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DOCUMENT OF INTERNATIONAL MONETARY FUND AND NOT FOR PUBLIC USE FOR AGENDA EBD/98/59 June 16, 1998 To: Members of the Executive Board From: The Secretary Subject: Guyana-Enhanced Economic Policy Framework Paper for 1998-2000 Strllctural Adjustment Facility­ ' Attached for consideration 1998-2001.
Guyana for the period arrangements under the Enhanced will be brought by the Executive Directors is the policy This subject, together wi.th ·Guyana• Structural Adjustment Facility (EBS/98/101, 6/16/98), framework paper for s request for to the agenda for discussion on a date to be '1lltounced.

Mr. Itam (ext.

35350), answer technical Mr. Hussein or factual questions (ext.

36567), relating to this paper prior to the Board discussion.

or Mr. Jiang (ext.
or Mr. Jiang (ext.

34284) is available to Section in accordance the Documents Unless transmitted, the appropriate Organization DevelopmentProgramme deletions, will be (ext.

36760) is otherwise notified, the document Board and with by the Executive with the procedures·approved to the European Commission (FAO), the Inter-American Development (UNDP), following its consideration (EC), the Food and Agriculture Bank (IDB), and the United Nations by the Executive Board.
Att: {I) Other Distribution: Department Heads INTERNATIONAL MONETARY FUND GUYANA Enhanced Structural Adjustment Paper, Framework 1998-2001 Policy Facility Prepared by the Guyanese with the Staffs of the International Authorities Monetary in Collaboration Fund and the World Bank June 12, 1998 I.INTRODUCTION the 1980s and to reduce economic imbalances the widespread stabilization that had emerged in in the 1980s and toward programme and restructuring the severe growth development of the government's economic an economic macroeconomic that would alleviate 1.
Guyana has been implementing designed to promote has been to reorient economic management impeded economic objectives growth debt burden), by technical and arrangements) and (IDB), the Caribbean Development Bank (COB), the European from assistance donors.

Poor Countries on strong policy to widespread financial arrangements (HIPC), with a completion performance.

with low inflation, and a lasting poverty.

The broad strategy away from the administrative controls that had The principal policies.
economic policy have been to achieve sustainable a substantial reduction in the external These efforts have been supported two three-year external viability (including solution Union (EU), and bilateral Indebted for Heavily conditional in February 1999, from the Fund (including Guyana would also benefit under the Initiative market-based point now expected resources poverty.
ESAF Bank from the World Bank, the Inter-American Development toward the achievement reduction of the macroeconomic in the overall fiscal by reform of the public sector that involved its of and the privatization for financial intermedia­ conditions reform, civil and the restructuring 1996. has been complemented controls, 2.

Guyana has made significant progress objectives of the economy.

Substantial deficit through tax reform, expenditure streamlining, In the financial public enterprises.
ed (mainly tion have been strengthen the central been enhanced, bank's role has been adopted.

removal of restrict sector vention; and-in most wlnerable support.
At the same time, the exchange ions and the reduction through ion of the short-term by the reform service the institutional the enactment of recognit groups has been improved and indirect the removal in tariffs; affected sector, through the incentive and trade system has been liberalized framework for the private inter­ the process- of the adjustment with transitional of virtually adverse process impact have been provided all price controls and state Act), Institutions have control with the instruments of monetary the Financial - 2 - framework paper (PFP) summarizes progress 3.
This policy years under the ESAF objectives covering arrangement.

1998-2001, The paper also examines (1995-1997) the basis for Guyana's Guyana's 1 and outlines request external financing the last three the government's for a new three-year this period.

ESAF needs during made during arrangement medium-term II.

ECONOMIC PERFORMANCE AND POLICY IMPLEMENTATION IN 1995-97 economic and remained broadly of 1997 associated 4.
Guyana's annual determination the last quarter December growth December 1997 elections, 1994 to around 6Yi percent averaged 4 percent programs during 1995-97 except on track, for a weakening ted with in public were implemen in large part with political 2 and the effects of the El Nino weather inflation a year, and 12-month in finances disturbances surrounding the Real GDP phenomenon.
declined from 16 percent in in December 1997. more than doubled to 16 percent of GDP a year during strict control 1995-96, of non-interest current gains in tax administration, significantly in interest payments, lower central higher surpluses bank operational losses.

of the public in 1997 public However, and substantially savings strong efficiency decline fell to about 9 percent of interruption overruns 5.
Public reflecting expenditures, a enterprises, savings because and expenditure services projects points 3 percent 18 percent because of the shortfall and advancement to rehabilitate of GDP during 1995-96, in public of GDP due to a shortfall in tax administration and the adverse in government revenues partly enterprises by the public of some capital expenditure).
(mainly unexpected Although infrastructure-rose and social the physical effect on incomes of El Nino, on goods and outlays capital by about 7 percentage sector was reduced declined slightly of GDP rose to 9 percent by half to to about of GDP in 1996.

However, of GDP in 1997, the public even though sector's capital overall deficit the overall deficit of the public outlays outlays-mainly savings.
6. Credit sector private policy during in the context was geared 1995-97 of market-determined toward facilitating interest rates, economic activity and money velocity declined in the of economic discussion in previous 1 A detailed 1988 is contained April 2, 1997 (EBD/97/33), (SM/96/241, and selected developments policy framework papers, and in the recent background 9/24/96).
and policy issues measures since implemented on of which was issued the latest paper on economic developments 2General elections reelected under the leadership OAS, and the Commonwealth and there were street the opposition political brokered leaders of the results.

The audit is expected an agreement were held in December 1997 and the ruling coalition of Mrs. Janet Jagan.

However, Secretariat.


(PPP/Civic) These elections was by IFES, were observed by outcome mid-January the elections until 1998 when regional was challenged demonstrations among the political by end-May to be completed parties for the conduct 1998. of an audit - 3 - for 1997, expansion a year while bank credit with the continuing it slowed in 1997 Except somewhat of 18 percent average strong, although rice production).
dated mainly by significant improved of the generally because treasury bill rates (three-month) inflation, about 10 percent.

also declined (by remained Partially about 3 percentage reflecting the decline points) net repayment significantly positive.

declined remonetization in part due to a slowing of the economy.

expansion Broad money rose by an to be sector activity to the private of economic of credit to the private sector was accommo­ continued ( especially by the public to the banking system.
Partly fiscal situation over sector the period as a whole and lower to by 8 percentage points during in treasury bill rates, deposit during the same period, but real interest rates 1995-97 and lending rates ( about five months 7.

The official international reserve US$3 l 5 million to US$269 million nal debt more than offset the strong The external current investment.

of GDP in 1997. to 14Y2 percent in 1994.


Higher export receipts in imports interest associated and lower increase with the expansi account deficit narrowed from 19Y2 percent of GDP in 1994 payments on the exter­ on of position remained strong rising to in 1995-97, of goods and nonfactor services) of imports compared build- concentr of the Inland and Customs In addition, of structural Departments), Act was repealed the operations Departments, reform, sector.
of antismuggling ated on institutional the computerization of measures, of the public sector a new Revenue and reforms included the strengthening for the execution establish program (combining efforts in 1995-97 tional Institu arrangements legislation of the operational (PSIP).

was passed to and Customs Revenue sector, In the financial were passed; and regulations of the exchange of the central bank was presented for sugar and gold exports 8.
In the area ing, and streamlining the public the Inland Revenue and the improvement investment Authority the government initiated program budgeting.
Act (FIA) and other conforming legislations Control Act to strengthen foreign exchange from 60 percent was lowered the maximum import duty 20 percent 1997, a plan was developed the public sector a regulatory establish continue the implementation view to enhancing Minister (in collaboration the civil framework the independence surrender in 1994 to 20 percent of a modernization and marketing order to implement and restructuring efficiencies.
a regulatory in June 1996 and eliminated from 35 percent issued an administrative During the latter half in 1997, in line with CARICOM's Common External Tariff(CET) with the IDA and IDB) to streamlin were reduced in in December 1996.

Also, in 1995 and to policy.


In June e the size of of 1997, steps were taken to the Financial 3 the Exchange system� and a revised Also, the stages sugar company (GUYSUCO) and to the liberalization in 1994 to 25 percent for the state-owned requirements In early 1998, the Finance plan for the company its production Institutions including to complete to Parliament.

service.

:framework.

with a of the Financial 3The new regulations provisioning for borrower limits, standards.
bad and doubtful debts, and improved reporting Institutions Act have tightened the requirements for the capital standards, raised and disclosure to meet regional and international established adequacy -5- exchange regime, a deepening ofstructural reforms, and invigorating the private sector; budgetary that will direct resources to the social sector areas and basic infrastructure.

policies and to 23 percent of GDP by 2001, 12.


The strategy will aim at raising gross national savings gradually from about 20 percent ofGDP in 1996-97 effort coming from the public sector.

Investment relative to GDP private sector but substantial would be maintained at about 31 � percent a year with its composition shifting in favor of the private sector and with the public able .fiscal and external position, external assistance, including under the IDPC Initiative.
sector concentrating on infrastructure.

To attain a sustain­ Guyana's adjustment effort would need to be supported by through a new three-year ESAF arrangement and debt relief with an increasing contribution by the 13.

