Projects and future oil money! IMF zeros in on haphazard spending; recommends improving public investment programme

Jan 25, 2018 News

For over 20 years, Guyana has had a haphazard approach to spending and planning for projects. This approach has even been used in cases where moneys were borrowed from international donor agencies. The US$200M Skeldon Sugar Factor is a prime example of this, says the International Monetary Fund.
With this in mind, many critics and international agencies have questioned what this “haphazard approach” would mean for Guyana’s future oil dollars.
This very issue was alluded to by the International Monetary Fund (IMF) in its recent report titled, “A Reform Agenda for Petroleum Taxation and Revenue Management”. In its report, the IMF zeroed on several issues relating to public investment management in Guyana.
The IMF alluded to the fact that there is a need to improve the manner in which planning is done for spending on projects. The Fund identified some of the systems and guidelines which are missing from Guyana’s public investment programme which would ensure efficient spending and implementation of projects.
The IMF said that projects in Guyana are not subject to a rigorous appraisal process. The Fund said that there is no institution or unit that carries out a detailed appraisal of the different projects and programmes. It pointed out that major donor-funded projects include cost-benefit analysis (CBA) but when it comes to the domestically funded projects, risks assessments are not conducted.
The Fund also noted that the authorities here do not publish project selection criteria. It stated that the process is further complicated by the lack of ministerial ceilings for the capital budget. The Fund stressed that this undermines prioritisation.
In light of this, the IMF said that there is a clear need to strengthen capacity for investment project development and appraisal. The Fund said that this is critical for the quality of the capital budget pipeline.
The Fund warned that demands for capital investment are always higher than available funding. It said therefore, that governments must make choices based on well targeted criteria. The IMF said that if this is ignored, there is danger that available resources are spread thinly between too many projects and investment goes on for years without completing the projects.
The Fund added, “As a result, projects will have a high cost and time overruns burden project management capacity and ultimately impact the country’s economic growth.”
The IMF said that Guyana is already facing similar challenges.
The Fund also stated that strong public investment management will become even more important once petroleum revenues start coming in.
It recommended that Guyana’s authorities improve the public investment programme which includes spending, selection, implementation, evaluation and monitoring of projects.

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Projects and future oil money! IMF zeros in on haphazard spending; recommends improving public investment programme

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