Official stamp of approval Editorial
Guyana Chronicle
September 21, 2002

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WHEN it was first announced, the IMF's Poverty Reduction and Growth Facility (PRGF) attracted suspicion.

Those weaned on the view that the Bretton Woods organisations represent the interests of a capitalist world intent on imposing free market systems on poor developing countries through harsh medicine were cautious when the facility was announced. The PRGF was then in many respects seen as a repackaging of the much assailed Enhanced Structural Adjustment Facility (ESAF) which emphasised the traditional menu of structural adjustment: increased liberalisation of trade and exchange regimes, reduction of the size of the state and increased use of market measures and a strong commitment to increased growth through domestic and foreign investment.

Yet, even the IMF and the World Bank proved that they were not beyond persuasion. Over the years, the approach of the two most powerful international organisations changed in much the way as their staff became more diverse. The banks began to increasingly listen to their critics, including those within the institutions themselves such as the former head of the World Bank, a staunch Roman Catholic whose concern for the poor and powerless was evident from the moment he assumed office.

Increasingly the World Bank and the IMF began to heed the cries of powerful non-state actors in the global system who distinguished between growth and development, and who complained bitterly that the banks should, apart from focussing on growth, also concern themselves with issues of accountability, transparency and the ever swelling armies of poor people in developing countries.

In the last five years, the overwhelming concern in the development debate revolved on the need to balance growth with a reduction of poverty since the evidence was that countries which embraced market economies found that while overall incomes may have increased, the gap between the rich and the poor had grown wider. At the same time, there was much criticism that the resources given to poor countries did not filter down to the most needy beneficiaries.

The Poverty Reduction and Growth facility was the answer of the IMF and the World Bank to this dilemma. Countries were encouraged to have broad-based participatory approaches to determining their economic and social priorities, which would be encapsulated in an indigenous bred Poverty Reduction Strategy Paper that in turn would form the basis for coordinated donor assistance.

The Poverty Reduction Strategy Paper represents therefore more than just a document about the way forward. It forms the blueprint for the country to draw down on critical resources from both the Bretton Woods organisations as well as other donor agencies and countries. Through the PRGF, developmental assistance will become more coordinated and focused.

The announcement earlier this week that the International Monetary Fund had approved a three-year credit facility of some US$73M is the official stamp of approval of Guyana's much praised Poverty Reduction Strategy Paper. It also silences the critics who maliciously contend that the facility was in jeopardy.

With the credit assured, the future of the programme agreed to by the Government, after exhaustive and extensive consultation throughout the country, is now on firmer footing.

This must be a considerable boost for the administration and President Bharrat Jagdeo, whose faith in macro economic stability ensured that Guyana was able to avoid the severe economic turbulence and uncertainty presently associated with developments in a number of states in the Caribbean and Latin American.

While Guyana still has many difficulties, and while we may have been set back by political and social instability, the religious adherence of the Government to exchange, interest and inflation rate stability have provided the perfect cushion from the present difficulties facing much stronger economies than ours.

The need to attract investment remains a high priority for the Government but this goal has been affected by the political instability over the past five years. Yet it must be pointed out that despite this fact, Guyana relative to other countries in the region has done well in sustaining economic growth.

Sound macro economic stability acts both as a catalyst and stimulus for economic investment and with the reduction of political tensions and increased guarantees over personal security, the country is well set to benefit from the economic programmes pursed over the past years and from the impressive menu of measures contained in the Poverty Reduction Strategy Paper.