A detailed timetable program is set out in the main macroeconomic (the associated selected policies policy matrix (Attachment I).
Below are brief descriptions of the and structural reforms envisaged and financial indicators economic period during the 1998-2001 are presented in Attachment II).

of measures to achieve the objectives of the medium-term B.Macroeconomic Policies Fiscal policies ( especially in the social sectors and the infrastructure) savings would increase to about 16 percent of GDP by 2001, to generate sufficient public savings and a of tax reforms and reorientation of primary current investment debt.
Public the continuation 14.

The medium-term fiscal strategy is to continue to permit increased reduction in public princip•y through expenditure.

would reduce the overall deficit of the public approximate permit a significant reduction system-and facilitate credit This, together with somewhat lower and more efficient capital expenditure, sector from 9 percent of GDP in 1997 to balance by 2000.
The strengthening of the public sector finances will continue to in its net indebtedness-particularly expansion rates.

to the private sector and a decline in interest to the domestic banking Central government the tax system is still.

insufficiently to changes responsive The effort to maintain central at about 33 percent of GDP a year over the medium tenn would be and would depend critically on broadening the tax its elasticity.

objectives recent progress, 15.


Despite in income and reforms are needed to improve government revenues crucial to attaining the fiscal base, improving government.

Substantial on income and imports.

involve taking measures land registration and up to date valuation.
tax administration, and recovering·costs ofservices·provided by the with the was made during 1991-97 rationalization of taxes base in 1998-2001 to further broaden the tax progress Initiatives to improve the efficiency of collection would and administration including · -6 - The new Revenue Authority, will be Departments, efforts will focus on improving which had merged computerized and audit and a and internal ofinspection system to tax administration, the medium-term ensuring a more effective of the Inland Revenue (particularly 16.
With regard agencies.

the efficiency of revenue-collecting the operations and Customs made fully operational, wider coverage (at the former Customs systems also become fully operational for audit and coverage.

the civil incentive corruption.


service, and more qualified structure-in order to improve In addition, the and help strengthen tax enforcement staff of the Revenue staff will be recruited-through recording, valuation, the data bases and improve separated .from Authority will be and a better salary and to stem and collection of the informal sector).
and the Inland Revenue The ASYCUDA and the TAXADMIN Departments, respectively) would over the medium term to enhance the infrastruc Spending ture, and meet allocations to in accordance -would increase reform plan with the civ.il service improve of the civil expenses projects.

will be carefully managed programs, comparable expenditure positions-would and retain staff in the public set under the HIPC initiative.
service, expand associated as education, social capital with completed health, poverty alleviation In accordance sector, adjusted ofthis to gains in productivity 17.Government the caliber the recurrent priority areas-such targets with the and with a view to recruit for key and critical levels their increases system maintained accommodating these efforts and make the budget reforming agement control, .from CIDA and USAID) would become well entrenched.
in 1998-2001. budgetary an effective provide Also, the government requests tool of economic be gradually sector.

Outside process to and principles.

will be confined introduced practices and auditing in 1997.
The wage bill of the central no supplementary will be continued, at about 8 percent Reform of the system of budgetary to within wage in line with the government the budgetary in the private except performance merit-based relative to GDP will be will continue its policy of To complement in emergencies.
policy, the government of modem expenditure for the introduction is man­ and program budgeting (introduced with assistance wages and salaries-especially upwards of general adjustment, 10 percent formulation, execution, of a satisfactory growth rate and lower unemployment requires an investment is to be at about 15� percent improvement Public of GDP a year over 1998-2001. and continued of its efficacy.
of public 18.The attainment level appropriate therefore investment in infrastructure Investment drainage systems, to focus on the rehabilitation education tation and the EU.

The institutional strengthened- executing particularly agencies-after in the areas of completion and preventiv These projects of schools systems.

e care) would focus on the rehabilitation and the sea defense system.
In the social sectors, and clinics ( emphasizing the of the road network, attention primary and secondary tion and sani­ will continue and on the improvement will be supported framework for the implementation by resources of the water distribu from the IDA, IDB, CDB, of the PSIP will be further and coordination of the Ministry of the ongoing restructuring identification project among of Finance.

-7- Public enterprises performance of the enterprises that would remain is expected 19.
The overall is expected to improve however, sector.

private expenditure a year in 1998-2001. of the public expenditure However, and an increase over the medium term.
The combined current to decline somewhat after 1998 as public efficiency gains in operations in the savings of the public enterprises This rate of savings would be more than sufficient sector in the public operating surplus, are sold to the enterprises would result in a reduction to about 5 percent of GDP to finance capital in current of around enterprises 2 percent of GDP a year.

20.The government will continue panies of LINMINE and BERMINE are expected 1998, and eight other 1999.
GUYSUCO has guide the operations private of the company sector management contract in 1998 and its.five-year strategic plan, was put in place in early 1998.

Also, GUYSUCO's will remain in place until the company is restructured.

with the privatization programme.


The bauxite com- to the point of sale again in small public enterprises revised are also targeted for privatization and the regulatory framework to to be brought Monetary policy and financial sector reform with the inflation and balance to rely on indirect of payments instruments for objec- In addition, policy will be consistent 21.Monetary tives of the program, and the central bank will continue monetary management.
well as its monetary management assistance ·expected improvements to the banking system.

microenterprises) of the financial in the public Increased from the Fund.
The pursuit would be accompanied of a prudent credit finances, as the public by measures intermediation, capacity will be enhanced to the private financial sector, deepen credit· further with continued technical by the policy would be militated I sector reduces its net indebtedness to the small and sector (including to improve and strengthen banking supervision.
the institutional framework bank as the technical and supervisory skills of the central bank's experience in the treasury was started on an experimental timely with a view to facilitate operations.
open-market money program (which bill market and move toward full-scale reserve 22.The central basis in April 1997) would be &s$essed and strengthened intervention Also, given Guyana's existing issues bank's interest of three-month auctions early redemption of treasury in domestic on lending but kept be maintained with treasury bill auctions, as a means to facilitate the development rates a positive (without currency to nonresidents under review.
the central bank will reopen The central to be market determined (in line with the average rate in and the rediscount pc>licy will continue bills) in the interest spread.

(through will continue treasury bills of a ·secondary market.

reference to the central bank) will to discourage rates).
The ceiling 23.Financial sector operations its reorganization, the central with a view to enhancing recapitalization, reforms will focus on (i) the modernization of the central its capacity for monetaty management, foreign liabilities and further transfer·of bank's through including from its books to (ii) implementation regulations especially regarding government; of the FIA - 8 - (iii) nonbank financial institutions; (iv) implementation revision of the 1966 circulars of the restructuring licensed reserve requirements; remaining government bank) with assistance from the IDA and IDB with a view to ensuring strengthening the financial recovery (v)elaboration government's 25 percent (the ratio achieved with the sale ofNBIC in late 1997); regulatory share in the financial and (vi) in the medium term; sector below of a introduction sector.
framework for the insurance of plans to further reduce plan for the GNCB (the only of the institution and operational on liquid assets and External sector policies have exchange a substantial and since 1991 all transactions system is free of restrictions, n after the floating reforms implemented exchange rate.
The sharp depreciatio and the structural in in a significant response tional 24.Guyana's taken place at a market-determined of the currency, the trade liberalization measures, and resulted competitiveness years have enhanced recent including tradable in nontradi increase sector, about 5 percent in the real effective exchange as both private effect so far on competitiveness its objective substitution activities, (vis-a-vis Guyana dollar tary, and wage policies, reforms.
The central meeting its international reserves exchange the surrender except restrictions prudent fiscal, efficiency-raising market will be limited currency U.S. dollar) competitiveness through in the foreign exchange a development strategy the government will seek to maintain a stable remain and efficient import­ exchange rate for the investment of export-oriented to in the in 1996 of removal target and smoothing out temporary fluctuations the intervention and to improve to have had little Given rate that do not reflect fundamental economic trends.
exports.

An appreciation of trade system became free of all trade those relating to for export receipts, health and security rate in 1997 appears requirements intervention and exports structural With the to pursue through Guyana's concerns.

strong.

bank's adverse mone­ in the from the Paris Club creditors-including on Naples terms involving debt and has sought at least comparable Trini4ad and in the a 67 percent reduction treatment from debt and and commercial would remain heavy over the medium term.
At end-1997, debt outstanding (192 percent of GDP), amounted to US$l Y:z billion was about 17 percent of exports of goods and nonfactor Nonetheless, Guyana's public total operation creditors.
external public obligations Club bilateral value (NPV) of eligible 25.In May 1996, Guyana received Tobago-a stock-of-debt net present non-Paris debt-service nominal and scheduled debt service The fiscal of 427 percent the public debt-servi with a ratio of debt service-to-government 1998-2001. rts ratio to about 11 percent, revenues debt-to-GDP ce-to-expo burden of external debt remains ratio would decline gradually and debt service-to-government services.
revenues high, with an NPV of debt-to-government further relief, Without revenues of 52 percent.

to about 16 l percent but the fiscal burden would by 200 l and the remain heavy of about 35 percent a year during 26.In December 1997, the Boards of the Fund and the World Banlc decided would be eligible the Initiative under the IIlPC Initiative.
point, for assistance at the completion Following would be reduced the fiscal burden agreed debt relief under significantly, as the that Guyana -9- revenues NPV of debt-to-government ratio would be reduced govemment terms, debt relief under the lllPC Initiative 25 .percent NPV reduction revenues points by around 10 percentage USS2S3 million, is projec..1:ed at a year.

