No ringing endorsement

Mar 16, 2025 Features / Columnists, Peeping Tom

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Peeping Tom…

Kaieteur News- The International Monetary Fund (IMF) is a cautious beast. It does not bare its fangs unless absolutely necessary. And even then, it prefers a soft growl over a menacing snarl.

To expect a damning indictment of the Guyanese government’s economic management from an IMF Article IV Consultation would be to misunderstand the IMF’s role. It is not in the business of toppling regimes with harsh words. Instead, it issues gentle nudges, phrased diplomatically, wrapped in the language of constructive engagement.

But this does not mean that its recent report on Guyana is a ringing endorsement of the government’s handling of the economy. Far from it. One only has to read between the lines to see the deficiencies quietly implied, the gaps politely identified, and the shortcomings that remain just outside the margins of explicit rebuke.

For all its politeness, the IMF has delivered a report that suggests there is much work to be done. Even from a neo-liberal perspective—the very school of thought that the IMF is often accused of championing and of which the PPPC government is an unrepentant disciple—there is little cause for complacency. The recommendations contained within the report highlight structural weaknesses, governance concerns, and fiscal policy risks that, if left unaddressed, could turn economic optimism into missed opportunity.

Take, for instance, the call for a comprehensive medium-term fiscal framework. This call was also made last year and seemingly has not been acted upon by the government. The IMF, in its ever-measured tone, recommends that Guyana adopt an explicit fiscal anchor and operational target.

To the untrained eye, this may appear as simple guidance, an offering of best practices. But to those who understand the language of international financial diplomacy, this is more than a suggestion—it is a signal. It suggests that fiscal policy, as it stands, lacks the discipline and structure necessary to ensure long-term sustainability, even if the fiscal policy is heading in the right direction. In plainer terms, the government has not yet demonstrated a clear, credible plan for how it will manage its spending over the next decade, beyond broad ambitions and general assurances.

Similarly, the IMF’s recommendation to enhance monetary policy effectiveness speaks volumes. Calls for a strengthened interest rate channel and better excess liquidity management are not merely technical proposals; they point to a financial system that remains inefficient in transmitting policy changes to the broader economy. Excess liquidity in the banking system, if not addressed, could lead to inflationary pressures or speculative activity. That the IMF feels compelled to raise this issue at all suggests that current policies have not adequately dealt with these risks.

The governance recommendations, though carefully worded, are telling. The IMF, while acknowledging progress in revenue administration, still sees the need for greater transparency in public procurement. E-procurement is not merely a modern convenience; it is a safeguard against corruption, inefficiency, and waste. That the IMF has to mention this E-procurement upgrading that is taking place suggests, as we know that our current procurement practices leave much to be desired.

On the financial regulatory front, the IMF’s call for better data collection on corporate and household balance sheets hints at gaps in the supervision of the banking sector. A robust financial system requires comprehensive data to assess risks properly. If the IMF is highlighting deficiencies in this area, it suggests that the financial regulatory framework is not as sturdy as it should be.

Then there is the matter of labor market policies. The IMF’s suggestion to address labor shortages and skills mismatches implies a fundamental disconnect between the education system and the demands of the economy. If workers do not have the skills needed to fill available jobs, the problem is not just one of training but of economic planning. The report’s polite hint in relation to vocational education and women’s workforce participation underscores the need for a more coherent labor strategy, one that anticipates future demands rather than reacting to present shortages. The government has been urged to update its labour surveys which has fallen behind since the APNU+AFC period.

On climate resilience, the IMF is careful not to directly criticize the government’s approach but still sees the need to warn Guyana about its vulnerability to climate-related shocks. The fact that this reminder is even necessary should give policymakers pause. In a country as vulnerable to sea level rise and flooding as Guyana, climate policy should not need gentle encouragement—it should be at the forefront of economic planning.

Perhaps the most damning evidence of the need for improvement is the recommendation to modernize national statistics. A rapidly evolving economy requires reliable data to inform policy decisions. If the IMF is calling for updated national accounts, price statistics, and labor force surveys, it is because these fundamental tools of economic governance are currently inadequate. A government cannot effectively manage an economy if it does not have precise, timely data on employment, household consumption, and sectoral performance.

The IMF will never say outright that an economy is being mismanaged unless it is on the verge of collapse. Its reports are designed to maintain engagement, to encourage rather than alienate. But those who read them carefully, who understand the nuance of economic diplomacy, will see that this latest report is hardly an unqualified endorsement of the government’s policies. It is, instead, a polite but firm series of warnings, a collection of signals that all is not as well as official rhetoric might suggest.

If the government wishes to treat this report as validation of its economic stewardship, it would do well to reconsider. There is much to improve, and even from a neo-liberal standpoint, the challenges are clear. The questioning about the risk of overheating suggests that fiscal discipline can be bettered, financial regulation needs strengthening and that governance reforms must go further. The IMF may not have roared, but it has certainly cleared its throat. Those who listen closely will hear the message loud and clear.

(No ringing endorsement)

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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