The Government of Guyana has received two loans from the International Development Association (IDA).
Minister of State, Joseph Harmon revealed yesterday that the loans include a financing credit arrangement to the tune of US$24M. This is in support of the first financial and fiscal stability development policy programme government received back in June.
The Minister said that the administration also received an advance agreement for US$1.6M that will provide financial support for capacity building in the oil and gas sector. Harmon said that Cabinet approved these loans and they will be laid in Parliament.
The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Overseen by 173 shareholder nations, IDA aims to reduce poverty by providing loans (called “credits”) and grants for programmes that boost economic growth, reduce inequalities, and improve people’s living conditions.
IDA lends money on concessional terms. This means that IDA credits have a zero or very low interest charge and repayments are stretched over 25 to 40 years, including a 5- to 10-year grace period. IDA also provides grants to countries at risk of debt distress.
On June 25, the World Bank approved a US$35 million Development Policy Credit to Guyana. This sum is expected to support Guyana’s efforts to strengthen financial sector development and fiscal management to better prepare the country to benefit from its newly discovered oil and gas reserves and transform its oil wealth into human capital.
While currently nearly one in four people in Guyana live in poverty, experts estimate that GDP will surge when commercial production of newly-discovered oil and gas begins. In response, the government has embarked on a series of reforms to diversify the economy and turn oil windfalls into human development and sustainable growth in the long term.
The World Bank said that the money will go towards enabling sound financial development to promote macroeconomic stability and long-term growth. In particular, the money will support banking reforms and depositor protection, the establishment of a deposit insurance scheme, implementation of a new insurance law, and the country’s anti-money laundering efforts.
Minister of Finance Winston Jordan said, “This financing provides critical support to our reform agenda and efforts to strengthen institutions and build a resilient economy that is capable of withstanding both external and domestic shocks. These reforms will be key to guide the management of oil revenues for the benefit of present and future generations.”
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