In NPV to equivalent creditors.


in debt owed to multilateral 6 and bilateral would fall to 272 percent and the debt service-to­ IV.STRUCTURAL AND SECTORAL POLICIES the role of the.

public 27.As indicated earlier, reduced over the medium term, with emphasis on the provisioa physical and social infrastructure administrative framework.
and sectoral policies promote that would create an environment and the maintenance To these ends, the government will continue to to private of the production diversification will be further of an efficient and durable in economic activities of a transparent regulatory, legal, and conducive a greater sector pursue structural base.

and investment A.Privatiution strategy is to rely increasingly on private sector-led investment generation.
28.The government's and income divesting/restructuring Part of the-divestment zation are restructured.

implement In parallel regulations to accelerate The government intends or broadening related proceeds may hJve to be used for expenditures belonging the privatization entities.
to the privati­ the share ownership of the remaining to enterprises that public program by program, such as severance pay for the displaced to the privatization, workers government will continue in the sugar, utilities and the :financial and insurance sectors.

to develop and to be offered for sale to the private 29.For the 1998 programme, entities LINMINE, BERMINE, Guyana Pharmaceuticals, National Printers, Oil Palm Estate, programme will include Packaging.
The remaining GUYSUCO-are to be restructured over the medium term.

Industrial Shipping, enterprises---,National Surapana Farm, Ruimveldt GEC, Versailles and· Seals and and Dairy Complex; and GNCB Trust.

The 1999 privatization Estate, sector include Wauna GNCB, GAC, Guyoil, Guyana Stores, under the Initiative in the form of a grant, slightly contribution 6The .Fund's disbursed obligations would amount to US$27.

l million to buy back IDA debt-starting reduction with the longest ratio.
in the NPV of debt-to-exports to the Fund (nine years .from the completion frontloaded would amoun� to,US$34.5 million, .and spread over the life of current from IDA will be used poin* The contribution and would be through the HIPC Trust Fund; these resources outstanding-to achieve the targeted -10 - B.Public Sector Reform Strategy service that complements public the essential services in close partnership the government with the to enhance compensation to and training work performance the is to be modernized by improving sector.
public delivers sector and effectively intends sector rules, monitoring To achieve this objective, while improving the next three years, 30.The government is keen to move toward a functional the private private its employees staff.

Within :financial and information syst departments to be given to agencies/ Georgetown, and several costs in health and education governments infrastructure.

NGOs, in policy formulation are to be gradually are to be strengthened to ensure Increased ems.
Key ministries such as the Revenue services are to be contracted participation is being sought by the government.

are to be restruct of the private introduced maintenance the public public sector ured, greater Authority and the Public out to the private is autonomy of Hospital sector.

User feasible.- The local of small basic sector, including the labor unions wherever and rehabilitation and C.Agriculture and Forestry strategy development stresses for 40 percent of GDP and the labor force.
In agriculture, the importance of agriculture of exports, and over 45 percent the government emphasizes services enhancing for rice, in particular extension the need and in secondary towns and rural areas.

Guyana has markets for sugar (17 percent of GDP and 26 percent of exports) 31.The government's forestry, which in 1997 accounted employed 41 percent of for improving international and improving benefitted and rice (4 percent dislocation rice markets in the EU.
from preferential essential market access, infrastructure of GDP and 17 percent of exports).

These sectors if changes are made to international trading arrangem would suffer severe ents and access quotas to the for GUYSUCO that includes an sugar from approximately efforts per pound in 1997 to around competitiveness, 32.To improve the strategic plan investment plan will seek to reduce the average cost of producing US$0.19 2002.

Current will be strengthened.


to foster research practices production penetrating increasingly in terms of both quality competition and the use of better seeds.

As in the case of sugar, in the Caribbean, and variety.
rapid growth in rice production, productivity to penetrate To sustain to raise farm and milling in the Caribbean new markets markets USS0.13 and extension per pound by the end of the strategic and Latin America the government by GUYSUCO services are rice exporters will continue to improve Latin America and Afiica with strong plan in products agricultural that have significant growth potential-such 33.Nontraditional and fisheries-will livestock externalities associated access market to facilitate as will benefit from the al sector the country's intelligence.
with the efforts to.

rehabilitate infrastructure and efforts be promoted and the agricultur market and to disseminate - 11 - in agtjculture 34.Land reform is needed to encourag e investment The legal and regulatory development.

land tenure by simplifying procedures and modernizing land records.

land tenure policy that provides leaseholds welfare.

regularize land titling.
framework will be enhanced to increase for obtaining titles, strellgth ening of the land registry , In the area ofland reform, the government has developed a for allocation of public and/or sale of land to promote lands either through conversion of agriculnual development and social The Lands and Surveys Departm ent is to be given grea ter autonomy production to freeholds to expedite/ and housing of the security is working with the DFJD 7 pn establishing effective policies framework and the competing claims of the forestry sector has been constrained by an inadequate policy Commission 3 5.
The development and institutional The Guyana Forestry and institutions place a land-use planning forest management and biodiversity Iwokrama and the National Protected policy .

Following with the g� ting of more concessions.

these steps, forestry that will guide, monitor� and regu late concessi and long-term ons and exploitation strategy; and deepen research on sustainable such as the system ; put in conservation.
Areas project are supportive is exp ected to expand exploitation The govenup ent' s initiatives of its environmental in an orderly fashion between forestry and mining activities.

D. Mining investment to develop and fiscal arrangements will be designed to permit Guyana to receive a fair share gold, To this end, mindful of the need to protect the environment.
36.The government will continue to seek private oil, and other mineral deposits, concessions of the proceeds of its natural resources government and improve the existing seeking donor assistance sale ofBERMINE and LINMINE is expected to bring in new investment the mining sector.

for granting mining concessions.

and facilitate joint ventures a standardized approach system to develop policies and to ensure that the environment developed The is protected.
under its mineral policy of 1997 The government is also with investors.

and technology to will maintain diamonds, The E.Manufacturing and Tourism sector in Guyana, which accounts for 7 percent of GDP, continues technology and infrastructural constrai nts.

The high cost and 3 7. .

The manufacturing to be limited by outdated supply unreliable firms' ability internationally.
active in promotion of electricity and a shortage to ensure continuous production, CAGI and Guyana M.anutkcturers trainin g) programs (mainly through of qualified in� ers and skilled labor and comp ete quality, maintain consistent are more with IDB assistance for management.

Furthermore, Association hinder 7Previously the U.K. ODA.

- 12 - of long-term rates decline.

shortage equipment.

lending consultant borrow externally, equipment.
donors to upgrade the skills to obtain financing and high debt leverage constrain firms from retooling obsolete Some of these constraints Additional will ease as the infrastructure support such as the services institutional improv� and commercial may also help but the sector may need more foreign investors, the critical long-term finan cing for upgrading plant and technical assistance programs by Also, the government will continue to encourage sector manufacturers.
of private of a marketing or where possible a small sector with significant commercial potential.

Given by lack of funds for promotion and insufficient air transport.

with flora and fiwna-and with respect to its rain forests-teeming However, it is mainly 38.

Tourism remains constrained Guyana's biodiversity natural assets such as waterfalls, with the private government (working use of its embassies, particular sustainable ensures environmentally through a niche market could focus on ecotourism.
sector) will undertake a tourism and design development.

In this regard, the strategy, in marketing that and put in place a set of regulations V.INFRASTRUCTURE electricity, in telecommunications, 39.

The government program pation the legal and regulatory the government intends expand the systems in this area is focused on increasing raising for critical infrastructure sectors.
aviation, safety standards Over the medium term, private sector partici­ and in improving frameworks to focus on the rehabilitation of existing as well as to infrastructure, of infrastructure into new areas.

A.Electricity and Water in the power sector and distribution in recent facilities and unable to meet peak demand.

Following of Sask Power to purchase 50 percent has not been completed and the set back of GEC, the govern­ years, the rehabilitation transmission, improvements with the withdrawal 40.
Notwithstanding of the existing generation, the power supply remains unreliable encountered ment has approved The proposed mid-1998.

both its maintenance improved Reform Act (ESRA) and the Public private supply capital in Guyana.

legal and regulatory and management investment a new list of bidders and expects the company to be privatized around and capital programs.
With the passage of the strategic partner framework for the electricity Utilities Commission in GEC should allow for more stable will allow the GEC to increase of legislations sector-the to provide Act (PUCA)-the participation and efficient Electricity Sector of power an 41.
With respect work on a strategy to water, the government with the assistance of donors will continue to to strengthen the operations and finances of the Guyana Water Authority -13 - weak cost recovery, Sewerage and Water Commission (GS&WC).1 The key (GUYW A) and the Georgetown issues are weak finances of the companies, dilapidated facilities, turnover in management personnel.

