World Bank ups Guyana's poverty reduction credit
Stabroek News
May 1, 2002
The World Bank has agreed to improve its US$8 million Poverty Reduction Strategy Credit for Guyana by US$4 million and the conditions attached to the loan were worked out last week before a bank team, headed by Norman Hicks, left Guyana.
The government was worried about the US$8 million allocation as this was said to be on the lower end of the scale for Guyana and as such high-level talks were pursued to facilitate an improvement on the allocation.
However, disbursement of the credit is tied to the government making tangible progress on many of the conditionalities set, including having procurement legislation in place.
Neither the bank's local representative, James Droop nor Hicks could be contacted for comment on the issue but well-placed sources said the issues relevant to the credit were ironed out before the team left last week.
The final version of the Poverty Reduction Strategy Paper was lodged with the bank and the International Monetary Fund in February to facilitate Guyana reaching completion point for enhanced debt relief under the Heavily Indebted Poor Countries Initiative (HIPC). The board of the IMF will deliberate on the paper on June 3 and three days later so will the board of the bank. However, there is no guarantee that Guyana would be able to meet the conditions necessary in the first year of the Poverty Reduction and Growth Facility (PRGF) to allow it to achieve the floating completion point to benefit from full relief under the enhanced HIPC. Should Guyana fail to reach completion point, it will have to approach the IMF and the bank again when it has made satisfactory progress under the PRGF.
Guyana last year received some US$15 million as interim enhanced HIPC resources and this year's budget makes provisions for further interim relief under the programme. But when Guyana achieves completion point its level of debt relief will go up from the US$15 million received last year by another US$10-US$12 million per annum, which will take it to about US$25 million or US$27 million. The country already receives an estimated US$25 million under the original HIPC initiative.
Guyana is listed among 26 countries for which debt relief packages under the enhanced HIPC initiative framework are in place. The IMF directors, in a recent publication, stressed the need for a track record of strong policy performance to allow for the success of the HIPC initiative.
The directors have agreed that the IMF should retain the requirement of at least one-year's satisfactory PRSP implementation before completion point under HIPC, except as provided for in retroactive cases.
Meanwhile, US$5 million from the US$12 million credit from the World Bank is to go towards a technical assistance project to support the poverty reduction objectives of the PRSP.