The government has responded strongly to a World Bank report describing the country as being gripped by “a crisis of governance’ saying the review is inaccurate and out of date given recent legislative reforms.

Minister of Finance, Saisnarine Kowlessar submitted his comments last week for consideration in the bank’s Final Development Policy Review (DPR).

This week’s Sunday Stabroek reported on the draft DPR, published on June 23, which is currently being finalised. In a copy of his comments sent to Stabroek News, Kowlessar asks, “Is the objective of the DPR to paint a bad picture of Guyana? If not, then why is it so difficult to give credit to the country for the reforms currently ongoing and proposed and also approved by the multilateral institutions and receiving funding for same? For example, why is it so difficult to write about tax reforms and its implementation?”

Among Kowlessar’s general concerns is that the report is not specific and is inconsistent in use of time frame of analysis; it is outdated; it makes broad brush statements lacking quantitative and qualitative evidence; does not acknowledge recent structural reforms; makes allegations and does not state facts; and draws conclusions without proper analysis.”

As for the observation that the country faces a crisis of governance the government states that “the ruling party, the PPP, was not consulted on the write up of the governance chapter, but that opposition parties were. The ruling party considers the governance chapter as reflective of the PNCR statements and extremely biased. Obviously, in its present form, the Government will not associate itself with the report.

“Specifically, this section suffers from wrong factual analysis of events that led to the (political) deadlock. The draft paper takes a rather simplistic reasoning of ethnicity, power and prestige, bitterness and subversion in part as the causes of political deadlock. In general, the chapter was not written in a constructive manner that engenders continued political dialogue. In a sense, it further polarises the political climate.”

Kowlessar goes on to say: “No analysis on local government and good governance was done, yet conclusions are reached; no analysis was made about fairness/unfairness of the conduct of elections or resources required by the Elections Commission to count ballots expeditiously, yet conclusions are drawn; the paper demonstrates profound capacity of ignorance of documents that are tabled in Parliament and are also found on websites of donors; the last recommendation assumes that the village of Buxton is treated unfairly” and Kowlessar asks what is the basis for this statement.

As for the economic situation the minister states: “While the case of drug-trafficking is supported by data, the paper provides no evidence of money laundering and other aspects of organised crime. What were the conduits of money laundering and what were the types of organised crime referred to in this chapter?

“The report writes about increasing higher deficits in particular for 2003 and in the medium term. What the report does not acknowledge is hat the underlying deficit is much lower and that it is the result of the restructuring of the sugar and bauxite sectors that increased the deficit to 10 per cent of GDP. The IMF took these points into consideration in approving the Poverty Reduction and Growth Facility

(PRGF). It is prudent that the paper look at the underlying deficits and draw comparisons or at least mention the contribution of public sector restructuring as the reason for the increasing fiscal deficit....

“The paper speaks of ineffective use of donor resources yet it does not provide any evidence of same. It would be better to provide reasons for the ineffective use of donor assistance so as to draw conclusions and lessons learned for future efficient use of such resources...

“The paper makes sweeping statements on donor fears on Government control of projects are not accurate. A check from the bilateral and multilateral donors does not support this assertion. A footnote may be in order to point to the donor who feels this way so that the Government could begin to address this issue specifically with the donors.”

As for the areas of improving public sector performance and governance, Kowlessar states: “This section demonstrates profound ignorance of the working of the Government and the Parliamentary Committees. Constitutionally, the Government is obliged to present its budget on or before March 31. Yet the paper argues that Government is not able to implement its programmes because budgets are always presented late. Of the 12 budgets over the last 12 years, one was presented in January, another in February and the remainder in March. The committee and others will be set soon in the context of the ongoing dialogue between the two main political parties.

The paper also talks about the disconnect and implementation problems between the capital and current budget. Though the current and the capital budget are not currently integrated, the Government is not aware that there are monitoring difficulties in expenditures. On the contrary, staff of the Ministry of Finance and State Planning Secretariat attend the releases meeting together in an effort to better co-ordinate the recurrent and capital expenditure.”

“The paper complains of circumvention of existing rules on expenditures and about the lack of oversight and ineffectiveness of existing mechanisms. The Parliamentary Accounts Committee chaired by the major opposition party has been functioning without any inhibition among other things to ensure that controls are not circumvented and without Parliamentary approval, resources cannot be reallocated from approved headings. Finally, the Accountant General over the last 12 years has been presenting reviews of operations of public expenditures to the Public Accounts Committee and to Parliament. Perhaps, these reports ought to be looked at before such sweeping statements are made.”

“In recent documents by the IDB and IDA there seems to be a consensus that the decision making process is highly centralized. This perception by both institutions is taking a life of its own. It is therefore important that the paper attempts to do more analysis on the issue of centralised decision making than is provided now.

As for the investment climate and governance, Kowlessar says:

“The paper takes an infactual approach about the processes leading to the tabling of the investment code and draws wrong conclusions Again, it is not clear the author understands the circumstances of the investment law.

What was proposed was more fiscal incentives that the Government could not afford and the IMF will not approve. The FIAS report (World Bank/IFC) though critical of the Government in effect supported the position that a reformed tax system if deprived of discretion and remissions will do well to encourage investment. Besides, the Government held consultations with private sector representatives before the code was submitted to Parliament....

“The statement “case by case approval of all budgets and programs by the Office of the President” is outrageous. It is infactual. Did the Bank speak with the Ministry of Finance before coming up with such an inaccurate statement?”