The adverse effects of El Nlfto have exacerbated the water shortages.
Capital expenditure will .be targeted to repair and replacement.

In the interim, GUYWA has undertaken a study to ensure water access by the poor and has prepared a pilot program for private sector financed study services; GUYW A will adjust 2000.

The IDA, EU, EIB, COB, and DFID are currently financing the improvement of water supply systems in the regions.

GS&WC has already contracted out some functions to the private sector.
Also, water tariffs periodically to cover fully its· for private sector participation in the provision of water in selected pumping stations.

has identified options operating costs by the year In addition, participation and high an IDA strengthening ofGS&WCis being conducted with IDB assistance, the phased rehabilitation of the Georgetown water supply system and the 42.

In addition, including institutional preparation of a new organizational and recruitment of staff to improve the delivery of services.
The government will prepare a tariff study and a metering/pipe rehabilitation strategy structure, implementation of a new wage structure, during 1998·.

Urban and rural infrastructure 43.

The government/IDB Urban Development December 1998, will enhance the institutional This wouid facilitate services.

enhanced private sector participation Programme, expected to be approved framework for urban management.
in .the improvement and financial of urban in B.Transportation, Sea Defenses, and-Other Transportation in this sector is to rehabilitate and expand infrastructure, to support the private sector and exp ort development.

in priority areas as required 44.

The government's strategy particularly The government will continue with the rehabilitation water transport Central Transport Planning Unit, and centralize its capital programs, the government bas devoted substantial maintenance.
of the main road network, aviation and efficiency, and to update its Transport Plan, rebuild the the responsibility resources to road repair for roads maintenance.

to improve systems In and of water quality, 8The deterioration human and financial resources of the public potable water of quality and Georgetown, quantity.

while GUYW A operates GS&WC operates in the public service and infrastructure resulted service.
It is characterized mainly :from the lack of by the general inability standards systems to provide service the potable minimal international meeting water systems in the city of and maintains the potable water systems in the regions.

-14 - sea defense system has deteriorated and the loss of qualified high for the coming decade.

45.Guyatia's lack of maintenance, ments will remain program-focusing on: (i) establishing mentation; ment of local contractors; adequate and maintenance require­ staff.
Rehabilitation The government has initiated a medium-term imple­ the involve­ including speed up project including policy, sea defense (ii) improving the maintenance of the existing sea·defenses, a Project Execution Unit to designing a comprehensive due to budgetary over time and (iii) standards.
constraints, in the area of transportation have The first is the construction particularly been identified port to of a deep-water sugar, rice and other nontraditional as having of bulk cargo, 9 A recently other projects and immediate economic impact.

efficient handling 46.Finally, direct permit more exports.

which one facility could efficiently of the country reliance scant population, of physical establish functions.
Authority Ogle has been completed and the government is reviewing commissioned study will evaluate handle upon air transport factors facilities by 1999 an Airport for regulatory at the international Authority tion working against a major ground transport system.

Rehabilita airport have begun and the government intends to for the management of A study on privatization airports and a Civil Aviation options for the local airport the recommendations.
at alternative and the extent to containerized and other general cargo.

Second, the is evident from the huge geographical locations area and VI.
HUMAN REsOURCE DEVELOPMENT, ENvlRONMENT, AND POVERTY ALLEVIATION A.Health and Education in substantially deteriorated Health Plan that seeks over the care care; (ii) improve secondary district has drafted a National and expand primary health system, like the rest of its infrastructure, The.government in regional and hospitals; and (iv) strengthen the general by resources health 4 7.

Guyana's the mid-to-late 1980s.

next four years to: (i) strengthen (iii) services management of the health sector.
Hospital; will be supported logical, placed public current and capital from about 2 percent 4 percent as well as the preventive education, on health, facilities.

and the provision has been developed.

in the health sector aspects of health and disease prevention Also, a National expenditure Policy by the government from the IDA and IDB and will address of GDP by 2000 (Attachment of GDP in 1996-97 care.
In the health Nutrition improve These objectives techno­ the physical, emphasis sector, will be care at of basic health Accordingly, both would be increased to about 3� percent of GDP in 1998 and to about tertiary care at the Georgetown Public III).

all cargo is shipped 9 At present, facility.


Most bulk cargos originate transported by truck to the over the wharves in central Georgetown, a rather dilapidated in the Berbice region in the east; and rice and sugar are port in Georgetown, adding to road wear and congestion.
-15 - 48.To redress assistance of donors-has upgrade training; efficiency torate system regional educational (iv) increase in spending; the deterioration prepared facilities; student and (vi) strengthen in the quality a five-year (ii) reform and access to textbooks administrations.
and restructuring of education, the government-with education strengthen plan which will (i) the curriculum; the refurbish and improve (v) improve (iii) materials; teacher and instructional inspec- the lines of authority between the central ministry the management by reactivating the school and the the efficiency and effective- primary, and secondary school with its policy to improve at the early childhood, to raise pro-primary enrollment, expand teacher training, and improve Amerindians 49.The government will continue ness of expenditure and service delivery levels.
Measures will be adopted tion coverage, for the population, especially will establish for a wider participation of technical education materials, objectives, GDP in 1996-97 to about 5 percent with concentration mechanisms and vocational level.

In addition, and school maintenance-will budgetary allocations and poor rural communities.
in the provision, and will continue management with cost recovery education, at the tertiary resources to cover basic recurrent cost items-such as Consistent with these from 4 percent of significantly.

sector would increase ofGDP in 1998 and about 5� percent of GDP by 2000, be increased to the education on the early childhood, primary, and secondary increase secondary educa­ the access (Attachment IV).
levels Also, the government and quality of basic education and financing textbooks, B.Environment a vast, thinly (resulting well endowed of the population populated in Georgetow_n faces a peculiar cover and promising and the coastal zone territory yet has 90 percent situation: mineral resources, 50.The country with rich forest concentrated common to urban areas).
Also, the economic large part on its extensive renewable and nonrenewable natural' resources, ronmentally of industrialization, However, the ri$k of opening operations resource ately maintained and the health up the country too quickly and therefore living sewerage may affect both its ecosystem the current landfills, exploitation.
sea walls, environmental logging to largo-scale In addition, sanitary of residents, especially not yet witnessed widespread and social development exploitation conditions sustainable Guyana has in the costal problems of the country rests in requiring level degradation.

policy; Because ofits low population density and in the environmental the long-term sustainability systems, of natural areas.

an envi­ and mining of the population (inappropri­ etc.)
the productivity threaten 51.Environmental extraction of gold and diamonds, and chemicals that adversely (NF AP) the government ning and the factoring assistance protection are being·taken measures which takes place affect the environment.

in dispersed Under the National to avoid damage caused by the locations Forestry and with methods Action Plan plan­ land�use of conservation will seek to manage the use of the rain forest through Also, with a and forestry leases.
clauses in mining from the Commonwealth Secretariat and UNEP, the· government will establish -16 - system of protected areas development.

to conserve biodiversity and increase research forestry in sustainable 52.

The enactment important step in formulating work to manage and protect (EPA) that is responsible responsibilities and private investment for pollution through regulation will include projects; norms and standards of the Environmental a consistent natural resources Protection set of policies.
The act constitutes the legal frame­ ment of an agency and calls for the establish Act (EPA) in May 1996 was an for environmental regulation aspects the evaluation of environmental applicable impact of proposed government to all sectors.

Its permits, licensing environmental management; prevention and enforcement prohibition; and prosecution and/or investigation and control measures of environmental for damages.

through C.Social Safety Nets and Poverty Alleviation 53.
Long periods of economic poverty of social and deterioration with the othe.r HIPCs in some respects, 43 percent of the population defined as the equivalent areas, situation alleviation the Basic Needs Trust Fund, and the activities amongst with the heaviest incidence somewhat has been ameliorated of an annual operations ofNGOs.

and limited decline services in Guyana.


Although budgetary resources led to rising Guyana compares favorably remains one of concern (according to the government) below the povecty the situation with about line (officially income ofUS$110)-m ost of whom live in the rural V).
The the Amerindian population (Attachment (SIMAP), of the Government's Social Impact Amelioration by high growth in recent years and by the poverty Program will continue more effective to strengthen SIMAP while ensuring and collaboration including project will be reviewed 54.

Over the medium term, the government efforts through Coordination be enhanced, procurement, benefits often possess real output and income will be the key to raising the general tion and reducing of procedures and reporting systems.
of the beneficiaries.

of SIMAP with the ministries and other public and accountability In addition, standard poverty.

of both unemployment and so that it does not prevent limited skills-from presenting requests.
agencies will in matters such as the application for process groups-who the poor and wlnerable the simplification the existing targeting approval, of the popula­ of living levels poverty reduction In the long run, sustainable increases in in the social primary health sectors has increased noticeably care, and the rehabilitation in recent of poverty on a permanent basis.

