Procurement law, sugar targets sticking points for poverty reduction facility By Gitanjali Singh
Stabroek News
July 17, 2002

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Though Guyana's Poverty Reduction Strategy Paper (PRSP) has been completed, it has not been considered by the boards of the international financial agencies as the government has to resolve transparency issues related to the procurement legislation, as well as set profitability targets for the sugar industry.

The PRSP was expected to go before the boards of the World Bank and the International Monetary Fund around June 3, but this has not been done to date. Additionally, simultaneous consideration of the new three-year Poverty Reduction and Growth Facility (PRGF) is necessary by the IMF to allow for further debt relief for Guyana. However, two outstanding issues holding up the process are procurement legislation and the profitability targets for the Guyana Sugar Corporation (GUYSUCO).

Stabroek News was told that the World Bank shared similar concerns as local groups concerning the procurement legislation rushed through parliament on May 29, last and was discussing these with the government. Additionally, a study is currently being done by the World Bank on setting profitability targets for the sugar corporation and these would need to be agreed to before the IMF would begin consideration of the PRSP and PRGF.

Sources have indicated that a World Bank consultant was here some time ago to review the procurement legislation and had raised concerns over some of its provisions, including the composition of the National Procurement Board. These concerns are being discussed with the government.

Meanwhile, President Bharrat Jagdeo is said to have told the Building Forum, a body encompassing architects, engineers, surveyors and other interests in the construction industry, that the Act passed had to be reviewed by the Procurement Commission, establishment of which was held up because of the deadlock between the major parties, PPP/C and PNC/R, on the composition of the parliamentary subcommittees, including the Appointive Committee.

The Building Forum met Jagdeo on June 24, to air its concerns on the legislation and the President was said to have stressed that the process leading up to the drafting of the procurement legislation was characterised by widespread consultation. But Auditor General, Anand Goolsarran said he never saw the final draft taken to parliament to offer his comments on and the Building Forum also echoed these sentiments.

Jagdeo is said to have told the Building Forum that he was standing firm on his position that there be five persons representing the public sector and two from the private sector on the National Procurement Board. The forum is against such a composition, arguing for stronger private/professional representation. The President, one source said, suggested that the composition of the board could be raised with the Procurement Commission when that was established.

It had not been mentioned before that the Procurement Act would have to be reviewed by the Procurement Commission and it is not clear if the commission suggests changes whether these would be translated into amendments to the Act.

Closure of this issue is not necessary for the World Bank's consideration of the PRSP, but it is needed for the IMF's and the same goes for the profitability targets for Guysuco. The World Bank, which is responsible for structural reforms in Guyana, is also seeking to have GUYSUCO shift from a system of production targets per year to targets of profits.

Guyana has been negotiating a new PRGF with the IMF since November last year after the earlier three-year programme was aborted when the mid-term review of the second year programme could not have been done. This followed an 18-month delay in moving from the first year programme into the second year programme.

President Jagdeo had expected this PRGF to go before the IMF's board by the end of June but this did not happen. It is not clear when this would be done as it depends on when satisfactory progress is made on the fronts of procurement legislation and GUYSUCO.

Having a credible track record in macro economic management is crucial for Guyana to be able to secure additional debt relief which would provide another US$25 million per year for the Treasury.

Guyana first entered into an IMF three-year arrangement from 1990 to 1993; a second arrangement ran from 1994 to 1997. The third programme began in 1998, but was aborted after only one release of SDR (Special Drawing Rights) 17 million.