PNC/R concerned over public debt, `disjointed' projects
Finance Ministry says new schemes properly appraised
Stabroek News
January 25, 2002

Huge loans contracted from the various financial institutions for disjointed projects that do not for the most part fit into any coherent development plan are likely to have serious repercussions for the country sooner than later, the PNC REFORM (PNC/R) says.

At a press briefing held at the party's headquarters in Sophia last Friday, PNC/R Chairman Robert Corbin said that government's announcement of US$50 million for the Basic Education Access Management Support (BEAMS) project in the education sector; US$33 million for road projects; US$32 million for rural electrification; and US$18.5 million for an information technology project were part of the disjointed projects.

He said of great concern was that the government's borrowing was not restricted to external agencies and massive domestic borrowing was costing the Guyanese public over $5 billion in annual interest payment. The combined domestic and foreign debt incurred at the end of 2001 was over US$600 million, he said, adding that an examination of the 2001 budget and the Bank of Guyana report for 2000 showed that the only area of expansion was the government sector.

Absent in the entire equation, Corbin said, was how the country will repay all its indebtedness when the growth rate and earning capacity declined significantly from 1994.

Responding to Corbin's statements, a Finance Ministry release said that the implication that the government has engaged in irresponsible foreign borrowing casts ludicrous aspersions on both the government and the multilateral financial institutions.

Government, the release said, enters foreign loan agreements to fund projects that are consistent with Guyana's development needs. Every foreign loan contracted was subjected to full and proper appraisal by both domestic and lending authorities as to its financial and social implications.

Corbin, the release said, would remember that between 1985 to 1992 the country's foreign debt increased from US$1.2 billion to US$2.1 billion. On the other hand, the release said, prudent economic management by the PPP/Civic government between 1992 to the present time has brought down the foreign debt from US$2.1 billion to US1.1 billion.

According to Corbin, the PNC/R was aware that several of the recently announced projects were really spending programmes that were not economically sustainable such as the Information and Communication Technology (ICT) project, for which the Inter-American Development Bank (IDB) has approved US$18.5 million with counterpart funding of US$4.5 million.

Corbin said that the IDB profile had grave concerns about such a scheme. He noted that according to the profile, the concerns were the present cost of communications and lack of trained personnel; a number of public sector automation projects had failed (one of the reasons being that they have used very sophisticated applications that require intensive participation of foreign consultants without building local capacity); besides the high cost of installation, the systems required continuing maintenance and reliance on foreign skills; and the impact of purely commercial ventures on the poor and rural areas tend to be minimal as services were limited and the cost of connectivity prohibitive.

There were great concerns raised about the e-commerce or call centres initiatives, the PNC/R chairman said, which were important elements in the project, as there was an over capacity of call centres globally. This has resulted in lower profit, Corbin said, and many countries falling out of the IT market. In neighbouring Trinidad and Tobago with very developed infrastructure and a much lower energy cost, he observed, the e-commerce business was in serious trouble and even in growth areas such as India, there were signs that the rapid expansion in the IT industry was slowing down. Noting that the IDB has taken note of the continuous brain drain, Corbin said that the government would essentially be creating white elephants or projects to be managed by expatriates. The general trend, he said, was for the government to stay out of the IT business and to encourage companies to bring their capital, skills and expertise to establish information technology business.

In relation to Corbin's remarks on the ICT project, the Finance Ministry's release said that it seems that the real objective of his remarks was to maintain the monopoly situation in the telecommunications sector.

The release said that the ICT project aims to provide the infrastructure required for the development of an IT industrial sector and simultaneously to empower significant numbers of young Guyanese to take a quantum leap into the world of technological skills. The project, the release said, like many others being undertaken by the government, has the specific aim of improving the economic lot of all Guyanese. (Miranda La Rose)