Govt. committed to sustain macroeconomic stability

Jun 11, 2009 Letters

Dear Editor,
The global economic meltdown is now beginning to devastate developing countries, especially those with investment products in the USA. The devastation produces fluctuations in national income, output and employment.
Developed countries like the UK, Germany, France, and the USA already face a growing recession, caused by the global credit crunch.
Today, stock markets are down more than 40% from their recent highs.
Investment banks have collapsed, rescue packages are drawn up involving more than a trillion US dollars, and interest rates have been cut around the world.
Stock markets across the world from both developed and developing countries have all dropped significantly since May 2008. The India stock market dropped by 8% in one day; at the same time so did stock markets in the United States and Brazil.

Developing countries are predicted to experience a decline in the demand for commodities and manufactured goods, many projects will be left at a standstill because of lack of funding; the Gross Domestic Product (GDP) of developing countries will decline to less than 5% this year.
Growth and demand in China and India are predicted to decline, negatively affecting developing countries. Remittances to developing countries are expected to shrink.
And, because of the recession in some parts of the developed world, there will be a decrease in migrants to developed countries.

Foreign Direct Investment (FDI) and equity investment also will be strained.
The year 2007 was a record year for FDI to developing countries, and equity finance is now under pressure; and corporate and project finance will decrease.
The loan and grant capacity of International financial institutions, like the World Bank, IMF, and IADB, to developing countries, are fast drying up.
Limited investments globally will become the order of the day. Foreign Aid budgets in UK, other European countries, and the USA, are under strain because of debt problems and feeble economic situations.
Macroeconomic stability is of major concern to many developing countries.

The adverse effects of economic shocks have threatened the markets of many developing countries. World growth is declining, posing another serious threat to the macroeconomic stability of these poor countries.
The Government of Guyana remains committed to sustaining macroeconomic stability. The Bank of Guyana and the Ministry of Finance continue to work in collaboration to establish a macroeconomic environment which endorses national competitiveness. The Government of Guyana continues to facilitate a sound macroeconomic environment by formulating a budget to ensure that a modest growth rate is achieved, especially in the present state of global economic turmoil.
Also, the Government of Guyana continues to ensure that fiscal deficit is consistent with medium-term sustainability.

The International Monetary Fund (IMF) recently commended the Government of Guyana for their ability to maintain a sound macroeconomic environment, and its advancement to achieve fiscal discipline.
The guidelines and policies of the IMF are not easy to follow, since poor countries are compelled to lower inflation, limit fiscal deficits and government borrowing, and increase foreign currency reserves.
For the past few years, Government has managed to achieve substantial debt relief under the Enhanced Heavily Indebted Poor Countries (E-HIPC) initiative, G8 Debt Relief initiative, the IMF, and the International Development Association (IDA).
Because of debt relief, more funds are available for servicing the social service sectors, to further facilitate growth and development.
Marissa Lowden

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Govt. committed to sustain macroeconomic stability

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