INTERNATIONAL MONETARY FUND APPROVES LOAN FOR GUYANA
INTERNATIONAL MONETARY FUND APPROVES LOAN FOR GUYANA WASHINGTON, Nov. 1 /PRNewswire/ -- The International Monetary
Fund (IMF) has approved a loan equivalent to SDR 17.71 million (about US$23.95 million) for Guyana in support of its second annual arrangement in the framework of its three-year arrangement under the Enhanced Structural Adjustment Facility (ESAF) (A). The loan is available in two semi-annual installments, with the first disbursement equivalent to SDR 8.86 million (about US$11.98 million) available immediately. Also, the IMF approved the immediate utilization by Guyana of a further SDR 3.28 million under its existing stand-by arrangement, which is due to expire at the end of 1991.
The recent performance of the economy has been broadly in line with the objectives of the program, which are to lay the basis for sustained growth, lower inflation and make progress toward a viable external payments position. After substantial adjustments in early 1991, the exchange rate has stabilized and the rate of price increases has slowed sharply. Economic activity has entered a recovery phase, with real GDP projected to increase in 1991 for the first time since 1987. The recovery has been strongest in the export sector where rice, bauxite, gold and sugar production have increased mainly in response to an improved incentive structure associated with the unification of the exchange rate and the liberalization of prices, greater competition in the rice-milling sector and the increased availability of imported inputs. While inflation was somewhat higher than had been projected during the first half of 1991, owing in part to corrective price increases and the elimination of most subsidies, the monthly rate slowed to about 2 percent a month in June-July. There also has been a substantial strengthening in the country's international reserves. Building upon the progress made to date, the Guyanese authorities have developed a program for 1991-93 that maintains the objectives of the original program and seeks to continue to correct the economic and structural problems still facing Guyana. These problems include infrastructural bottlenecks, critical shortages of skilled labor and management, a large parallel economy and a very large external debt. The 1991-93 medium-term economic program envisages real GDP growth of 4-4 1/2 percent a year, a reduction of the annual rate of inflation to about 8 percent a year by 1993, and a further strengthening of Guyana's international reserves. Fiscal policy aims at a reduction of the overall deficit of the public sector through increased tax revenues and expenditure controls, further improvement in the efficiency of the central government and a continuation of the government's divestment program. The credit program contemplates an expansion of bank credit to the private sector while fostering positive interest rates in real terms. The program will continue to rely on market determination of the exchange rate, interest rates and prices as the main guide to resource allocation. The deterioration of Guyana's economy over the past decade has resulted in a substantial decline in the standard of living and in the provision of social services. The improved macroeconomic policy framework is expected to reverse this decline over time through a restoration of economic growth. In order to alleviate the burden on the most vulnerable groups of the population in the transition period, the government in 1989 launched an emergency poverty alleviation program financed out of its own resources, and this has been followed by a social impact amelioration program (SIMAP) which became operational in March 1991. Guyana joined the IMF in September 1966 and its quota (B) in the IMF is SDR 49.20 million (about US$66.52 million). Guyana's outstanding financial obligations to the IMF's General Resources Account, ESAF Trust Fund and Trust Fund currently total SDR 89.06 million (about US$120.42 million). (A) The ESAF is an IMF concessional facility for assisting its low income developing members that are undertaking economic reform programs to strengthen substantially and in a sustainable manner their balance of payments and improve their growth prospects. Loans under the facility carry an interest rate of 0.5 percent and are payable over 10 years with a five-and-a-half-year grace period. (B) A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs. -0- 11/1/91 /CONTACT: External Relations Department of the International Monetary Fund, 202-623-7100/ CO: International Monetary Fund ST: District of Columbia IN: FIN SU: MH-DC -- DC008 -- 0144 11/01/91 10:45 EST
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|Date:||Nov 1, 1991|
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