## _cr04123 - 1. HIPC Completion Point Status

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### I. Introduction and Staff Recommendation
- In September 2002 some Directors noted the completion point could be reached at the time of the first review of the current PRGF-supported program, provided the decision point conditions are fulfilled.
- Almost all triggers have now been met, including preparation of a consultative PRSP outlining use of HIPC debt relief to reduce poverty.
- Authorities requested waivers for two pending triggers:
  - requirement to lay-off 1,000 core civil servants;
  - requirement to complete a list of job descriptions and design a performance appraisal system.
- Staffs support the waiver requests because of:
  - significant progress on a comprehensive civil service reform program with IDB support;
  - progress with employment downsizing in the non-government public sector;
  - other measures to advance civil service reform and control the public sector wage bill.
- Staffs recommend that, provided pending compensatory measures related to core civil service wage increase and enactment of the organic budget law are implemented, the Executive Boards of the IDA and IMF agree that Guyana has reached the completion point under the enhanced HIPC Initiative.

### II. HIPC Assistance and Debt Relief History
- Original HIPC Initiative (May 1999):
  - Guyana qualified for US$256 million in debt relief in net present value (NPV) terms.
  - Reduced NPV of external debt to the threshold of 280 percent of average central government revenues as of end-1997.
  - Paris Club bilateral creditors agreed in June 1999 to grant required relief under Lyons terms (stock-of-debt operation with an 80 percent NPV reduction on eligible debt).
- Enhanced HIPC Initiative:
  - Decision point reached November 2000, qualifying Guyana for further relief of about US$329 million in NPV terms to bring debt-to-revenue ratio below 250 percent as of end-1998.
  - Interim enhanced HIPC relief since 2000:
    - SDR15.4 million from the IMF;
    - US$6.5 million from IDA;
    - IDB interim relief of about US$16.5 million as of end-2003.
- Debt stock revision:
  - Debt stock estimate as of end-1998 revised upwards to US$ 833.1 million in NPV terms, US$5.9 million higher than decision point amount.
  - Revisions due mainly to new information from non-Paris Club and commercial creditors and new calculations.

### III. Assessment of Requirements for Reaching Completion Point
- Macroeconomic performance:
  - Macroeconomic stability maintained over past few years despite difficult external, political, and security environment (referenced Tables 3–5).
  - PRGF-supported program: first review completed on September 5, 2003 with continued good performance thereafter.
- Implementation status:
  - PRSP implementation progressed; some improvement in poverty indicators.
  - Structural reforms gained momentum; satisfactory performance in meeting most pending completion point triggers and reforms under PRGF and PRSC.

### IV. Implementation of the Poverty Reduction Strategy (PRSP)
- PRSP strategic pillars:
  - (i) broad-based, jobs-generating growth;
  - (ii) stronger institutions and better governance;
  - (iii) investment in human capital, emphasis on basic education and health;
  - (iv) investment in physical capital;
  - (v) improved safety nets;
  - (vi) special interventions for regional pockets of poverty;
  - (vii) environmental protection.
- Progress and challenges:
  - Social indicators continue to lag the region despite improvements since the late 1980s.
  - Economic growth and government revenues in 2002–03 substantially lower than anticipated in the PRSP, adversely affecting ability to reach objectives (i), (vi), and (vii).
  - Authorities committed to completing a PRSP update by end–2003.
  - Data limits: many PRSP target data not yet available, making durable assessment difficult.
- Positive PRSP-related outcomes:
  - Poverty spending in terms of GDP increased (Figure 1 referenced).
  - PRSP target for infant mortality reduction in 2001 was exceeded.
  - Numbers of health workers and teachers have risen in recent years.

