IMF bowls cricket stadium googly
Feasibility study required, releases US$8.3M
Stabroek News
July 29, 2004
The International Monetary Fund (IMF) has asked the government to undertake a feasibility study of the proposed cricket stadium, noting that it should meet certain targets as set out in Guyana's Poverty Reduction and Growth Facility (PRGF).
A press release from the IMF also announced that the Executive Board of the IMF had completed the second review of Guyana's economic performance under its US$73M PRGF arrangement. This decision entitles Guyana to the release of a further US$8.8M under the arrangement.
The IMF stated that "To improve the quality and efficiency of public spending and safeguard debt sustainability, the authorities plan to establish a five-year rolling Public Sector Investment Program, to conduct feasibility studies for all large projects, and to strengthen procurement procedures. In this context, the authorities have committed to keep the planned construction of a sports stadium within the program's fiscal, debt, and social spending targets, and to take compensatory measures, if necessary, on the basis of a feasibility study."
The timeline to build the stadium for the event is already thought to be tight even without a feasibility study which can often take many months or years.
The government does have a commitment from the previous BJP-led Indian government to provide a grant of US$6M and a soft loan of US$14M to cover the rest of the expenses, amounting to about US$20M. It may be the soft loan aspect that has alerted the officials of the IMF given that an offer of soft loans from Venezuela to finance fuel bills under the Caracas Energy Accord fell foul of the fund. There is also the issue of whether the new government in India is as enthused about the stadium as the previous one given that there has been no official word on the subject since the Congress Party took office in May. Guyana has been awarded six matches in the World Cup and this was predicated on the building of the stadium. Some $4.2M has already been approved by cabinet for preparatory works which is to come out of lottery funds.
The press release from the IMF states that at the end of the meeting on Monday, Takatoshi Kato, Deputy Managing Director and Acting Chair, said:
"Guyana's macroeconomic performance has been broadly in line with program expectations, despite a difficult security and political situation and wage pressures. Important progress has been made in advancing key structural reforms in the fiscal, governance, and public enterprise areas. Nevertheless, growth has remained weak, reflecting structural weaknesses and the difficult political situation. Accelerating the pace of poverty reduction remains an important challenge. Moreover, Guyana's debt burden remains high, even following debt relief under the HIPC Initiative.
"The authorities' medium-term program, embodied in the Poverty Reduction Strategy Paper (PRSP), seeks to address these challenges on the basis of prudent macroeconomic policies, including sustained tax reform, the introduction of a value-added tax in 2006, careful wage policies, adherence to strict limits on external debt, and prudent monetary and exchange rate policies.
"Sustained structural reform remains key to promoting private sector development, diversifying the economy, and achieving the poverty reduction and growth objectives of Guyana's PRSP. The 2004-05 agenda focuses on continuous restructuring in the state-owned sugar and bauxite companies, and strengthening the regulatory framework of the domestic banking system. In addition, budgetary procedures will be further improved, and social spending better monitored and targeted.
"Going forward, strong efforts to safeguard debt sustainability and steadfast implementation of macroeconomic and structural policies in line with the PRSP will provide a solid basis for sustained progress toward poverty reduction," Kato said.