Substantial would be required government expenditure 55.
Central years with priority given to basic education, as important steps toward reducing infrastructure outlays that continued result and reallocation ment would support the institutional of the agreed assistance donor support, changes to bring the social conditions and the release of budgetary under the HIPC Initiative, to acceptable standards.
resources from debt service as a increase would allow for a sustained govern­ It is expected of public spending toward nonsalary inputs and the to strengthen and maintenance, monitoring of poverty and the -17 - impact of growth and public amelioration efforts (Attachment VI).

expenditure.
expenditure.

as well as to improve poverty the targeting of VIL ExTERNAL FINANCING REQUIREMENTS account deficit Increases described the balance external current above will contribute in the export volumes the weakness of the policies 56.The implementation strengthening of payments.

The to narrow from about 14% percent of GDP in 1997 to about 10 percent of 1998-2001. expected to more than offset preferential markets 4 percent goods.

to :finance public and forestry.


external inflows for identified investments lower.

to the extent that the envisaged deficit a year over the same period, with continued shift in favor of However, current account to be correspondingly Nonetheless, of gold, timber, and on private investment is expected Guyana will continue to rely heavily on concessional to by e and capital external assistance investments significantly to would be targeted GDP a year during items are for sugar and rice in the EU.
The volume of imports would'increase in mining the are not undertaken, in gold prices and the assumed reduced access and nontraditional intermediat capital 57.External financing reserves international goods and nonfactor services.
the envisaged debt relief under the the envisaged policies the benefits IDPC Initiative disbursements requirements are about US$168 million are to be maintained at the equivalent a year for 1998-2001 months ofimports of 10 These financing are expected to be covered by requirements under the new ESAF arrangement and IDA/IDB credits, and by it is expected that VII).
At the same time, and build upon for the next 3-4 years will allow Guyana to consolidate (Attachment of four-five IIlPC Initiative of having external debt reduced to a sustainable level in the framework of the (Attachment VIII).

if VIll.
TECHNICAL ASSISTANCE REQUIREMENTS AND STATISTICAL ISSUES 58.The provision agencies bilateral of a comprehensive technical assistance from multilateral and will continue to be an important complement policy program to the government's may take time to materialize, high level is prudent in the case of Guyana given that financing at a relatively reserves sector 1°Maintaining increased private requirements vulnerability are subject to wide fluctuations fluctuations 1% months of imports based on historical for accelerated associated in commodity prices reform measures with export concentration on agricultural in world commodity and mineral which The effect of the prices and/or weather.
by up to reserves reduce and vagaries in weather could data for 1991-97. the likely resource under the HIPC initiative, up-front and committed products, - 18 - of Finance, important The government 11 Particularly are efforts to strengthen the Ministry macroeconomic efforts to improve this effort.

take steps to increase reforms.

Guyana's Guyana, and the Bureau of Statistics.

will continue remain deficient.


data and will seek external to support capacity reporting, ODA and Sweden in the preparation will provide Ministry of Finance.

secondary of government agencies, and improve data assistance In addition, in the form of advisors the Fund will provide of treasury expects The Bureau of Statistics of national income involving the reopening assistance and other statistics, while the Fund to the central attached bank and the in the development of a assistance bills.
It will strengthen the timeliness and frequency the Bank of but statistics technical sources.

to receive market of have improved the quality of statistical the institutional help from the 11The key areas and likely sources I. matrix presented in Attachment of such technical assistance are identified in the policy -19- ATTACHMENT I Guyana: Policy Matrix 1998-2001 PolioyAzca Objectives and Targets StrafoSia and Measures lmplo- mentation TA R.equimnents 1.Incentive policies a. Exchang e and trade system b.
Domestic pricing •Maintain a flexible exchange rate system.

1998-2001 Promote export- oriented economic growth, ensure external compcti• tivcncss, and main- tain appropriate incentives for private sector activity.

Avoid subsidies and rely on market pricing.

.

Price of electricity to be determined within newly established framework:.

regulatory C. Role of the private sector Increase the role of the private se<:· tor and encourage competi�.

.
.

Introduce an investor guide the one-stop and strengthen office (Go-Invest).

•Aooolerate land reform with steps to strengthen the institutions, the conversion of lease holds to free holds, making more, land available for economic activities.

and 2.

Fiscal policy and public sector reform a.

Central g overnment defi­ Reduce overall cit, improve capacity while increasing investment.

• Strengthen fiscal management.

Strengthen revenue.
Strengthen revenue.

• Continue to broaden the tax base by: - not renewing expiring contracts for tax remissions; and - making more, services subject to the consump­ tion tax.

• Make the revenue author­ ity fully operational.

• Continue to improve tax administration by strength­ ening tho newly created Revenue Authority through adequate staffing and computerization.
1998-2001 September 1998 1998-2001 1998-2001 IDB,DIFD 1998-2001 IMF 1998-2001 1998 IMF September 1998 IDA 1998-2001 IDA,DFID -20- ATTACHMENT I Guyana: Policy Matrix I 1998-200 lmple- Policy Area Objectives and Targets Strategies and Measures mentation Requirements TA Improve expenditure.

efficiency of .

Improve cost-recovery their scope.

.


Gradually increase non- mechanisms and broaden 1998-2001 1998-2001 interest current expenditure as a ratio to GDP while reorienting toward: spending priorities and maintenance expenses; public gradually adjusting service pay levels to those of comparable jobs in the private sector.

.

Enhance expenditure and management through the of adequate establishment fiscal management systems and more frequent monitoring.
control 1998-2001 1998 IMF, CIDA b.Public enterprises c.Public investment 1998-2001 1998 IDB IDA Joc;al .

Improve accounting, Strengthen governments management, and project implementation capacity through an urban development programme.

a Early 1998 IDA; and subsequently the efficiency .

Complete and implement and reduce the .


Bring to the point of sale Improve and financial pcrfor- regulatory framework for mance of the public GUYSUCO as agreed with further enterprises, rationalize their opera- restructure the company.

tions, size of the public Guyana Stores Ltd, Guyana September sector.

National Printers, Pharmaceutical Wauna Estate, LINMINE, BERMINE, and Versailles Dairy Complex.

Guyana Company, .

Restructure or privatize basic .


Maintain priorities remaining for the central government pro- capacity.

gramme (roads, sea defenses, Rehabilitate infrastructure and productive public enterprises.

power, water, social services).

1998 ·IDA 1998-2001 IDA 1998-2001 1998-2000 IDA,IDB CDB,EU •Ensure adequate provision for maintenance expenditures assoc:iated with existing and new investments.

the planned rehabilitation .

Implement OUYSUCO.

.


Strengthen the preparation of work for PSIP in cloae collaboration external agencies.

with 1998-2001 1998-2001 1998-2001 -21 - ATT AC'fIMENT I Guyana: Policy Matrix 1998-2001 Policy Area Objectives and Targets Stratogioa and Moaauroa Imple­ mentation TA Requirements d.Civil service reform Improve otliciency of public services.
• Dcvclop a new remuneration · structun, for managerial, pro­ fcaional, and technical positions in the civil aervi.ce to bring the remuneration to such levels, relative to the private sector, u would enablo tho civil service to attract and retain skilled per­ sons for these positions.

Septombor 1998 IDA, IDB Soptombec 1998 Docembor 1998 • Devolop norms and mechanisms for periodic adjustment remuneration structure tho private sector.

of tho vis-a-vis in order to • Review and streamline the pub,.
the lie sorvicc rulos (including pension schcmo) facilitate public service ment.

enhance transparency in key pcrsonnol decisions, improve incentives for perfor­ mance, and strengthen accountability .

.

• Completo tho restructuring manage­ of the Ministry of Finance and use that u a pilot to restructure the Ministries ofHealth and Education.
• Commence tho implementation January 1999 Docembor 1998 of tho new remuneration structure for managorial, professional, and technical positions in the public service.

public • Continue to implement 80Ctor reform: - computerization of informa­ tion systems.

• rostructuring of othor ministries.

- providing autonomy to agcncies/dopertmant.s.

- contracting out public services.


1999-2001 IDA.IDB - 22 - ATTACHMENT ... Guyana: Policy Matrix 1998-200 I Policy Area 3.Financial sector poU.cies Objectives and Targets Strategies and Measures tional plan of the new GNCB.

Strengthen institu-•Complete financial and opera- fmancial .

Continue to implement tional fr�ework, increase sector competi- tion, improve of effectiveness the fimncial and operational ffiltnlctUring plan for "new" ONCB.

monetary policy.

.
monetary policy.

.

Implement the new liquidity for reserve money and management framework forecasting foster the development of a secondary market in govern- meat securities and a more inter- actiw foreign exchange Imple­ mentation TA Requirements December 1998 IDA, IDB 1998-2001 IDA.IDB 1998-99 1998-2001 IMF 1998-2001 1998-99 IMF December 1998 September 1998 1998-2001 June 1999 IDB bank market.. Continue to institute a cost- sharing formula for bank supervision.
•Complete the reorganization and recapitalization of the .

Revise 1966 circulars Bank of Guyana.

.

Reduce the government's share .

Comply fully by all licensed in all financial institutions below 25 percent.

liquid requirement.

assets and reserve on trading Act.

with the financial institutions required minimum paid-up capital under the Financial Institutions regulatory a securities framework.

frame- .

Establish .

Introduce a regulatory .

Undertake institutional .


