IDB crafting framework for Guyana green economy
the sector; (iv) encourage and support entrepreneurship; (v) create more job opportunities; (vi) boost innovation; (vii) reform business facilitation; (viii) build climate-resilient infrastructure (including renewable energy investments); (ix) improve the overall quality of life; (x) address poverty; (xi) reform the public and financial sectors; and (xii) linking coastland and diversification of the economy.
The IDB highlighted the challenges encountered with the previous country strategy. The previous one focused on natural resource management, sustainable energy, private sector development, and public-sector management, across nine sectors, with modest results.
“By the end of 2016, 54 percent of the portfolio was classified as “alert” or “problem,” while the disbursement rate for loans fell from an annual average of 8.6 percent in 2012 to 4.4 percent in 2016. As a result, there was a significant decline in net cash flows to Guyana, which reached an all-time low in 2016. Around 50 percent of the IDB’s approvals were in infrastructure—the water, transport, and energy sectors—all of which faced delays during the decisionmaking and procurement stages. The change in administration in 2015, the first after 23 years under regular general elections, slowed execution across the Government’s public-sector investment programme due to a comprehensive portfolio review. This transition has not been without its challenges. The government has had to tackle the issue of stalled project implementation after encountering a capacity (institutional and human) deficit in ministries. Although an additional time constraint on execution, this review marked the beginning of an iterative process by which the Government, development partners, and the private sector identified bottlenecks in the current project management system and developed joint solutions”, the IDB said.
The bank contended that low disbursements were symptomatic of Guyana’s challenging institutional environment and the lack of strategic planning and vision at the highest level.
“This resulted in inefficient planning across the project cycle, from design and financing to implementation and monitoring. Recommendations made by the Office of Evaluation and Oversight (OVE) are in line with this assessment and have informed the institutional strengthening focus of this new strategy. Specifically, the Bank’s Board of Directors endorsed four of OVE’s recommendations for future engagement in Guyana: (i) work with the government to develop and institutionalise a project management system that combines core procurement functions across programmes; (ii) ensure an adequate level of IDB Group staff support in each area of the programme to enhance project implementation and achievement of results; (iii) design projects that fit the institutional environment, build on one another, and incorporate the Office for Institutional Integrity’s (OII) input as part of project risk assessment; and (iv) increase support for the generation and publication of data by continuing to work with the Government to strengthen the national statistical system”, the bank said.
The multilateral financial institution contended that Guyana does not perform well in terms of results-oriented planning.
Lowest
“The country ranks as one of the lowest countries in Latin America at 1.7, compared with a regional average of 2.8 (PRODEV). The country-specific PRODEV analysis for Guyana notes that its institutions lack the ability to conduct long-term operational planning: that is, the ability to define programmes and targets and establish roles and responsibilities. Among the collection of long-term plans, none are annualised or contain indicators for monitoring implementation. Plans also fail to address the social aspects of development. The evaluation also noted that in terms of planning, Guyana’s Poverty Reduction Strategy Paper (PRSP) expired in 2005 without a replacement. Until the Green State Development Strategy is in place, fully national policy is presently articulated through budget documents. The central government’s management of public institutions is complex and dysfunctional: the three main institutions responsible for public service management—the Public Service Commission, the Department of Public Service (within the Ministry of the Presidency), and the Establishment Division of the Ministry of Finance—have overlapping responsibilities and lack coordination. These combined factors result in “issues of sluggishness in implementation, poor inter-agency coordination and cooperation, and a deficit of strategic planning and management,” which in turn undermines service delivery, affecting productivity and growth”, the IDB said.
The IDB is projecting a sovereign guaranteed pipeline of US$86.1 million (US$17.2 million per year) over the period for Guyana.
“This represents a lower level of approval compared with the previous CS (2012– 2016) of US$209.8 million (or US$42.0 million per year). This scenario assumes a reduction in allocations because of the increase in Guyana’s per capita income and relatively weaker portfolio performance over the CS 2012– 2016 period. It is assumed that the current blend of 50/50 of concessional resources with ordinary capital will be maintained throughout the allocation period. Net cash flows to Guyana will average US$22.7 million per year but will turn negative by 2021 (US$-6.4 million). Total net cash flows will equal US$113.3 million, and the outstanding debt to the IDB will grow to US$654.1 million by the end of the period (Annex IV). The scenario does not include grants or complementary funding sources, either direct or leveraged”, the strategy said.