IDB approves loan for finance management
Stabroek News
June 11, 2004
The Inter-American Development Bank (IDB) on Wednesday approved a US$28M soft loan for Guyana aimed at improving the management of public finances.
The loan will support a reform agenda aimed at ensuring continued fiscal sustainability and the transparent and efficient management of public finances.
Marco Nicola, the deputy representative of the IDB noted that it will take the next two to three weeks to finalise the contract for signing then access to the funds will be immediate once the government meets certain conditions.
Among the conditions will be the adoption of a procedural manual to be used by the auditor general in regards to the Audit Act.
Of the US$28M soft loan, US$15M will be designated as Balance of Payment Support to be placed into the Consolidated Fund but the first release will be US$5M and the remainder is to be disbursed over three years.
The remaining US$13M will be used for technical support to enable the efficient management of the public finances.
According to an IDB press release, the project "will support a series of legislative and administrative steps designed to increase efficiency and equity of the tax system and improve public expenditure management and transparency. These measures were agreed upon by the Guyanese government and the international community on the basis of the recommendations of a series of technical assessments conducted by international agencies over the past two years. The steps were taken within the framework of the Enhanced HIPC Initiative - the international effort to provide debt relief to heavily indebted poor countries, including Guyana."
The programme, whose implementation will be led by the Ministry of Finance, takes the form of a hybrid lending operation consisting of a policy-based financing component and an investment component. With respect to the first, the initial phase of the programme is aimed at establishing a modern legislative framework for fiscal and financial management, with subsequent phases supporting the effective implementation of the reforms.
For the investment component, resources will be invested in the development and implementation of a comprehensive modernisation plan for the Guyana Revenue Authority, as well as in the expansion of an integrated financial management system recently installed with the support of the Canadian Development Agency.
At the same time, in supporting the implementation of constitutional reforms adopted in 2001 in the areas of public audit and financial and fiduciary oversight, the programme will strengthen the role of parliament in the oversight of fiscal and financial management.
The IDB loan is for a 40-year term, with a 10-year grace period, at a one per cent annual interest rate during the grace period and 2 per cent thereafter. Local counterpart funds total US$1.5M.