Reduce levels ening and modcmiz.ation of deeds registry.

of nonperforming loans in the banking system.

work for the insurance industry.
October 1998 October 1998 strength- September 1998 1998-2001 IMF, IDA - 23 - ATTACHMENT I Guyana: Policy Matrix 1998-2001 Policy Area Objectives and Targets S1rategios and Measures Imple­ mentation TA Requirements 4.Sectoralpolidel a.Agriculture and forestry nianagcmcnt contract for invest GUYSUCO Sugar: Improve •Continue the private sector productivity and efficiency, in refurbishmont until its restructuring and expansion of capacity and pro- grcss toward the restructuring programme is completed.
•Complete administrative of the industry.

.

Revise sugar levy and make meuures to establish roauJatory framework.

1998-2001 IDA February 1998 January 1998 January 1998 January 1998 December 1998 December 1998 IDA March 1998 1998 IDB it more tnmsparent.

.

Subject OUYSUCO to corporation tax at the normal rate.

•Bring import regime for inputs to GUYSUCO in line with other en=prises.
•Introduce semiannual performance benchmarks related to reducing unit costs of production into the management contract for OUYSUCO.

.

Complete revision of medium•tmn strategic plan for GUYSUCO to reduco costs to competitive levels..

Begin to implement pla n...Update all land registration, strategic improve scc:urity of tenure, and strengthen the land registry system for tiding.

•Adjust lease hold rents toward market-based strengthen lands commission.

values and and surveys Policy Area b.


Mining -24- ATTACHMENT ... Guyana: Policy Matrix 1998-200 I Objectives and Targets Strategies and Measures Rice: maintain .

Continue �litation and and and incentives, improvement of drainage producer improve quality of production, increase production sector participation.

1nigation and other basic infra- structure and promote private and exports while .

Shift more state-owned farmland maintaining the pre- from lease to free hold.
sencc of small farm- •Improve provision of land- production.

tiJling � ccs.

mers in rice Imple- TA mentation Requirements 1999-2001 IDB 1998-2001 1998-2001 IDB use of natural .

Ensure that forests are harvested 1998-2001 CIDA, IDB in a sustainable mamer and without damaging the tropical resources Forestry: forestry the basis of sustainable management on practices.

forest eoosystem by establishing effective policies and institutions.

Land reform.

.

Expedite land titling.


1998-2001 IDB,DFID Bring LINMINE and BERMINE 1998 restore operation Bauxite: LINMINE to a viable to the point of sale.

commercial with a view to eliminat- ing direct government involvement industry.

in the Other minerals: .

Maintain fiscal arrangements increase exports of gold and diamonds oil and and develop deposits.

cornpetitiwness.
cornpetitiwness.

other mineral to provide government with a fair share of proceeds from extract- ing resources without impairing 1998-2001 joint ventures with Develop comprehensive policies that facilitate domestic and foreign investors and help improve the availability data.

of geological C. Manufacturing and Expand activity value added.

tourism and .

Govemrncnt to work with private 1998-2001 IFC sector in implementing a marlccting study.
-25 - ATTACHMENT I Guyana: Policy Matrix 199~2001 Policy.Area Objccti'ves and Targets TA Roquiromeats d. Eloctricity Rehabili1ate the elec,.

tricity soctor and support the privati zav.on of OEC.

with the creation of a now GBC and related sectoral, policy and regulat.my reforms.

• Pot into effect and stBrt imple mentation of tho Electricity Sector R.ofbnn Act; the Public .. Utili1iell Amendment Act; and • the EIICll'I)' Sector Act Implement plan for the satisfac.
toJy trlllafor of management l'Olp(IIWbilitios and oporatiou tQ the strategic partner.

· • ·.

Im~ plan 1o incrouc eqllity · pm1icipation in the now OBC to pnvato investors (excluding · public mterprises).

1998 IDB 1998 IDB 1998-2001 IDB e. Transport.

.infra&truclure, and water IUpply R.ehabilitalo the transport and water supply networks.

• SOC!k additionld.

eamal auiatance for the nihabilita· · ~oftbetranaport netWork.

• Wtth external usastanco.


~eot tho management and · miintmianco programme for tho ,... dotonsea.

• Execute with multilateral usis- 18nee tho rehabilitation pro ·gnunino for the oxiating water and unitation facilities.

ln~uce.and improve cost~ 1'CCOVIH)' policies.

including the Phuins ia of long-run marginal cost pneing for wator.

• • Dewlop a national tranapodation .pi.

• Pn,pa.ro .ltudy on tariff and Rlhabilit11tion straa,gy t'or.water.
1998-2001 IDA.IDB 1998-2001 1998-2001 1998-2001 1998-99 1998 1998-2001 IDB,EU IDA.IDB, CDB,EU, DFID 1998-2001 IDA 1998 IDB 1998 IDB f. Human rcaouroe development and social impact of the programme (details contained in the attached polioy matrices on education, health and poverty alleviation) Ameliorate burden of adjul1mcmt on the more wlnorablo segments of the population.

through implementation of the Social Impact Amelio ration Programme (SlMAP) and improve health and education sorvices.
• ~ to improve ta,geting of SIMAP benofioiarios.

onhance SIMAP• plannins and projoct implomOldatiaa capacity with emplwia.on boalth.

nutrition.

and water and sanitation.

• .s.et clpnor support for 800ird propanuno, includins for refurbishing and upgrading of school and health care facilities.

1998-2001 1998-2001 IDB.

1998-2001 1998-2001 IDA.IDB - 26- ATTACHMENT ... Guyana: PolicyMatrix 1998-2001 Policy Area Objectives and Targets Strategioa and Mouure• lmplc,.

mentanon TA R.equiromonts .


Strength• C09Weeo....:,ry IIW'Ot and encourage parti.cipalian of nangowmmental llld 1ho privati:, sector in health and educillion.

O!

]p!NDtioas mea- 1998-2001 1998 g.Environment Limit adverse environmental effects of cummt and future economic: development •Ccntinuo to imploment policioa and enact losiillation to address illuot roprding pc,111 of solid wuto, unoontrollod development in mining and foros,.

try, IIDIUltainable resoun:es.


the proper dis- oxploitation of Maintain normal • Completo all dilCUUiom to financial relations regularizo debt service to extm• with external creditors ml croditon and leek terms at and a viablo debt po1ition.

kutcomparable provided by 1ho Pari, Club from other bilateral credimn.

to thou external .

Nogotiate and execute aoU.le- matt of tho debt External Payments Deposits Scheme.
IDA 1998-2001 CIDA,IDB, OFID,IOA 1998 1998 IDA 1998 IDA, CIOA Strengthen tho insti• •Computcrimion tutionaJ capacity for debt management.

izatian of debt-management datahue software.

and .modem- 1998 DRI •lmploment BEEP' s. recom- mendation on human resource reatructurins, •Strengthca staff training and atablisb an information cent« on debt-related issues.
capacity of the oomaponding Improve the quality of •Strengthen tho in1tituliooal the statistical data to strengthen tho capacity gowm meet agencies along to monitor economic the lines of tho Fund's and fllllllleial develop- recommendationa.

monts, and seek donor •Accelerate tho implementation support to austain and further improve tho production of statislics.

of tho recommeadations Fund technical uliatanco miuions in statistics.
of prior 1998-99 ORI 1998-99 DRI 1998-2001 IMF 1998 s.E:stel'IUII debt policl.u 6.Statiltical policl.u - 27 - ATTACHMENT I Guyana: Policy Matrix 1998-2001 Arca Policy Objectives and Targets Strategios and Moasurea lmple- montation TA Roqui.mnents .

Complete compilation of his- meal balance of payments statistics based on surwy returns on private soctor investment March 1998 7.Tec:hnlcd .... tance requir-..ts Address the lack •Provide counterpart ata«to of skilled man- the government.

.
.

Continue to focus on technical J)O\Wf within better absorb and mab tcchni- cal usistanco more effective.

assistance in macroeconomic and related areas with emphasis the Ministly on strengthening ofFinanco, the Bank of Guyana.

and tho Bureau of Statistics.


