Crime wave needs national solution
-IMF mission leader
By Patrick Denny
Stabroek News
December 9, 2002

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Most of the key problems in Guyana, including the crime wave require national solutions, says Jorge Guzman who is in Guyana as the head of mission of the International Monetary Fund (IMF), to review the implementation of measures to reduce poverty.

The IMF is providing a US$75M loan on concessionary terms from its Poverty Reduction and Growth Facility to support the implementation of the strategy outlined in the Poverty Reduction Strategy Paper (PRSP).

In an interview with Stabroek News on Saturday Guzman says that it is very important that the leadership of the political parties work to resolve their differences and be able to improve the functioning of key institutions such as Parliament.

Identifying security as one of those problems, Guzman said it was an issue not foreseen when the poverty reduction programme was designed and it was affecting private investment and growth.

“That has to be dealt with not only from the government standpoint but broadly from society. The society at large has to come together to deal with this problem. It is a threat to all whatever political party, whatever group, it is a threat to the country.”

Also, Guzman says, “Guyana’s economic problems and development problems would be lessened if there was more co-operation between the political parties and its key institutions of government such as parliament.”

He acknowledges that difficult issues are impeding the opposition’s participation in parliament but in the Fund’s views, Guzman says, “it is important that progress be made and that both sides make utmost efforts to have these institutions play the role that they should in a democratic country.”

Guzman says the present security situation has a negative impact on the economy and is one of the challenges the government faces in implementing its poverty reduction programme.

However, he says the donor community is willing to make resources available to Guyana as the security situation constitutes a complex threat that needs to be addressed urgently.

Guzman says the IMF is interested in the security situation because of the impact it has on the economy as a whole and the welfare of the Guyanese people.

“We discuss these issues with the donor community, with the government etc and the importance of moving forward.”

He explained that the donor community wants to make sure that those that can help, move quickly to help in ways that the government thinks their assistance can be most productive.”

Discussing the implementation of the PRSP, Guzman believes that progress was being made but conceded that there were challenges, including the security situation.

“The security situation is an issue that has hurt the economy; the external situation e.g., the weakness of tourism has affected exports of many products”.

Guzman says too that there are challenges in specific sectors that affect the economy such as the electricity supply situation and the problems in the bauxite industry. “These things are problematic areas that have adversely impacted the economy and the important thing here is the need to be proactive.”

He stressed that whatever is done in the short term has to be consistent with long term growth, explaining that “at times it is easy to take short term measures which are palliatives but do not solve the fundamental problems, so it is important to keep in mind the need for a recovery over the long term for an enduring growth of output and employment.”

Guzman, who is attached to the Western Hemisphere Department of the IMF and has been coming to Guyana for the past two years, describes the PRSP as an important instrument for co-ordinating the work of the different donors and international financial institutions interested in Guyana and working with Guyana.

“The donor community here is co-ordinating its activities in such a way so that we try to reduce ... areas of overlap and to accelerate the assistance in the key areas”, he pointed out.

Asked about the Fund’s attitude to the reports of corruption here and whether it has taken action to assess the accuracy of the reports, Guzman says that the IMF has the capacity to audit or investigate the reports.

He noted that in the IMF as well as the donor community at large “there is deep interest in reducing the amount of leakages”.

Guzman says the approach the Fund is taking in terms of the support it is giving to the programme, is focused on institutional strengthening to try to improve the functioning of key institutions where leakages may probably be occurring.

“The approach we are taking is not looking at this as going after corrupt officials or anything of this nature. It is looking at systemic problems that create incentives for corruption”.

Guzman said the Fund believes “if one acts in these areas in this way then the problem has to diminish over time.”

He says the government and the society are conscious of this problem and that in the PRSP there are critical measures that are attempting to deal with these issues such as tax reform and procurement reform.

He added that there are various policies in the PRSP that are designed to improve efficiency in the public sector, which deals with this problem indirectly.

George Bindley-Taylor, the IMF’s Resident Representative says that historically in looking at what are the causes of corruption one tends to look at institutions which are weak and in which people take advantage of these weaknesses.

“For that reason therefore you find that in most of the programmes now there is a concentration on transparency, accountability and strengthening of the technical arm whether it is a ministry or a department.

Those are the ways in which you would hopefully deal with those particular problems.”

He noted that the IMF deals mainly with macro-economic matters - the general direction of the economy - explaining that while there are always allegations of corruption these have to be dealt with internally.

“We get involved with specific inputs into helping countries be more transparent with rules and regulations and strengthening institutions so that they are more efficient.”

He added that “the more efficient an institution is the less likely somebody would be willing, or need to deal with a corrupt official.”

Stressing the importance of dealing with corruption, Guzman says the government understands and believes that it is a very important issue and that is why in Guyana’s programme this institution building is a fundamental element.

He says that in Guyana there are many institutions that are in need of strengthening some of which will take years or decades to do properly.

In terms of institution strengthening, Guzman said that one of the pillars in the PRSP is reform of the tax system.

He noted that a Fund mission from its Fiscal Affairs Department had submitted a number of recommendations to the government, which it is studying at the moment.

He contended that presently the government was collecting taxes from a relatively small number of people who are paying high rates, and the idea behind the reforms is to widen the tax base, reduce the distortion and to make the regime more equitable.

He says the government is working to a specific timeframe for introducing the reforms and that it would be having discussions with the Fund over the next few months on the issue.

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