Guyana: Staff Report for the 2017 Article IV Consultation—Informational Annex
Author: International Monetary Fund. Western Hemisphere Dept.
Publication Date:
28 Jun 2017
eISBN:
9781484305768
Language:
English
Keywords:
ISCR; CR; deficit; authority; debt; Guyanese authorities; IMF FSAP; disbursement performance; investment grant disbursement; IDA portfolio; net loan flow; Loans; Government finance statistics; External sector statistics; Government debt management
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2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Guyana

Abstract

2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Guyana

Fund Relations

(As of February 28, 2017)

Membership Status. Joined: September 26, 1966; Article VIII.

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Latest Financial Arrangements:

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Overdue Obligations and Projected Payments to Fund 2

(SDR Million; based on existing use of resources and present holdings of SDRs)

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Previous Decisions and Article IV Consultation Cycle:

  1. On December 18, 2003, the Executive Board determined that Guyana had reached the completion point under the enhanced HIPC Initiative (IMF Country Report No. 04/123).

  2. On February 27, 2009, the Executive Board concluded the 2008 Article IV consultation.

  3. On March 17, 2010, the Executive Board concluded the 2009 Article IV consultation (IMF Country Report No. 10/292).

  4. On February 16, 2011, the Executive Board concluded the 2010 Article IV consultation (IMF Country Report No. 11/152).

  5. On November 9, 2012, the Executive Board concluded the 2012 Article IV consultation (IMF Country Report No. 12/254).

  6. On December 19, 2013, the Executive Board concluded the 2013 Article IV consultation (IMF Country Report No. 14/294).

  7. On May 9, 2016, the Executive Board concluded the 2016 Article IV consultation (IMF Country Report No. 16/216). Guyana is on a 12-month cycle for Article IV consultations.

Safeguard Assessments

The most recent safeguards assessment of the Bank of Guyana (BOG) was completed in May 2007 in respect of the then expected PRGF arrangement. Overall the assessment noted capacity constraints, including in the internal audit function. Recommendations were made to enhance internal audit reporting and to improve external audit quality to enable compliance with International Standards on Auditing (ISA) and IFRS. In the reserves management area, staff recommended the establishment of an investment committee. The latter has been implemented. The BOG continues to be audited by the Audit Office of Guyana and the reports state compliance with ISA. The BOG’s financial statements refer to IFRS and are published.

Exchange Rate Arrangement

Guyana has accepted the obligations of Article VIII—Section 2, 3, and 4—and maintains an exchange system that does not have any multiple currency practices, and is free of restrictions on the making of payments and transfers for international transactions, with the only exception of certain exchange restrictions for the preservation of national and international security. Guyana’s de jure exchange rate regime is floating. Guyana’s de facto exchange rate regime is classified as a stabilized arrangement. The BOG conducts transactions on the basis of the weighted average quotations of the three largest dealers in the exchange market. The currency of Guyana is the Guyana dollar. The exchange rate was G$206.50 per U.S. dollar on December 31, 2016.

ROSC, FSAP, EPA Participation

  1. A fiscal ROSC was undertaken in July 2002.

  2. A WB/IMF FSAP took place in November 2005 and concluded in September 2006.

  3. Ex-Post Assessment findings were discussed with the authorities in June 2006 and concluded on October 23, 2006.

  4. A WB/IMF FSAP took place in May 2016 and concluded in March 2017.

Technical Assistance

Fiscal Affairs Department

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Monetary and Capital Markets Department

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Statistics Department

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Legal Department

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Resident Representative

The office was closed in end-January 2009.

Bank-Fund Collaboration Under the Jmap and Relations With the Bank

A. Bank-Fund Collaboration Under the JMAP

The Fund and the World Bank are collaborating in responding to the Government’s request for assistance with debt management. Support has been requested from the IMF to develop the domestic debt market and ensure proper coordination with monetary policy. In addition, a staff from the Government of Guyana’s debt management department is on secondment with the World Bank, under the Debt Management Practitioner’s Program. Guyana would benefit from strengthened capacity to formulate and implement a debt management strategy to assess the cost risk tradeoffs of the portfolio.

