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LCDS not a realistic model for development financing-AFC

Dec 30, 2009 News

“It is unfortunate that after the debacle at Copenhagen, President Jagdeo is still bullish that Guyana can obtain a substantial cut of the proposed pitiful US$10B funds made available by the powerful nations which run the world,” says the Alliance For Change.
In a statement to the media yesterday, the AFC stated that it appears as though the President (with a chosen few) will now personally run off on a new round of global escapades to try to draw down on the pitiful US$10B that has to be shared among vulnerable poor countries.
The party stated that while it is of the view that Guyana should not ignore the potential for obtaining small amounts of finance from the global US$10 billion funds. “We believe our energies should be directed elsewhere so as to modernize the production structure, and enhance competitiveness and capabilities of the Guyana economy.”
It stated that the party did not believe that the Low Carbon Development Strategy (LCDS) is a realistic model for development financing and that essentially the PPP has placed the development financing of the nation at the whims of global deal making and political uncertainties.
“The PPP has placed all our financing eggs in one basket and is jeopardising the welfare of the masses of bauxite workers, sugar workers, housewives, farmers, public servants and others.”
According to the AFC, as the Jagdeo government waits for US$580M each year to be realized to implement LCDS, the PPP has chosen to enter into short-term relationships with bilateral donors to obtain small change to keep the government’s current expenditures going.
“Therefore, the government’s policy is to maintain its cash flow so as to present a façade of success…However, the short-term aid strategy of cash flow maintenance does not lead to fundamental transformation and independently verifiable job creation (job numbers by Go-Invest are not authoritative as that is not the mandate of the institution Go-Invest).”
Given what the party called the shortsightedness of the PPP government, the AFC proposed an alternative vision of development financing which simultaneously looks for financing from different sources.
“All financing eggs must never be placed in one basket…Moreover, development financing must lead to positive structural changes in the economy…Government cash flow or current expenditure financing is just not enough.”
The proposals by the AFC include: Mobilizing domestic savings through financial market development and deepening; the establishment of a state development bank. We see a state development bank as deepening financial markets and complementing (and not competing with) the commercial banks; Foreign direct investments; Mobilization of finance from the Diaspora; Bilateral development financing for fundamental projects and not just cash flow sustenance; Multilateral financing from IDB and other similar agencies; Tax incentives for domestic and Diaspora investors as well as the Refocusing of Guyana’s foreign policy to lead to maximum development financing.

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