Mobilizing resources for development

Apr 26, 2014 Letters

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DEAR EDITOR,
Mobilizing resources for development has always been a challenge for most governments, both in the developed and the developing world. This is particularly so for countries with limited resources such as ours where it is not an easy task to generate the requisite financial outlays to sustain much less accelerate the momentum of change and development.
This is why, when it comes to the financing of development, there can never be too much money since as every schoolboy knows there is a positive correlation between the quantum of resources and the rate of economic growth.
There was a time when Guyana’s development was largely overseas-driven. This was especially so during the period of colonial rule when development financing, in particular the financing of capital programmes, depended almost entirely on overseas grants from the mother country. Our records would reveal that there was a time when money from the colony was transferred to Britain to finance development in that big metropolitan power.
One of the major challenges faced by the PPP government of the late 1950’s and the early 1960’s was how to mobilize resources for development. Dr. Cheddi Jagan, who was then Premier, sought to obtain funding from Britain, United States and other western countries, but was faced with numerous obstacles, mainly because of ideological reasons. Attempts to get funding from the USSR and other Eastern European countries did not yield the anticipated results, since the British Government did not take kindly to the colony getting development assistance from the Socialist world.
After the PPP was removed from office in 1964 the new PNC-UF coalition was showered with lots of overseas loans and grants which for the most part were greatly mismanaged and spent on ill-advised projects, some of which never saw the light of day despite the huge sums of money spent on initial preparatory works. The western financial institutions and other donor countries were literally tumbling over each other to spend money on Guyana. Most of the money came in the form of loans which had to be repaid with interest.
By the latter part of the life of the PNC regime, the country was saddled with a huge foreign debt which was consuming over ninety per cent of the country’s revenues. The country was unable to meet its debt obligations to the international financial institutions and at one time was declared ‘uncreditworthy’ by the IMF and therefore considered ineligible for further loans.
One of the first tasks of the new PPP/C administration was to mobilize resources to rebuild a battered economy, especially given the fact that the treasury was empty and the productive capacity of the country in virtual tatters. By the early 1990’s the production of sugar and rice had reached record lows and bauxite had experienced an advanced state of production decline.
Several development rounds took place with the assistance of the Carter Centre and the UNDP aimed at securing financing for development. In addition, several interventions were made at the bilateral and multilateral levels to either write-off or reschedule the country’s huge debt burden.
After several rounds of negotiations, Guyana became one of the few countries of the world that benefited from debt write-offs under the Highly Indebted Poor Countries (HIPC) Initiative. This was a major breakthrough for Guyana and released considerable financial resources which otherwise would have had to be spent on repaying and servicing the debt burden. Because of good governance, the country was projected as a model of a third world country which has recovered from the trauma of economic and political disaster.
I thought of providing that background information if only to show how far the country has evolved over time in terms of its capacity to mobilize financing for development. Today, Guyana is no longer a part of the IMF policy prescriptions, having exited the programme some years ago. This is a major economic advance, especially when seen against the background of what is taking place in several of the more advanced economies in the region which are still heavily dependent on the IMF to finance their development.
What we have in Guyana is something of a paradox, where the PPPC administration has successfully mobilized resources for development but the combined opposition is slashing the funds which are designed to stimulate the economy and accelerate the pace of our development. This is a very unusual situation which certainly is not in the best interest of the country and its citizens. The actions taken by the combined opposition is motivated by narrow partisan interests and has the potential to do harm to the economy and by extension the well-being of the people of Guyana.
Hydar Ally

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