Guyana pursues sound macroeconomic policies

Guyana Chronicle
June 25, 2003

Related Links: Articles on economic concerns
Letters Menu Archival Menu

AN Inter-American Development Bank (IDB) Report last year said Guyana has pursued sound macroeconomic policies, deepened structural reform, and sought debt sustainability and relief under International Monetary Fund (IMF) for a decade.

Poverty surveys revealed a strong relationship between economic growth and the reduction of poverty between 1993 and 1999. “However, since the December 1997 elections, the country has endured a battery of exogenous shocks, political turmoil, and the recent increase of violence and criminal activity that combined to undermine economic performance. During this trying period with competing demands for resources, the authorities increased social sector expenditure,” the IDB observed.

The Government’s most recent macroeconomic and structural reforms were supported by a Poverty Reduction and Growth Facility (PRGF) from November 13, 2000 until the expiration on December 31, 2001. Since then, the Government continued to accelerate the implementation of reforms that had been delayed and negotiated a new PRGF for the 2002-2004 period, which was approved by the IMF Board on September 13, 2002, the Bank said.

But it noted that the private sector continues to face “a weak enabling environment for trade, investment and business expansion. The specific challenges would require the Government to deepen reforms to improve the trade and investment regime, tax policy and administration, the commercial legal environment and access to land, financial intermediation, business and sector regulations, promotion strategies, and other governance systems,” the IDB urged.

The Bank emphasized that while accelerating and sustaining economic growth in order to facilitate durable poverty reduction is the foremost challenge facing the country, it is not sufficient, given other important development challenges facing the country. Among the other challenges are the modernization of the public sector and the further strengthening of social programmes given the current environment characterised by low economic growth and weak institutional capacity.

The Bank said its strategy is to promote growth oriented programmes and policies, which if reinforced by the strengthening of governance, security and justice, public sector systems and social programmes, will contribute to poverty reduction in Guyana. To implement the strategy, the Bank seeks to help Guyana address its three major development challenges.

In order to implement this strategy, the Bank proposes an indicative programme containing 14 operations for US$244.3M in the 2002-2005 period. “The proposed pipeline reflects the concentration of resources in each strategic area: The growth -oriented programmes are for information and communications technology, a trade and investment facility, agriculture, a deep water harbour and port facility, two road projects, rural roads, and an environmental loan, which account for 60.9% of resources, the Bank reported.

The IDB is Guyana’s most important development partner being the largest donor under the original and enhanced Heavily Indebted Poor Countries (HIPC) Initiative, the largest creditor to Guyana with operations spanning most sectors and the largest provider of technical assistance and policy advice.

Bank disbursements from ongoing operations represented 6.7% of Gross Domestic Product (GDP) in 2001, 14% of public expenditure, and 49% of official development assistance to Guyana. (Chamanlall Naipaul)

Site Meter