Latest update April 19th, 2024 12:59 AM
Mar 17, 2017 News
By Kiana Wilburg
A delegation from the International Monetary Fund (IMF) is currently in Guyana to assess the
health of the economy. In doing so, it engaged various bodies in discussions, with one such forum being held with the Private Sector Commission (PSC).
In that meeting, the Commission lauded the Government’s efforts to operationalize the Public Procurement Commission (PPC) and hold Local Government Elections which was not held for over 20 years.
But, be that as it may, Head of the Commission, Eddie Boyer told Kaieteur News that other concerns were raised with the IMF delegation. He said that these were in relation to instances of sole sourcing, the decline in value of the Guyana dollar, and loss of investor confidence.
With regard to sole sourcing, Boyer told Kaieteur News that the team meeting with the Commission did not go into details in this regard. He commented that the IMF comes to Guyana “fully knowledgeable of the issues facing the nation.”
With regard to the decline in the value of the Guyana dollar, Boyer said that it was suggested by the representatives of the Fund that a flexible exchange rate, which allowed the currency to revalue itself in response to market forces, was ideal.
But of all the issues discussed, the most worrying to the Private Sector is the apparent loss of investor confidence. Boyer said that members of the PSC pointed to increased taxation and a degree of uncertainty which reflects the direction in which the economy is moving.
“If you don’t have investor confidence and the Government cannot arrest the decline in the economy then we are going to go further down, and we want to work with them to arrest the decline. A number of sectors have been complaining, from manufacturing to tourism, and they have been talking about the state of the economy,” Boyer said.
He added, “We are committed towards working in the national interest.”
Additionally, Boyer said that the PSC team also raised concerns regarding taxation and Value Added Tax (VAT) being applied to a number of items and services such as water and electricity bills, as well as on private tuition fees.
“These things are affecting consumer spending,” the PSC head asserted.
“We also indicated we have not seen any change in pricing since the VAT was reduced from 16 to 14 percent. Maybe it is too early to see this, but we still made our concerns in this regard known,” Boyer added.
The visit by the IMF delegation is in keeping with its Article IV Mission.
Under Article IV of the IMF’s Articles of Agreement, the IMF usually holds bilateral discussions with members every year. During those consultations, the mission reviews the overall economic developments in the country, as well as its policy measures aimed at maintaining economic stability, ensuring a sustainable external balance and further liberalizing foreign trade.
Upon the completion of the IMF mission consultations, the IMF Executive Board discusses the staff report and issues an assessment of the country’s economic situation and the adequacy of its economic policy measures, based on a comprehensive analysis of the overall economic situation and a wider fiscal policy strategy of the member country.
The IMF is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
The last Article IV Executive Board Consultation was on May 9, 2016. In the IMF’s 2016 report, the relatively young APNU+AFC administration received high praise for steering Guyana’s economy unto the path of sustainable growth.
The Directors, in their evaluation of Guyana’s financial system last year, commended the resilience of the economy, which continued to grow despite global headwinds. They noted, however, that challenges and risks remain, and encouraged the authorities to build up fiscal buffers, implement structural reforms, and strengthen the financial sector.
The Directors noted that Guyana remains vulnerable to changes in commodity prices due to its dependence on imported oil and the concentration of exports on a few commodities.
The Directors also stressed the importance of fiscal consolidation in order to safeguard debt sustainability and preserve fiscal and external buffers while maintaining growth momentum. They recommended that fiscal consolidation efforts focus on moderating the growth of current expenditures, in particular transfers to public enterprises, so as to preserve space for public investment while protecting social spending.
In their review, they encouraged the government to move toward greater economic diversification by advancing reforms to promote competition and improve the business climate.
The Directors said that given that the high costs of electricity, transportation and telecommunications have been longstanding impediments to growth, they supported well targeted public investment and liberalizing reforms to lower costs and raise productivity.
The IMF Members added that the largely concessional nature of debt contributes to resilience and should be preserved. They commended the authorities for taking a cautious approach in factoring in possible future oil income in their medium term fiscal plans.
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Apr 19, 2024
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