International aid, democracy and good governance
Kaieteur News

June 11, 2004

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International aid, democracy and good governance.

GUYANA is enjoying a particularly good phase of relations with the international donors community; therein lies an important message for the Government and people of Guyana.

The majority of Guyanese are struggling to eke out a tolerable existence under the crushing weight of the nation’s ailing economy.

As such, recent moves by the international donor community to provide substantial debt and other economic assistance is extremely good news.

This week, the United Kingdom wrote off the entire $12.14Bln debt owed by Guyana to that country.

Last week, Guyana got US$65.1M in debt relief from the Inter-American Development Bank (IDB) for loans from the Fund for Special Operations.

This release became available under the Heavily Indebted Poor Countries (HIPIC) initiative.

On March 14, 2004, the IDB confirmed that Guyana reached the HPIC benchmark for approval of such debt release.

In addition to providing debt relief, international donors have moved to prop up the economy through several grants and soft loans. For instance, just days ago, the IDB approved a US$28M soft loan to upgrade public finance management. Earlier, the US had pledged grants totalling US$20M to boost governance, democracy and economic growth.

In April, Guyana signed an agreement with the United Nations Development Programme (UNDP) for renewable energy development. In addition, Government’s 2004 national budget mentioned many multi million US dollar-initiatives to be undertaken in partnership with the international donor community, especially in the health sector.

The scale of assistance to Guyana in the form of debt relief, grants and soft loans as well as the prospect of further input, suggests that international donors believe the country’s economic outlook at this juncture is positive.

If so, this is an enormously significant development. For several years, Guyana’s economy has consistently failed to inspire confidence in international donors and potential investors, seriously undermining public morale. However, the recent outpouring of largesse from the First World appears to show an encouraging measure of cautious optimism about Guyana’s chances of economic recovery. What is of crucial significance is that most of the aid initiatives have a powerful built-in commitment to the advancement of democracy and good governance. Almost without exception, recent agreements include carefully crafted statements about strengthening transparency and accountability in government institutions.

For example, the IDB soft loan approved this week for public finance management refers to a series of legislative and administrative steps to increase efficiency and equity of the tax system and improve public expenditure management and transparency.

The message interwoven in these aid packages is clear; good relations with the donor community leading to debt relief and other types of economic aid are linked to Guyana’s pursuit of democracy and good governance.

Recently, United States for International Development Director, Dr. Mike Sarhan stated quite unequivocally that assistance from the US was linked to strengthening democratic processes and overhauling present mechanisms of governance in Guyana.

Based on the tenor of agreements Guyana has made recently with other donor nations and agencies, there is little doubt that Dr. Sarhan’s remarks reflect the current thinking of international donors, at least those from the developed western world.

For the time being, it appears that donors will consider factors to constitutional governance and democracy when they consider economic aid packages to developing nations.

The government of the day would do well to heed this and move quickly to resolve outstanding problems regarding democracy and good governance in Guyana.