IMF APPROVES US$26 MILLION LOAN FOR GUYANA

WASHINGTON, April 15 -- The International Monetary Fund (IMF) today
approved the second annual loan for Guyana in an amount equivalent to
special drawing rights (SDR) 17.92 million (about $26 million) under the
enhanced structural adjustment facility (ESAF)(A) to support the
Government's economic reform program for l996.  The loan will be disbursed
in two equal installments, the first of which will be available on April
30, 1996.

Background

Within the framework of the present ESAF arrangement, Guyana's economic
performance in 1995 was satisfactory.  Real GDP growth was 5 percent, a
decline from the 8.5 percent growth achieved in 1994 that reflected
stagnant sugar production due to drought and lower output of gold and
bauxite, inflation was halved to 8.1 percent in 1995, from 16.1 percent in
1994, as the Bank of Guyana continued to pursue a cautious monetary
policy, and the overall deficit of the nonfinancial public sector was
contained at an estimated 8.5 percent of GDP.  As a result of a planned
large increase in public investment, the external current account deficit
widened to 12 percent of GDP in 1995, from 9 percent of GDP in 1994, while
gross international reserves, which the program required to be not less
than seven months' imports, stood at the equivalent of eight months of
imports at the end of 1995, after 10 months in 1994.  After some delays,
implementation of structural reforms picked up in the latter part of the
year, and significant efforts were made in accelerating steps toward
integrating the cambio and official foreign exchange markets; liberalizing
the exchange and trade system; and strengthening tax administration.  All
performance benchmarks were observed.

Medium-Term Objectives and 1996 Program

Guyana's medium term objectives for 1996-98 are to achieve real GDP growth
of about 5 ½ percent a year; to reduce inflation to about 4 percent by the
end of the period; and to strengthen the balance of payments sufficiently
for official reserves coverage of imports to be maintained at around
current levels.  Consistent with these medium-term goals, the
macroeconomic objectives of Guyana's 1996 program, which the ESAF loan
supports, are to reach a growth rate of about 6.5 percent; to reduce
inflation to an annual rate of 5.6 percent; and to maintain international
gross reserves at the equivalent of eight months of imports.

Fiscal policy -- supported by monetary and structural reforms -- will play
a central role in achieving these ends.  The budget for the Central
Government and the operational plans of the nonfinancial public
enterprises aim at reducing the overall deficit of the nonfinancial public
sector by more than 2 ½ percentage points of GDP to 5.6 percent.  Public
sector savings are programmed to almost double to 10 percent of GDP, and
investment outlays are targeted to rise by 2 ½ percentage points to 18
percent of GDP.  These objectives will be achieved through the
reorientation and containment of current outlays; strengthening tax
administration; and improving the performance of the public enterprises.

Monetary policy is geared toward a further deceleration of inflation and
safeguarding the international reserve position, while supporting private
sector activity.  To support the program's aim of moving toward external
payments viability in the context of a liberalized exchange and trade
system, the exchange rate will continue to be market-determined, and it is
intended fully to integrate the official and cambio markets by the end of
1996.  As part of its debt-management strategy, the Government is seeking
debt reduction from the Paris Club and other bilateral creditors, as well
as an increase in the concessionality of the remaining debt and future
debt flows.

Structural Reforms

In addition to strengthening tax administration as noted above, structural
reforms will focus on a) increasing the efficiency of the public sector
through reforms which include the privatization of a number of financial
and nonfinancial enterprises; b) improving utility services, in particular
power and water supply; c) implementing sectoral programs to exploit the
potential of the natural resource base on a sustainable basis; d)
protecting the environment; and e) strengthening the statistical base.  On
the trade side, the authorities are committed to further liberalizing the
regime along the lines established under the Caribbean Community.

Addressing Social Problems

The Government has been following a two-pronged strategy aimed at
achieving sustainable progress in poverty reduction.  Through its
macroeconomic policies, it has been seeking to foster the creation of
employment opportunities and it has been targeting basic social services
to the poor.  The Social Impact Amelioration Program, introduced in 1988
to alleviate poverty and the possible adverse effects of economic
adjustment on the poor, is to be reorganized to improve its efficiency and
to ensure that its benefits are well targeted.

The Challenge Ahead

Over the medium-term, Guyana's main challenge will be to maintain economic
growth that is sufficient to reduce unemployment and poverty, while
establishing a sustainable external position.  The authorities' strategy
emphasizes raising the level of domestic savings, improving further the
conditions for investment by the private sector, and encouraging a steady
inflow of foreign savings.  For this approach to succeed, it will be
important that Guyana continue resolutely to pursue prudent fiscal and
credit policies, intensify and deepen the process of structural reform,
and secure comprehensive debt restructuring and a significant increase in
concessional financing in the years ahead. Guyana joined the IMF on
September 26, 1966; its quota (B) is SDR 67.2 million (about $97 million).

Guyana's outstanding use of IMF credit currently totals SDR 108.9 million
(about $157 million).




Guyana:  Selected Economic Indicators

					1993       1994    1995*  1996**

(percent change)

Real economic growth                 	8.3        8.5    5.0     6.7


Consumer prices (end of period)      	7.7       16.1    8.1     5.6

(Percent of GDP)

External current account

balance (deficit-)               		-21.0       -9.0   -12.0
-9.0

Nonfinancial public sector

balance (deficit-)               		-14.0       -6.8    -8.5
-5.6


Gross reserves

(in months of imports)             	8         10       8      8

Sources: Guyanese authorities and IMF staff estimates.

*estimate.

**program.

(A)  The ESAF is a concessional IMF facility for assisting eligible
members that are undertaking economic reform programs to strengthen their
balance of payments and improve their growth prospects.  ESAF loans carry
an interest rate of 0.5 percent and are repayable over 10 years, with a 5
½-year grace period.

(B) A member's quota in the IMF determines, in particular, the amount of
its subscription, its voting weight, its access to IMF financing, and its
allocation of SDRs.

April 15, 1996