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IDB predicts: Oil production will see reduction in concessional loans
- warns of weak Govt. structures
IDB’s Local Head, Sophie Makonnen
One of the country’s largest financiers of public projects has approved its programme for the next five years, and it is focusing on preparing Guyana for the oil production.
According to the Inter-American Development Bank (IDB), its country strategy was approved by the board.
“This strategy guides the IDB’s partnership with Guyana for the next five years; focusing on institutional strengthening and infrastructure investment to help prepare the country as an emerging oil economy,” the bank disclosed in a statement yesterday.
The strategy provides Guyana with US$86.1M in concessional financing, and has been designed to ensure “continuity” with Guyana’s existing portfolio commitments, as well as to respond to developing government priorities in the new Green State Development Strategy.
Among other things, IDB has been lending for road improvements, including for the Sheriff Street/Mandela Avenue project and the East Bank Demerara road project.
Among other things, IDB said that four main areas will be focused on.
These include the establishment of a modern national strategy and planning framework for undergirding the new Green State Development Strategy, including efforts to promote Guyana’s economic diversification efforts and pursue modern industrial policies.
The bank will also be looking to strengthen fiscal policies and the framework for managing Guyana’s natural resource revenues and facilitate private sector development to support the delivery of better services, mainly through enhancing Guyana’s business environment.
IDB will also be focusing on delivering critical infrastructure to facilitate Guyana’s human and private sector development.
“As Guyana transitions to oil and gas production by mid-2020, it is expected that the country will likely see reduced access to concessional resources from the multi-lateral development banks. This means that the next four years is particularly important for the IDB’s long partnership with Guyana.”
The bank warned yesterday that several risks will need to be swiftly addressed, including the continued vulnerability to commodity price shocks, and the adequate creation of new government structures to manage a “hitherto unknown sector (oil).
The IDB will work with the Government of Guyana to achieve the good life for all…” during the historic economic transformation.
With regards to the previous five-years – 2012-2016 – IDB said its strategy was focused on four priority programmatic areas – specifically natural resource management; sustainable energy; private sector development; and public-sector management.
“During this period, the IDB’s portfolio in Guyana consisted of 13 new loans totaling US$143.6 million; investment grant operations totaling US$51.9 million; and 30 technical cooperations in various sectors.
The IDB’s Multilateral Investment Fund (MIF) approved four separate operations totaling US$4.0 million, despite efforts by the Government to overcome difficulties in loan disbursements, slow portfolio performance reflected Guyana’s challenging institutional environment.”
Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
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