The World Bank Country Engagement Note (CEN), 2016–2018, was endorsed by the World Bank’s Board of Executive Directors in March 2016. The current IBRD/IDA portfolio is comprised of three projects totaling US$35.6 million.1 IFC’s committed portfolio in Guyana amounts to $35 million (December 2016), and includes one project in the mining sector. IFC also has four advisory services projects: i) the Guyana Bank for Trade and Industry (GBTI) Risk Management ($0.3 million for Risk Management and SME Banking); ii) the LAC regional Indicator-Based Reform Advisory ($2.1 million); iii) the Caribbean Regional Credit Bureau ($2.1 million); and iv) Trade Logistics in the Caribbean ($2.3 million). Currently, MIGA has no exposure in Guyana.

The work of the World Bank is aligned along the three main areas of the CEN.

  • Enhancing Resilience of Selected Infrastructure and Building Disaster Risk Management. The World Bank has two active projects focused on flood risk management: the IDA funded Flood Risk Management Projects ($11.9 million), supporting the reduction of vulnerability of coastal areas to flooding of coastal areas; and the grant funded (Guyana REDD + Investment Fund − GRIF) Cunha Canal Rehabilitation Project (US$3.7 million), approved in December 2015.

  • Setting up the Foundations for High Quality Education. The Bank is helping Guyana to improve the quality of education delivered through three projects. The current two IDA projects include the Guyana Secondary Education Improvement Project (US$10 million), and the University of Guyana Science and Technology Support Project (US$13.7 million. The third project, Early Childhood Education, is grant funded by the Global Partnership for Education.

  • Laying the Ground for Private Sector Development. The World Bank is conducting work in support of the financial sector through: a Financial Sector Reform and Strengthening Initiative (FIRST) grant to the Bank of Guyana (US$0.5 million), a Supervisory Capacity Building and Consumer Protection grant funded project (US$0.26 million), and a Financial Sector Assessment Project. The World Bank is also providing additional support via the following two Caribbean regional projects: the Caribbean Growth Forum, and the Entrepreneurship Program for Innovation in the Caribbean funded by a grant from Canada.

B. Financial Relations

Statement of World Bank Projects

(In millions of U.S. dollars, as of December 20, 2016)

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Amounts may not add up to original principal due to changes in the SDR/USD exchange rate since signing.

Disbursements and Debt Service

(Calendar Year)

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January – December 20, 2016

Relations With the Inter-American Development Bank

(As of February, 2017)

Approvals and Highlights

  • Four new investment loans totaling $40 million were approved during the last quarter of 2016, the second year of the biennial FSO/OC allocation, in the areas of Health, Agriculture, Justice and Private Sector Development. Approved loans are outlined in the Table below. Already all loans have been signed and that for Agriculture (GY1060) is eligible for disbursement of resources under the facility. Also, resources from the Small and Vulnerable Countries (SVC) allocation were used to finance 3 new technical cooperation projects totaling $1.7 million.

Approved Investment Loans in 2016

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  • Country Strategy: Preparation of a new CS commenced in December 2016 and is scheduled for approval in November 2017.

  • Net cash flows: In 2016, for the second consecutive year, net flows were negative because of low disbursements.

2017 Program

  • The IDB is in the transition period of the existing Country Strategy (CS) for Guyana 2012-2016. The Strategy supports the priority areas of: sustainable energy, natural resources management, private sector development and public sector management, as well as the strategic dialogue areas of transport, citizen security and water and sanitation, with the cross-cutting theme of concerns affecting Amerindian communities.

  • For 2017, no investment project is included in the pipeline. Listed for approval in 2017 is one Investment Grant, Institutional Strengthening in Support of Guyana’s Low Carbon Development Strategy (LCDS) II estimated at $24 million to be financed with resources from the Guyana REDD+ Investment Fund (GRIF) on a non-reimbursable basis.

  • Three new TCs are scheduled for approval in 2017: (i) GY-T1135: Water and Sanitation Governance Strengthening in the Guyanese Regions (ii) GY-T1125: After BEAMS—Status of IRI Mathematics & Literacy in Guyana; and (iii) GY-T1120: Institutional Strengthening to Guyana Social Safety Net. Other new TCs will come on stream as the 2017 allocation of US$1.76 million received for Guyana under the Small and Vulnerable Countries Funding is fully programmed.

Portfolio in Execution

  • The active investment portfolio consists of fourteen (14) investment loans for an approved amount of US$240 Million; two investment operations co-financed with EU/CIF grant resources for US$41.7million; one loan guarantee for US$2.5 million and three investment grants for US$15.92 million, representing a total approved amount of US$297.62 million with a total undisbursed balance of US$214.3 million.

