The World Bank says Guyana suffers from “a crisis of governance” and that the government is seen as being “weak” and unable to deal with embedded crime and corruption.

But the government has expressed its “very serious” concerns to the World Bank over the June 23 report, which it dubbed “political,” filled with allegations and complaints and lacking in “quantitative or qualitative” analysis.

The Bank’s 74-page report finds that Guyana’s gridlocked political system leaves little time for policies to facilitate growth and development or to discourage corruption and crime, which it says are now “deeply embedded” in Guyana.

“...Guyana is once more at a tipping point and could either become `a failed state’ or begin anew, the long march to improved governance and economic recovery. Onus is now on both parties [the PPP/C and the PNC], but particularly the ruling party (PPP/C) with its majority electoral position, to show real commitment to political reform,” the World Bank says in its draft report. The report was sent to the government for comment before it is finalised.

For Guyana to return to economic recovery, the Bank says the country has to pursue policies of “social cohesiveness and political inclusiveness” as well as improve the investment climate.

The report was released as the crime wave, sparked by the Mash Day 2001 prison escape, had begun to subside. It says nowhere was the crisis in governance more evident than in the area of security. This was to the point where the rule of law, the security and judicial systems were viewed as having collapsed and confidence in the army, police and judiciary largely evaporated. The crisis discouraged investments, severely compromised good governance and fuelled migration, the Bank says.

“The crisis of governance is also evident in the continuing disagreement as to what political model (the winner takes all vs consensual paradigm) is most suitable for Guyana’s demographic circumstances and historical experiences,” the Bank asserts.

The report notes the sloth of the Herdmanston Accord in delivering results, the worsening in the crisis of governance until the recent May 5 Communique between President Bharrat Jagdeo and Opposition Leader Robert Corbin, and the need to implement fully the agreements reached and to have in place good governance.

“The constitutional and parliamentary arrangements which have been agreed to and formally announced in the communique should be given a chance to work before any further instalments of power sharing are contemplated,” the Bank says. The Bank believes that certain elements within the PNC will continue to make demands for power sharing at the executive level and that the PPP will continue to resist such demands.

However, the government, in a response to the World Bank, is reported to have accused the Bank of issuing a report bereft of the most recent information including data sets; of failing to acknowledge recent structural reforms; and of drawing conclusions inconsistent with analysis.

Sources say the Bank was also accused of parroting the PNC’s viewpoint in its chapter `political economy - a crisis in governance.’

The Bank report sought to provide an up-to-date, integrated assessment of Guyana’s development policy agenda with the main focus on governance, growth and poverty alleviation.

It finds that Guyana, at a crossroads, can either bounce back into high growth rates of the 1990s or slide back with the risk that many would be trapped in abject poverty and the ethnic divide could give way to violent conflict, undermining the gains of a decade of economic reforms. The Bank stresses that in the long run, growth will have to come from exports, as the domestic market is small and the private sector will have to lead the way.

But despite the many challenges outlined, the World Bank report recognises the good implementation pro-gress in some areas since the government adopted the Poverty Reduction Strategy Paper (PRSP). However, it also notes slippage on the macroeconomic front now being addressed by the three-year programme with the International Monetary Fund.

Political economy - a crisis of governance

The Bank reviews the struggle for paramountcy by the two main parties caused by the 1955 split in political unity along ethnic and ideological lines.

It notes the emergence of a deadlocked political system because Afro-Guyanese, the main supporters of the opposition PNC, are dominant in the public sector and in the police and defence forces in particular.

“The opposition also controls the capital city George-town and paralyses the city whenever it deems necessary to do so. The ruling party has often complained that it lacks effective political space and that many critical decisions it makes are routinely perceived as being driven by racial or party considerations and not by concerns for the national interest. Policy decisions are thus routinely delayed or deferred and the government is regarded by supporters and detractors alike as being weak,” the Bank says.

The World Bank describes the PNC as being “politically risk averse” and fearful of taking decisions which might alienate either its militants or middle-class supporters.

