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‘It’s the IMF assessment that matters’ –
Dr. Luncheon Approval demerits PNCR claims of corruption, mismanagement of economy

The International Monetary Fund’s (IMF’s) appraisal of Government’s management of Guyana’s economy is evidence of the good work the Administration to ensure economic viability.

This is Cabinet’s view on the IMF’s pronouncement and was conveyed to the Media by Head of the Presidential Secretariat and Cabinet Secretary Dr. Roger Luncheon at his weekly post-Cabinet briefing held at the Office of the President yesterday.

Dr. Luncheon described the IMF’s pronouncement as “a positive development” for Guyana. The IMF completed the first review of Guyana's performance under the Poverty Reduction and Growth Facility (PRGF) arrangement and based on the outcome, it has granted waivers to the country, as well as extended the programme period and approved additional interim Heavily Indebted Poor Country (HIPC) assistance.

The Executive Board of the IMF completed the review on September 5 of Guyana's economic performance under its three-year US$75M PRGF arrangement, which was approved on September 13, 2002. Guyana is now in a position to benefit from a further US$8.2 million grant under the arrangement.

According to a release from the IMF’s Office in Washington, “the Executive Board also approved Guyana's request for waivers on the non-observance of the end-December 2002 quantitative performance criteria on the net foreign assets and net domestic assets of the Bank of Guyana, and the end-December 2002 structural performance criteria.”

The Board approved an extension of the program period for six months to March 19, 2006 as well as Guyana's request for additional interim assistance under the HIPC Initiative of US$7M to help the country meet its debt service payments on its existing debt to the IMF.

Deputy Managing Director and Acting Chairman of IMF Agustín Carstens after the review commented: "Guyana has faced significant challenges since the start of its reform program in September 2002, including a more difficult political and security situation. As a result, private investment and growth have fallen significantly short of expectations. Implementation of key structural reforms was also delayed, with adverse effects on fiscal performance.

"The authorities' program aims at regaining momentum for reforms. Most 2002 structural performance criteria were implemented as prior actions for the completion of this review, including in key areas such as public enterprise restructuring and tax reform. Corrective revenue and expenditure measures are now in place to contain the 2003 fiscal deficit to a level consistent with macroeconomic stability.

"Sustained structural reforms remain key to achieving Guyana's poverty and growth objectives. The 2003-04 structural reform agenda focuses on strengthening tax administration in the Guyana Revenue Authority, improving public expenditure management, privatizing or restructuring the loss-making State-owned bauxite company, implementing a profitability-oriented wage and employment policy in the sugar company, and strengthening financial regulations and supervision.

"In concluding the first review under the Poverty Reduction and Growth Facility, the Executive Board commended the authorities for regaining reform momentum. Implementation of the program should lay the basis for sustainable growth and poverty reduction." Mr. Carstens said.

According to Dr. Luncheon, the IMF’s Board took note of the political instability, crime and terror that played a negative role on the economic performance. However, “notwithstanding those factors, the IMF praised the PPP/C Administration for maintaining the momentum with structural reform, fiscal procedure and monetary policies.”

Commenting on criticism of Government’s management of the economy by the Opposition Party, Dr. Luncheon said, “These approvals flies in the face of the strident claims/allegations by the PNCR that the economy is in shambles, the management is incompetent and corrupt. The approval by the Board defeats the PNCR's efforts to discredit the PPP/C management of the economy in the eyes of the donor community.”
In the context of the IMF’s approval, Dr. Luncheon noted that the “PPP/C Administration renews its calls to the PNCR to exercise proper judgment and to really put Guyana first.”

The HPS observed that not many Caribbean countries enjoy the civil arrangement that Guyana has with the IMF and as such, financial institution’s views on Guyana would be shared with other countries, especially those that Guyana depends on for assistance.
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