1998-2001 CIDA, DFID 1998-2001 -28 - ATTACHME1 II Guyana: Selected Economic and Financial Indicators, 1994-2001 1994 1995 1996 1997 1998 1999 2000 2001 Pro jdons (Annual perc:cmap cbangea, un1-othenviae indicate) prlea Output, lnCOIMI, ... RealODP Real GDP per capita Real per capita OOIIIWllption Consumer Comumer price index ( ava-age) pri co index (year-end) at CWTeDt pri ces at c:umat pric:ea E:dernal Ndor (In U.S. liollan) Exports (f.o.b.)
Imports (o.i.£) Exports volume Importa volume Terms oftrade (decline·) Real oft'elltive el«lhango rate ( depreciation -) Money and credit Net domestic auets Net� credit 1/ 1/ 2/ Ofwhich: Oownunen t Private sector Money and quui-money (M2) 1/ Ceotra1 bank intervention rate (percent per annum) 3/ 8.6 5.0 7.9 6.2 3.1 4.4 4.2 4.9 7.0 3.0 6.4 5.2 2.1 3.4 3.2 3.9 3.1 -6.3 10.8 8.7 5.4 2.3 2.2 3.4 16.1 8.1 4.5 4.2 5.S 4.5 3.5 2.9 13.6 12.3 7.1 3.6 4.6 4.S 4.0 3.5 10.7 10.8 16.1 3.0 4.1 6.9 S.8 6.0 4.7 6.0 10.8 7.8 1.8 7.3 S.7 5.7 12.3 -1.7 ll.5 15.1 6.6 4.1 3.2 4.1 -7.1 -3.6 1.6 7.7 3.1 3.7 3.8 3.8 -12.4 2.5 -4.7 -10.7 -1.2 -0.7 0.6 0.0 -2.2 1.3 8.1 5.7 7.4 2S.l -82.0-23.0 -16.2-6.0 0.9 0.7 18.3 0.1 -0.6 7.2 S.7 -9.1 19.6 13.9 -19.8 1.0 -16.9 3.4 -11.2 -12.l -3.3 -4.6 10.7 18.7 30.8 14.9 11.3 11.5 10.6 10.3 17.2 26.1 16.7 11.7 6.5 8.9 8.8 8.2 18.0 16.0 10.0 9.0 Pulillc flnalcea General government Revenue Ofwhich: Tax revenue Nontax revenue ExpendituR Of which: Military expenditure e Current expenditur Of which: Wagea and aalaries Capital expendi Primary balance Overall deficit(·) ture Savinp and lnveatment Orou national 11.vinp Public aector Private leotor Groa domestic .fixed capital formation Public ICCtor Private sector External oumot account ll.lance E:denud ad publlc debt and debt service Public sector oxtema1 debt (end of year) Of which: Extemal arrears Public Of which: Interest due sector ext«nal debt IIOl'Vi.ee sector extomal debt service/e xports Public of goods and services (percent) Public sector domestic
 debt Of which: Domestic urears (end of year) (In percent of GDP, unlCII otherwise indioatod) 31.3 37.4 39.7 36.6 39.9 40.2 39.0 38.0 29.6 31.3 32.2 29.8 31.4 32.0 31.6 31.3 2.2 1.9 2.4 23 2.3 2.2 2.1 2.1 41.0 39.l 36.8 36.9 41.4 42.9 4S.4 42.0 1.4 1.4 1.3 1.2 1.2 1.2 1.2 1.2 25.4 25.1 23.8 27.2 26.3 2S.O 23.4 22.2 8.0 8.2 8.2 8.0 7.7 S.9 6.2 6.S 11.S 16.3 19.1 18.2 15.7 16.0 15.7 14.5 16.3 18.2 18.4 14.4 1S.S 16.3 16.6 16.8 -S.7 -4.0 -3.2 -8.8 -2.0 -0.8 ..0.1 1.3 12.6 17.8 21.9 18.1 20.0 21.0 22.0 22.9 5.9 12.3 15.9 9.1 13.6 15.2 15.6 IS.I 6.7 S.5 6.0 9.0 6.4 5.8 6.S 7.1 31.6 36.9 31.l 32.S 30.7 31.4 31.9 32.0 16.3 19.l 18.2 15.7 16.0 1S.7 14.S 10.8 20.8 20.6 12.0 14.3 15.0 1S.4 16.2 17.5 -19.S -17.6 -9.3-14.5-10.7-10.4-9.8 -9.1 382.0 308.0 220.8 191.7 188.l 182.1 171.S 161.0 31.2 26.0 14.7 16.7 14.4 12.6 12.2 10.1 15.8 13.3 4.6 7.2 6.0 S.4 4.9 4.4 17.0 16.9 14.5 16.8 14.S 12.7 12.s 10.5 132.7 104.7 93.3 79.9 70.1 60.7 187.0 206.7 Groas official reserves In m illiOIII ofU.S.
dollars In months of imports of goods and 1ervic:ea /U.S.

dollars) Exchan ge rate (local currem:y Nominal GDP (in milliODI ofU.S.

dollars) 269.0 269.0 331.6 315.0 333.0 376.0 386.0 398.0 5.1 4.6 S.2 4.6 4.7 5.0 4.9 4.8 142.S 140.0 140.2 142.8 539.0 646.2 703.0 741.0 771.0 824.0 884.0 949.0 SOlll'COII: Data pnaentod by tho Ouyana authoriti es; and Bank and Fund stafli' estunata and 1/ Change in percent ofbroad money.

2/ Net of valuation chan goa .

3/ Threo-month tl -,Y bill rate.

pro jaom.
-29- ATTACHMENT ID Guyana: Social Development Policy Matrix for Health 1/ Objectives Straqics and Mcaau� Implementation Date Strengthen institutional capacity of the Ministty ofH.calth (MOH) and upgrade human rcao\llCCII rcstructuriilg/rcorpnil.ation Implement ofMOH •Plan completion in collaboration with the Public Service Commission •Plan approval by Cabinet •Implementation 1998 September September 1998 Begins October 1998 and to be completed by December 1998 Improve health scrvicea and implement training plan Develop for MOH personnel •Plan completion •Allocaw resources October 1998 1999 budget Increase budgetary allocation on health • Total expenditure (current and capital) to reach 3.2 percent .of GDP •Total expenditure (oumnt and oapital) to reach 3.8.pcrccnt of GDP 1998 2000 modical supplies Increase proportion of budget spent on drugs and •Expenditure supplies current health spending to reach 27 .3 percent of on drop and medical of budget spent Increaac proportion on mainwnancc •Expenditure on mainwnancc to reach 10 percent of current health spending •Expenditure on maintenance to reach 12 percent of current health spending Increase spending on primary and pre­ ventive scrviC4ls to increase health impact, improve and increase targeting to the poor •80 percent of the increase in expen­ acccaa to basic services, 1998 1998 2000 will be devoted to high priority ditures preventive especially aide posts acrvicca and primary care, at health ilCDWB, clinics, the role of aclectivo .­ Evaluaw charges and public/private collabora· tion to improve targeting of pubic health spending •Prepare evaluation report August 1998 1/ This table presents details on the broad area covered in the policy matrix in Attachment I and was prepared by the with the staffs of the IMF, the World Bank.
and the IDB.
in collaboration Guyanese authorities -30- ATTACHMENT I\ Guyana: Social Development Policy Matrix for Education 1/ Objectives Straqica and Measures Implementation Date Strengthen institutional capacity of the Ministry ofEducation (MOE) •Plan completion in collaboration with the Public Service Commiuion Implement rcatructuring/reorpnizltion ofMOE and u� human reaources •Plan approval •Implementation by Cabinet September 1998 September 1998 Begins October 1998 and to be complctz:d by December 1998 training plan Develop and implement for MOE personnel •Plan completion •Allocate resources Incrc:asc resources and Review sector improve allocation the education sector in •Completion date for action plan needs and prepare action plan Increase budgcwy allocation on education • Total expenditure (current and capital) to reach 4.9 percent of GDP •Total expenditure (current and capital) to reach S.6 percent of GDP (of which pri- mary and secondary: S.3 percent of GDP) October 1998 1999budgct June 1998 1998 2000 1998 Increase proportion ofbudpt apcnt on the supply of educational materials •Expenditure on educational materials to reach 7 percent of current education spending •Expenditure on educational mat.crials to reach 12.3 percent of current education epcnding 2000 Increase proportion of budget spent on school maintenance •Expenditure on acbool maintaiancc to reach 10 percent of current education spending •Expenditure on school maintenance 12 percent of current education spending 2000 to reach 1998 Incrc:asc number of
 trained nuncry, primary, and secondary school teachers •Train 375 teachers •Train 1,400 teachers October 1998 2000 Improve management Develop a plan to stnmgthcn the manage- information syst.em and educational ·ll)'Blmn and database of statistics (oowrasc should statistics educational mcnt information generally acecplDd education include expenditure statistics foJlowing intmna- tionally •Plan completion date •Implementation begins atandantized definitiona) and Enhance technical of youth skills Develop a. training and placement program in association with potential cmpk,ycrs •Completion date for plan •Begin training 1,000 youths September 1998 October 1998 March 1998 Mid-1998 and complctz: by December 1998 1/ This table presents details on the broad area covered in the policy matrix in Attachment I and was prepared by the Guyanese authorities in collaboration with the staffs of the IMF, the World Bank, and the IDB.
.. 31 - ATTACHMENT V Item Unit ofMouure 1980-85 1986-90 1991-96 1997 1998 1999 2000 2001 Latest Sins!e Y oar Program Period Guyana: Income and Social Indicators Popalatlon Populati on (midyear ) Population growthnte (annual average) 1/ Total fertility nte (births per woman) Poverty National poverty line (local CUirenOY ) 2/ Total Urbln poverty Rural poverty National bNdcollnt indax (percont of Total Urban Rural population) 756,700 749,910 760;379 770,139 -0.1 -0.2 1.1 1.0 3.3 2.8 2.4 2.3 777,840 1.0 2.3 785,619 793,475 1.0 1.0 2.2 2.2 801,410 1.0 2.2 26 43 35,000 49,62S 29 27 14 14 35 32 53,323 54,867 Sl,766 26 13 31 25 23 13 12 30 29 56,456 22.0 11.0 28.0 29 27 SI hlcome GNP per capita (U.S. dollar ) Index ofnal wapl (minimum in public Bedor 1989-100) Camumer price index Food price index 400 350 590 800 872 91S 1,066 100.0 101.0 11S.9 72 1Sl 242 250 71 2SO 444 471 116.0 262 494 116.0 118.0 274 285 Sll 532 295 5S1 1,243 120.0 lneomelea111111pdon Shire ofinoome oc comwnption (percent) dlltnlndlon Lowwt qujnti1o Highelt quintile Sodal Wketon Shire of public expenditure u percmt of'ODP 3/ Health 1/ Eduoatim 1/ Social NCUri1y and welfare Groll primary lllhool mro1lmeat BChool ap popuation) Total Male Female ratio (percent of MCe11 to ufe water (percent of population) Total Orbin Rural Immunization nte (peroentuader 12 months) Meulel3/ DPT Quid (under 5) malnu1rition nte (percent Life expectanoy at birth (nte) Total ) Male Female In&m mortality nte (pet 1,000 live births) Under S mortality nte (per 1,000 live
 births) 100,000 liw births) Maternal mortality rate (per 6 ·52 7 51 8 so 8 8 so 50 8 50 65.4 66.6 .
41.0 41.1 3.1 2.1 2.3 2.0 6.7 2.9 3.6 4.0 0.6 0.8 0.8 39.4 3.2 4.9 1.1 38.4 37.0 3.6 3.8 S.3 5.6 1.2 1.3 34.7 3.8 S.7 1.4 103 106 10, 104 104 109 106 10S 101 104 10, 103 102 103 101 103 102 104 ·103 ll>l 101 102 103 101 80 83 93 100 100 100 100 60 7S 90 97 100 9S 4S 36 3S 64 189 200 131 90 87 90 2 90 90 90 90 2 2 90 90 2 67 64 70 27 34 80 68 68 65 6S 71 70 26 25 33 32 63 !IS 68 66 70 23 31 45 Souroes: World Bank dlda bue, Social Indicaton of Development.I.
1996: WCll'ld Bank; Ouyana: Slratepea for Reducing Povsty, May 1994; 0ovommeat of OuyMa Ind UNICEF, Idanatioml Stnigbtening of Social Statistics.

