Comments Finance Ministry ...
World Bank report 'draws wrong conclusions'
Guyana Chronicle
September 16, 2003

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THE representatives of the World Bank did seek the Government's request to finalize the preparation of their Development Policy Review on Guyana, but the draft report by the consultants reflected only the opposition's perspectives and therefore drew wrong conclusions about what obtains in Guyana at the present time.

So explains the Ministry of Finance.

A summary of the ministry's comments on the draft report obtained by Guyana Chronicle yesterday says that although Finance Minister Saisnarine Kowlessar, submitted his comments for consideration in the final DPR on September 8 the draft, which is reportedly still being finalized, so far reflects only the views of consultants recruited by the World Bank.

On the report's chapter on "Political Economy - A Crisis of Governance," the Finance Ministry says "The ruling PPP was not consulted on the write-up of the governance chapter. But Opposition parties were. The ruling party considers the governance chapter as reflective of the PNCR statements and extremely biased. Obviously, in its present form, the Government will not associate itself with the report.

"Specifically, this section suffers from wrong factual analysis of events that led to the deadlock. The draft paper takes a rather simplistic reasoning of ethnicity, power and prestige, bitterness and subversion in part as the causes of political deadlock. In general, the chapter was not written in a constructive manner that engenders continued political dialogue. In a sense, it further polarizes the political climate."

Says the ministry on the report's chapter on Economic Transition - An overview of development outcomes: "While the case of drug-trafficking is supported by data, the paper provides no evidence of money laundering and other aspects of organized crime. What were the conduits of money laundering and what were the types of organized crime referred to in this chapter?

"The report writes about increasing higher deficits in particular for 2003 and in the medium term. What the report does not acknowledge is that the underlying deficit is much lower and that it is the result of the restructuring of the sugar and bauxite sectors that increased the deficit to 10 percent of GDP. The IMF took these factors points into consideration in approving the Poverty Reduction and Growth Facility (PRGF). It is prudent that the paper looks at the underlying deficits and draw comparisons or at least mention the contribution of public sector restructuring as the reason for the increasing fiscal deficit. After all this is a programme that has been agreed to by the Bretton Wood Institutions.

"For ease of comparison, it would be better to show the increase of the share of wages with respect to GDP resulting from the increase in public wages emanating from the 1999 wage arbitration award.

"The draft paper speaks about productivity increase in Guyana but does not provide an empirical basis of measuring productivity. No such detailed work has been conducted as the country as Guyana does not have data on capital stock and even the labor force data is weak. The real reason for increases in real wages should therefore be investigated. Was it for example the rapid decline in inflation levels from over 100 percent in 1990 to single digits at the close of the decade?

"The paper speaks of ineffective use of donor resources yet it does not provide any evidence of same. It would be better to provide reasons for the ineffective use of donor assistance so as to draw conclusions and lessons learned for future efficient use of such resources. The last sentence is an appendix to the Collier and Dollar study without application of the causes to Guyana.

"The paper makes sweeping statements on donor fears on Government control of projects is not accurate. A check from the bilateral and multilateral donors does not support this assertion. A footnote may be in order to point to the donor who feels this way so that the Government could begin to address this issue specifically with the donors."