you know of the difficulties here in Guyana and I hope that you can also communicate to your representatives in the multilateral institutions where this programme would have to be approved, the peculiarities of our country, so that they can better understand the case as presented by us and they do not use a cliched or a general approach in viewing our case." An arbitration panel in August awarded a 31.6 per cent pay increase to public servants for this year and a further 26 per cent for next year. "We need additional debt relief, even beyond the HIPC (Highly Indebted Poor Countries) Initiative. After benefitting from HIPC we still use in excess of 50 per cent of our revenue in servicing debt...and after the enhanced HIPC Initiative, once we qualify for that, we'd still be using a substantial part of our revenue to service debt," President Jagdeo explained. He said his calls for debt relief and the assistance the multilateral institutions give to Guyana are crucial links that filter to the various sectors of the economy. The President said it is important that the country maintains macro-economic stability which is critical to the smooth functioning of the economy. Praising the path the Institute for Private Enterprise Development (IPED) has taken in helping micro enterprises, Mr Jagdeo said a lot of these small businesses would be in turmoil without macro economic stability. "They become unsustainable and they just die away," he said. President Jagdeo was pleased to see IPED focusing on export markets for the small businesses it supports, noting that it has been playing an important role in creating employment. He said he looks forward to the setting up of a special incentive regime for micro enterprises. This suggestion, he noted, was floated at the Business Summit he held with the private sector last month. The President also encouraged training at the micro business level, noting that small enterprises cannot be fully successful without this. He also referred to international trade negotiations which developing countries have entered, emphasising that they must be given preferential treatment to avoid severe adverse effects. "Our productive sector capacities are at a stage where we need great help. We need transition periods. We need special preferential treatment in the transition period to avoid major dislocations," Mr Jagdeo stressed. "There must be safeguard measures to ensure that countries like ours do not slip further back." IPED Chairman, Mr Yesu Persaud told the gathering that since its formation more than a decade ago, the scheme has helped more than 15,000 new entrepreneurs, creating employment for in excess of 43,000 people. The new centres are funded partially by IPED but contributions will eventually come from international agencies such as the British and the United Nations Development Programme to subsidise their operations at the start. However, Persaud said both centres will eventually be made self sufficient. Ms Sheila Peters, Charge D'Affaires at the American Embassy spoke on the role of micro credit in assisting trade. She said the U.S. Government is committed to four principles in designing and implementing micro enterprise programmes, which she said guided its support for IPED's micro credit enterprise during the years. These are: * a focus on women and the very poor; * helping the implementing organisations reach the greatest number of people; * supporting institutional sustainability and financial self sufficiency among the implementing institutions; and * seeking improved partnerships with local organisations in the pursuit of micro enterprise development. She related that of the 2,500 loans disbursed by IPED last year, 75 per cent were given to women. The delinquency rate for repayment has also dropped from about 30 per cent at the beginning to about 5.8 per cent at the end of last year. Peters, in assuaging concerns often expressed about the high interest rates slapped on borrowers from these schemes, explained that the organisations cater for extremely high risk clients. "They bring no collateral to the table. Their default rates are often high, particularly at the beginning of a programme and outreach and monitoring from city to rural clients is expensive," she said. But the American diplomat said despite the high interest rates, micro lending institutions have flourished. As it relates to Guyana, Peters prodded micro business entrepreneurs to expand their enterprises and improve their skills, calling on IPED to make its training financially sustainable in the long run. Indian High Commissioner, Dr Prakash Joshi also gave brief remarks, encouraging the development of small business. He noted that they are the best way forward for developing nations, given his country's experience. New Minister of Finance in the Office of the President, Mr Saisnarine Kowlessar was also at the ceremony. A © page from: Guyana: Land of Six Peoples