“Decision avoidance has become both a strategy and a tactic. In sum, both parties find it difficult at crucial times to accept the political costs of doing what is right or necessary in the national interest.”

It also finds that most of Guyana’s political and state institutions lack cross-ethnic legitimacy and civil society groups are also ethnically typed and accused of being politically partisan. “The suspicion as to motive and bona fides serves to disempower and inhibit their involvement in social action.”

And efforts to reform state bodies have been frustrated because what is proposed is looked at in terms of “zero sum outcomes” rather than “win-win” alternatives.

The Bank also finds Guyana’s political culture haunted by ghosts, with the PPP remaining “embittered” about its past marginalisation and the PNC being seen as an inappropriate party with which government can be shared. It notes that the PNC does not regard the PPP as a fit and proper party to rule and while it endorses the shared governance concept, has made it clear that it will only work if the PNC is the hegemonic party.

“Guyana’s contemporary crisis is in a very profound sense, a crisis of governance. The social and economic problems facing the country and its inability to develop its fabled resource capital, is in the final analysis, the result of political factors, which are deeply embedded in and driven by the country’s demographic realities and historical experiences. The crisis is also due to the failure of the post-independence political class to do the things necessary to transcend that historical and demographic inheritance.”

The Bank says the crisis in governance is evident in the controversy over what political model is most germane for Guyana and notes the arguments for and against power sharing. It also says that apart from the PPP’s quite “understandable” unwillingness to share the “rents and prestige” that go with control, the PPP fears that concessions to the PNC would be regarded by its supporters as appeasement and a sign of weakness.

The May 2003 communique was seen as the event to break the recent 14-month old deadlock and the Bank advises the government to:

*Ensure the agreements entered into are fully implemented in the given time-frames;

*Implement the local government reforms;

*Take steps to ensure that by the next general elections, the Elections Commission is equipped to conduct free and fair elections and count ballots expeditiously;

*Ensure that members of the National Assembly and civil society are informed about the commitments being contemplated or negotiated with donor countries and agencies in order to allow for timely debate and discussion as is constitutionally required;

*Enhance the capability of the security services to reduce the incidence of crime and violence;

*And deal “firmly and equitably with the problem of the ‘city of Buxton’ which it says has the potential to derail all that was achieved in terms of the communique.

The role of donors

The Bank says that there is a view within opposition circles that much of the aid and concessional loans channelled to Guyana are not being properly used or accounted for and the WPA and the PNC have called for donors and multilateral agencies to:

*”Stop bankrolling” the government unless it reforms itself and the procedures it uses, especially in public procurement, financial management and accounting and halt the abuse of discretionary powers by public officials for personal and political enhancement. “The recent tax amendments take away the discretion of the President and the Minister of Finance in granting fiscal exemptions/remissions except for tax holidays which are now legislated and clearly spelt out.”

*Ensure that agreements or protocols entered into with donor agencies are shared fully with parliamentary parties and are made available for timely debate in the National Assembly and by the public.

“While many agree that the Government of Guyana has not fulfilled donors’ expectations, they also recognise that sanctions involving the cessation of aid or concessionary funding under the PRSP will have a negative impact on development efforts in the country and the welfare of its people,” the Bank says. It notes that close to half of the funds to close the budget deficit comes from concessional funding and great hardship will ensue if this is not available. Programmes and vital services would be sharply impaired and many infrastructure projects would have to be curtailed or abandoned.

The Bank says donors could, through increased collaboration, ensure that the government delivers on commitments made in respect of the PRSP for which it can reasonably be held accountable. It points out that the opposition and civil society have a role in the good governance process and need to be better informed about the contractual agreements the government undertakes in the name of the people, as is constitutionally required by terms of Article 13 of the revised constitution. It says the donors could also help the government enhance the security forces’ capability to reduce the incidence of extra-judicial, inter-ethnic and drug-related killings. Some programmes are already under way with help from the British.