199S; Guyana.

Bureau of Statistics.

Statiatical Bulletin.

Ind Economic Propu in Latin America.

1996 Report.

June 1996; and IDB, Social 1/ Period awnge.

2/ Lower poverty line; upper poverty line is G$47,S00 3/ Fer oenb'a1 gowmment.

for 1991-96.
-32- ATTACHMENT VI Guyana: Social Development Policy Matrix for Poverty Alleviation 1/ Objectives Strategies and Measures Implementation Date Strengthen statistics system to monitor poverty impact of economic growth and public expenditure policies Plan a follow-up to the 1993 LSMS/HIES household survey as part of development of a poverty monitoring capacity August 1998 •Specify the date of next October 1998 survey Improve the targeting of public subsidies Develop a poverty map of Guyana to better target subsidies Target Amerindian popula- tion (85 percent of whom fall below the poverty line) with community develop- ment projects •Identify at least 25 Amerindian community projects for by SIMAP appraisal Completed October 1998 October I.
998 Target community development projects to other poor commu- nities as determined by the poverty map October 1998 •Identify at least 20 projects in other poor communities for appraisal by SIMAP October 1998 1/ This table presents details on the broad area covered in the policy matrix in Attachment I and was prepared by the Guyanese authorities in collaboration with the staffs of the IMF, the World Bank.

and the IDB.
and the IDB.

- 33 - ATTACHMENT VII Guyana: External Financing Requirements and Resources, 1996-2003 (In millions of U.S. dollars) Prel.
Projections 1996 1997 1998 1999 2000 2001 2002 2003 Cwrent account 1/ Exports of goods and services Importa of goods and services -6.S -107 -82 -86 -87 -87 -88 -84 714 737 767 817 863 913 9S7 1003 -767-825-844-901 -9Sl·l,004 -1,054-1,103 Noninterest current account lY -11 -48 -31 .35 -38 .39 -41 -39 Interest (net) -54 -S9 -S2 -so-49 -48 -47 -4S account Capital -S2S -4 -37 -29 -29 -23 -25 -27 -26 -32 Scheduled amortimtion IMF repurchases and repayments -24 -25 -21 -22 -26 -17 .. 17 -18 -465 so 44 42· 46 53 54 57 Other capital 2/ 3/ -3 -s 10 11 7 -6 Increase in net official reserves ( -) 4/ -74 4 -34 -58 -23 -23 .. 10 -7 Change in arrears (decrease • ) 13 -25 -185 0 0 0 ·O 0 Extcma1 financing requirements 652 132 308 147 115 100 87 84 Resources Grants Loans SI IMF Debt relief 652 132 307 146 115 100 87 84 17 24 13 10 8 7 86 67 103 83 ss S4 S3 2S 24 12 24 24 12 0 0 S24 18 179 30 27 27 27 27 7 3 Residual :financing ga p 0 0 0 0 0 0 0 0 Sources: Data provide4 by the Guyanese authorities; and Fund and Bank staffs' estimates and projections.
1/ Excluding official transfers.

2/ Including foreign direct investment 3/ Including amortization of future principal 4/ Excluding the net use of IMF credit.

5/ Including both existing and expected new commitments.

obligations as a result of the Paris Club stock of debt operation in 1996.
Guyana: Key Public External Debt-Sustainability Indicators, 1997-2019 1/ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2010 2015 2019 2006 2019 Average --------- 1997- 2007- Key ratios (In pen:ent) Debt to ODP ratio 192 188 182 172 161 151 141 132 123 87 63 47 155 73 NPV of debt to exports ratio 2/ Before HIPC assistance After IUPC assistance NPV of debt to revenues ratio 3/ Before HIPC assistance After IUPC assistance NPVofdebtto GDP ratio Before HIPC aailtance After HIPC aaistance Debt-service ratio 4/ Before HIPC UBistance After HIPC assistance Debt service to revenue ratio 3/ Before HIPC UBistance After HIPC UBistance Memoradumitema: Debt stock NPVofdebt Expol1s of goods and services 5/ Central government GDP revenue 3/ 146 138 13S 128 122 116 109 103 97 71 ss 43 118 62 146 138 103 98 95 92 88 84 81 63 51 41 100 S6 Ill s 4 4 7 s 4 I .i:,.
12 6 10 s 52 42 36 34 29 S2 42 2S 26 21 14 10 33 16 27 27 27 27 16 19 20 21 20 13 12 10 27 13 (In millions ofU.S.

dollars) 1,421 1,449 1,501 l,S17 1,529 1,529 1,523 1,507 1,489 1,428 1,447 1,419 1,491 1,432 1,009 1,020 1,046 1,042 1,050 1,052 1,047 1,036 1,021 9S6 967 934 1,030 9SS 693 739 773 815 864 911 9S8 1,004 1,053 1,347 1,756 2,189 891 1,614 � 236 264 291.
313 33S 354 372 379 398 SlO 680 870 336 624 741 771 824 884 949 1,013 1,080 1,144 1,209 1,650 2,303 3,001 990 2,079 � Sourc:es: Data provided by the Guyanese authorities, and staff estimates and pn,jedions.

1/ Da1a before HIPC 1S1i1tance nflect the May 1996 Paris Club lltoc:lc-of-ddlt operation on Naples tams (67 pcrceaa NPV reduction), and - companble tnllmiela in 1998 ftom odll!r bilateral cieditors.
2/ In tams of a -.,le historical three-year average of exports of goods and llOllfidGr Ml'Yic:es, excludingworbn' u11Nllb11CM.

3/ � is defined as the central govemment 4/ In tams of c:um:nt year exports of goods and nonfactor services, excluding SI Siq,le historical �year average revemie valued at end-1997 exx:mnac rate.

'WOllcas' 1emittw:es.

services, m:luding workers' n:mittanoes.


of exports of goods and l1Clllfactor � s -35 - ATTACHMENT IX June 12, 1998 Mr. Michel Camdessus Managing Director International 700 19th Street N.W.

Wasbingion, D.C. 20431 Monetary Fund Dear Mr. Camdesus: Government of Guyana, I·am pleased to transmit On behalfofthe Framework Paper (PFP), prepared in collaboration Monetary Fund and the World Bank, setting forth the government's basic economic objectives for 1998-2001 them.
I am today forwarding herewith a Policy with the staffs of the International policies of the World Bank.

the same paper to the President and structural adjustment and the macroeconomic designed to achieve The Government of Guyana requests transmittal to the governments and organizations listed that the Fund distribute in the attachment.
the PFP publicly, including Sincerely yours, Isl Jagdeo Bharrat Minister ofFinance Attachment - 36 - ATTACHMENT IX List of Governments and Organizations to Which Guyana Wishes the PFP Transmitted by the Fund Governments Organizations People's Republic the European Community Banlc Caribbean Development Commissions of Commonwealth Secretariat European Investment Banlc Kuwait Fund OPEC Fund for International United Nations World Trade Organization Development Development Programme Argentina Brazil Canada China, Denmark Finland France Germany India Italy Japan The Netherlands Norway Russia Spain Sweden Switzerland Trinidad and Tobago United United Kingdom United States Venezuela Arab Emirates