  • Undisbursed balances, representing 73 percent of approvals, are concentrated in the Transport, Energy and Water & Sanitation sectors with support for major infrastructural works in the country.

  • Technical Cooperation projects (grants) total US$18.72 million and comprise approximately 6 percent of the existing portfolio for Guyana. TC resources mostly support the Country Strategy priority area of Public Sector Management, contributing to capacity building and improvements in the statistical as well as fiduciary capabilities of Guyana.

  • Disbursements: In 2016, investment loan disbursements totaled US$8.6 million, a decline of 45 percent in terms of actual amounts disbursed since 2015 and 77 percent since 2014. In 2017, investment loan disbursement performance is expected to improve with projections at US$22 million. Investment grant disbursements are expected to remain healthy with an increase from US$7.3 million in 2016 to US$12.3 million in 2017.

  • Net loan flows are projected to be positive at $7.2 million in 2017, resulting from increased disbursements under the investment loan portfolio. These projections do not include expected disbursement of investment grants.

Main Indicators of the loan portfolio SG

(February 2017)

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Net Flow of IDB Convertible Currencies

(US$ million)

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Note: (e) Estimated.

Loans and Investment Grants in Execution as of December 31, 2016

(US$ million)

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Relations With the Caribbean Development Bank

(As of December 2016)

  • CDB remains one of Guyana’s most important development partners, accounting for over 20 percent of the country’s multilateral debt stock. Total loans approved for Guyana from CDB’s inception (January 26, 1970) to December 31, 2016 amounted to $286.5 million, representing 6.8 percent of CDB’s total approved lending, and making Guyana CDB’s sixth largest borrower out of its 19 borrowing member countries. Guyana is also the largest recipient of grant funding from CDB after Haiti, with cumulative grant approvals amounting to US$46.0 million as of December 31, 2016.

  • Of the total amount of loans approved, outstanding balances totaled $146.7 million as of December 31, 2016. As of that date, undisbursed balances were $48.78 million, detailed in the table below.

Summary Statement of Loan Approvals and Undisbursed Balances, December 31, 2016

(In US$ million)

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Source: Caribbean Development Bank.

  • Most of the interventions programmed in CDB’s 2013-17 Country Strategy Paper (CSP) for Guyana had been approved as of December 31, 2016. These included the Sea and River Defense Resilience Project, which remains under implementation. The $7.5 million loan for the Sugar Industry Mechanization Project, approved in 2014, was cancelled in late 2016. In December 2016 CDB’s Board of Directors approved a Skills Development and Employability Project ($11.7 million). In advance of a new CSP, grants totaling $0.22 million were approved to provide technical assistance in development planning, and in assessing market demand for a development bank. Guyana also continued to benefit from grant funding under CDB’s Caribbean Technological Consultancy Services (CTCS) program, as well as the Stand-by Facility for Caribbean Single Market and Economy (CSME) Implementation.

  • An uptick in approval activity is anticipated from the first half of 2017. In December 2016, CDB’s Board approved a new CSP for 2017-2021, with a notional resource envelope of $194 million. This includes Guyana’s grant allocation of about $65 million1 from the United Kingdom Caribbean Infrastructure Partnership Fund (UK – CIF). The resource envelope reflects the emphasis of the Government of the Co-operative Republic of Guyana (GOGY) that each intervention being financed with external resources must include a grant element of at least 35 percent.

Statistical Issues

(As of March 2017)

A. Assessment of Data Adequacy for Surveillance

General: Data provided to the Fund is broadly adequate for surveillance purposes, although timeliness, reliability, and coverage can be improved. Selected data are only available during missions and upon request. Monetary and external statistics, exchange rates and interest rates are reported to the Fund and available also from the website of the Bank of Guyana (BOG) but with certain lags. The Ministry of Finance (MOF) provides macroeconomic and fiscal statistics in semiannual publications on its website. While specific statistics areas have received technical assistance, some limitations remain in the compilation and dissemination of data for certain sectors. The authorities are currently not incorporating the effects of increased exploration and investment activities in the emerging oil sector. Future technical assistance should focus on helping them incorporate reliably the contribution of the oil sector in national statistics.

