Securing debt relief is not an act of begging

May 15, 2009 Letters

Dear Editor,
I refer to Mr. Freddie Kissoon’s column May 13, 2009 in the Kaieteur News, with the caption “Things about Guyana, the Caribbean Police Commissioners should know.”
Mr. Kissoon should know that these esteemed visitors to Guyana are Police Commissioners closely wedded to ‘goings on’ in the Caribbean.
Critics who conclude that the applications for debt relief, and in fact, today more progressive debt relief, constitute global begging, are naïve about administering a national economy, and short on practical details on how to improve the social services sector in the interim. This ‘begging’ argument is inane because securing the debt relief is not automatic; Guyana qualified for debt relief because it met stringent eligibility criteria.
But debt relief was necessary at 1992 and subsequent years; the inherited external debt relief of US$2.1 billion was part of the reality here; traditional debt relief as concessionary loans was insufficient to meet debt service payments; and the social services sector was crying out for help.
Securing investments is a constant function of this Government. And Government is also fully cognizant of the process of securing investments and this process is actively being pursued. Attracting both domestic and foreign investments continues to be the norm of the PPP/C Government. But investments translated into revenues have a protracted lead time in many cases. So while the effort exerted to attract investments is an ongoing process, the need to make debt payments and sustain an adequate social services sector requires funds not immediately available within the economy. Hence, the need to, initially, seek traditional and non-traditional debt relief packages.
Simultaneously, with the process of securing investments, Government also sought a new type of debt relief linked to structural adjustment policies geared toward producing sustainable debt levels, sustainable growth rates, and poverty reduction, a debt relief different from the concessionary loan-type. This new type of debt relief, Heavily Indebted Poor Countries (HIPC) relief, is progressive and has a human face.
The HIPC Initiative was set up to solve debt problems of the heavily-indebted poor countries which had a total debt of US$200 billion. Also, the HIPC Initiative, as part of its eligibility criteria, frees up resources for enhancing the social services sector, especially basic health and education.
The HIPC Initiative was modified in 1999 to give faster, deeper and broader debt relief and reinforce the connections between debt relief and policy reforms to increase long-term growth and achieve poverty reduction. This modification initiated the Poverty Reduction Strategy Paper (PRSP), approved by the World Bank and the IMF in 1999 as part of the Enhanced-HIPC.
In order to be considered for HIPC assistance, a country must experience an unsustainable debt burden, and have a track record of reform and good policies as determined by the IMF and the World Bank. Then a debt sustainability analysis will be completed to determine the current external debt. If the existing external debt ratio for the applicant country exceeds 150 percent of the net present value of the debt to exports, it will qualify for HIPC assistance. The next stage is to determine the country’s eligibility to request assistance, and this step is referred to as the Decision Point.
Here, an eligible country will have to adopt, in addition to the IMF and World Bank-supported structural reforms, a Poverty Reduction Strategy Paper (PRSP), using a national participatory process, by the Decision Point. In all of this, good economic management is the key to meet the HIPC rigorous eligibility requirements. This is, indeed, not a case of begging, as Mr. Kissoon wants us to believe. The Caribbean Commissioners of Police already know this, so Mr. Kissoon is not presenting anything new to our esteemed visitors.
Kissoon also wants tell the Caribbean Police Commissioners about our corruption and other types of crime like, narco-trafficking, gun running, and in general, organized crime. These crimes are regional and international in nature, and so, all our CARICOM counterparts are dabbling with this type of crime scenario on a daily basis. Again, Kissoon is telling the Police Commissioners nothing about crime in the Caribbean that they do not already know. And the Commissioners are fully aware of the economic status of CARICOM; and so, they do not see debt relief as begging.
Prem Misir

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