President hails IMF programme for Guyana By Abigail Butler
Guyana Chronicle
September 18, 2002

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`This is a strong endorsement of the Government's management of the economy' - President Bharrat Jagdeo

GUYANA must be practising sound economic policies for the International Monetary Fund (IMF) to approve the three-year US$73M programme for the country, President Bharrat Jagdeo said yesterday.

"I think it is a good thing for the country especially in light of some people trying to block this programme," he told reporters.

The credit was granted under the IMF's Poverty Reduction and Growth Facility (PRGF) for the amount which is equivalent to SDR 54.55 million.

The IMF said the Executive Board determined that Guyana's Poverty Reduction Strategy Paper (PRSP) "provides a sound basis for Fund concessional financial assistance."

The Board also approved additional interim assistance for Guyana under the enhanced Heavily Indebted Poor Country Initiative (HIPC) of SDR 4.13 million (about US$5.4M) to help Guyana meet its debt service payments on its existing debt to the Fund.

The PRGF is the IMF's concessional facility for low income countries. It is intended that PRGF-supported programmes will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a PRSP.

According to an IMF press release, this is to ensure that each PRGF-supported programme is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty.

PRGF loans carry an annual interest rate of 0.5 per cent and are repayable over 10 years with a 5 1/2-year grace period on principal payments.

President Jagdeo yesterday said the loan could send very strong signals that (with US$73M inflow from just one institution and the country securing loans from other institutions for various projects), Guyana could experience exchange rate stability since there would be a lot of currency in the system.

Apart from that, he said the credit clears the way for interim debt relief. He, however, pointed out that the Government has not met the point of completion but it is going to get interim relief from the IMF of about $1Billion (that is debt saving reduction of about $1Billion) which would clear the way for the World Bank, the Inter-American Development Bank (IDB) and other institutions to also give the country interim relief before it reaches completion point.

"This agreement sets the stage also for the completion point early next year. When we reach the completion point we will get about US$30M per annum in debt relief," he announced.

Speaking to reporters during a visit to the Medical Transcription Centre on the top floor of Citizens Bank in Georgetown, the President added that in terms of the interim relief it would be equivalent to about US$15M per annum.

"So it gives a strong signal that we are practising sound economic policies or the IMF would not lend you money if you are not practising sound economic policies," he pointed out.

President Jagdeo further explained that the IMF has a rigid Board on which other countries of the world are represented, noting, "if you do not have a good programme you are not supported."

"This is a strong endorsement of the Government's management of the economy. And apart from that it gives us much needed resources to generate greater economic growth and create employment," he stated.

He said that soon the World Bank will be approving another programme for Guyana and expressed gratitude that things for the development of the country are moving forward.

The three-year programme is being supported under the PRGF and is based on the PRSP.

Its objectives are to speed up output and employment growth in an environment of macroeconomic stability, and to reduce poverty on a sustainable basis.

The medical transcription programme facility which the President visited yesterday is undertaken by Decipher International of India, the Guyana Government and Demerara Distillers Limited.