National accounts: The technical assistance mission from CARTAC produced a Data Quality Assessment Framework for the national accounts system. The mission also assisted the Bureau of Statistics to develop a five-year work plan for the development of the national accounts. This will involve undertaking a new benchmarking exercise for the annual gross domestic product (GDP) estimates for the year 2018 and will require considerable support from international agencies, in terms of funding and TA. The authorities intend to rebase GDP, which will help them incorporate the effects of future oil production. There are also plans to start publishing quarterly GDP by the end of 2017. Future work will focus on compiling expenditure-side GDP, an Industrial Production Index and Producer Price Index. The Bureau of Statistics (BOS) could increase the coverage of surveys, particularly with respect to the services sector. There is also room to improve the timeliness of statistics on labor markets, gender and poverty, which are outdated.

Government finance statistics: Fiscal statistics are disseminated through several Ministry of Finance (MOF) publications, including the Mid-Year Report on the annual budget, the Budget Speech and other budget-related documents. Technical assistance delivered by CARTAC in 2016 focused on strengthening custom tariff classification and valuation, debt management, a review of VAT policy and administration framework and developing a medium-term macro-fiscal framework. Authorities plan to upgrade their fiscal statistics to reflect the impact of future oil revenue and to incorporate it in their future budget projections.

Monetary and financial stability statistics: The BOG has made significant progress in improving the quality of monetary statistics, especially about the institutional coverage. The monetary statistics currently include the BOG, other depositary corporations (commercial banks, the New Building Society, and trust companies), and other financial corporations (finance companies, life insurance companies, non-life insurance companies, pension funds, and asset management companies). The BOG’s monetary statistics provide data for publication in the IFS Supplement, based on standardized report forms. The BOG publishes on a regular basis prudential indicators for commercial banks, depository and nondepository nonbanks in its quarterly report and on its website. CARTAC has helped make progress with developing macro-prudential/systemic risk indicators and financial stability indicators for the insurance sector.

Balance of payments: In 2016, a mission from CARTAC assisted the BOG in strengthening the compilation and dissemination of external sector statistics. Progress has been made on most of the main recommendations, including implementing a pilot enterprise survey, compiling a partial international investment position (IIP), and preparing quarterly balance of payments data in sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) format. The mission provided hands-on guidance to major enterprises to complete and submit the survey forms. BOG staff continues to follow up on the completion of the survey with the companies. For the IIP, beside capacity constraints at the BOG, the main data gaps include direct investment and other financial assets and liabilities of the nonfinancial private sector and public corporations. A pilot FDI survey was conducted and further administrative data on FDI was requested from data-producing agencies. The BOG publishes quarterly balance of payments data in their national publications in an aggregated format similar to BPM4, and compiles quarterly estimates for internal purposes in the BPM6 format. The mission also followed up on the recommendation of the 2014 TA mission to revise imports of goods data in the balance of payments to remove double counting for freight and insurance.

B. Data Standards and Quality

Participant in the General Data Dissemination System (GDDS) since 2011.

C. Reporting to STA (Optional)

No data are being reported for publication in the Government Finance Statistics Yearbook.

Guyana: Table of Common Indicators Required for Surveillance

(As of March 2017)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Balance sheet information of the Bank of Guyana and the consolidated balance sheet of the other depository corporations on standardized report forms are submitted to the Statistics Department of the IMF.

Both market-based and officially determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing (partial information).

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Only domestic debt, including currency and maturity composition (partial information).

Quarterly data are only available for exports and imports of goods, not of services.

Daily (D), Weekly (W), Monthly (M).

1

Formerly PRGF.

2

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

1

Financing to Guyana is usually done at concessional rates and channeled through the International Development Association (IDA), the World Bank’s fund for the poorest, which provides interest-free loans and grants to low-income countries and through a series of trust funds managed by the World Bank. Guyana’s total IDA 16 allocation for FY12–14 is 14.3 SDR/US$21.9 million. The IDA 17 allocation for FY15–17 is 16.5 SDR/US$22.7 million.

1

Guyana’s allocation is GBP 53.2million. This equated to $64.6 million as at November 2, 2016, shortly before Country Strategy Paper was submitted for approval.

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Cover IMF Staff Country Reports
Guyana: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Guyana
Author: International Monetary Fund. Western Hemisphere Dept.
Volume/Issue:
Volume 2017: Issue 175
Publisher:
International Monetary Fund
ISBN:
9781484305768
ISSN:
1934-7685
Pages:
80
DOI:
https://doi.org/10.5089/9781484305768.002