### V. Key Social and Sectoral Indicators (Selected)
- Poverty and demographic indicators (Table 1, 2001):
  - Poverty incidence (percent below poverty line, 1999/2000):
    - Guyana: 35 (1999 national poverty line of US$1.40 a day) (or 19.1 percent with a poverty line of US$1.08 a day).
    - Latin America and the Caribbean: 11–26.
  - Urban population (percent of total population):
    - Guyana: 38; Latin America and the Caribbean: 75; Lower-Middle Income Countries: 42.
  - Life expectancy at birth (years):
    - Guyana: 63; Latin America and the Caribbean: 70; Lower-Middle Income Countries: 69.
  - Infant mortality (per 1,000 live births):
    - Guyana: 54; Latin America and the Caribbean: 30; Lower-Middle Income Countries: 32.
  - Child malnutrition (percent of children under 5):
    - Guyana: 12; Latin America and the Caribbean: 9; Lower-Middle Income Countries: 11.
  - Prevalence of HIV/AIDS (female, percent ages 15–24):
    - Guyana: 4; Lower-Middle Income Countries: 1.
  - Illiteracy (percent of population 15+):
    - Guyana: 1; Latin America and the Caribbean: 12; Lower-Middle Income Countries: 15.
- Selected education and health indicators (Table 2, 1999–2003):
  - Primary teachers: 1999: 3951; 2000: 4457; 2001: 4808; 2002 Est.: 5048; 2003: 5275.
    - Trained (%): 1999: 50; 2000: 54; 2001: 57; 2002: 60; 2003: 59.
  - Secondary teachers: 1999: 3371; 2000: 2298; 2001: 2412; 2002 Est.: 2532; 2003: 2659.
    - Trained (%): 1999: 58; 2000: 56; 2001: 64; 2002: 69; 2003: 68.
  - Health care workers: 1999: 3057; 2000: 3460; 2001: 3475; 2002: 3502; 2003: n.a.
  - Student drop outs (primary): 1999: 2209; 2000: 2100; 2001: 2005; 2002: 1992; 2003: n.a.
  - Student drop outs (secondary): 1999: 2500; 2000: 2326; 2001: 2275; 2002: 2198; 2003: n.a.

### VI. Civil Service and Structural Reforms (Box 1 Highlights)
- PRSP and governance-related achievements (status as of November 25, 2003):
  - PRSP completed November 2001; Joint Staff Assessment confirmed broadly satisfactory participatory process.
  - First PRGF review completed on September 5, 2003 with continued good program performance.
  - Procurement reform: New Procurement Act tabled in parliament June 2003 and found broadly satisfactory to IDA; revised draft ratified July 24, 2003 (completion point trigger).
  - Budget coordination and tracking HIPC spending: Single budget circular issued; coordination on current and capital budgets; government tracking expenditures aimed at reducing poverty.
  - Primary school teachers increased from 4,457 in 2000 to estimate of 5,275 for 2003; secondary teachers increased from 2,298 in 2000 to 2,659 for 2003.
  - Trained teacher ratios increased: primary from 54 percent to about 60 percent; secondary from 56 percent to 68 percent.
  - Health care workers increased from 3,460 to 3,502 over 2000–02.
  - Population census completed January 2002; under the census 95 percent of population enumerated.
- Civil service specific conditions and actions:
  - Outsourcing of security guards: 1,359 security guards outsourced in November 2000 (target was 1,000).
  - Computerization of public service payroll and pensions: Done.
  - 1,000 temporary and unqualified civil servants: waiver requested; compensating measures taken.
    - Downsizing elsewhere reduced employment by over 2,500 employees since 2001 (including GNBC, GUYSUCO, state-owned bauxite companies).
  - Staff audits conducted May–June 2002; job descriptions and performance appraisal not completed due to reformulation of PSMP TC; waiver requested.
  - Hiring freeze in core civil service enacted October 2003 for two years.
  - Organic budget law enacted December 2003 expected to incorporate semi-autonomous agencies and support civil service reform.
  - Government committed to grant 2003 wage increases in core civil service consistent with macro framework; 2003 teachers’ wage increase in arbitration.

### VII. Sector Restructuring Highlights
- GUYSUCO:
  - Six-year modernization plan implementation started; modernization agreement signed March 2003.
  - Permanent employment downsized by 760 workers between 2000 and 2002 (excluding outsourcing).
  - Further reduction of 700 expected by end-2003.
  - Co-generation extension to proceed only after consultation with World Bank and consistency with debt sustainability.
- GNBC sale completed March 2003.
- Investment law tabled October 2003; if passed would provide satisfactory investment framework consistent with tax reforms enacted August 2003.
- SIMAP III implementation begun, verified by signing of SIMAP III agreement with IDB with strengthened Amerindian component.

### VIII. Broad Parameters of the 2003 Tax Reform (Box 2)
- Tax policy changes:
  - Extend consumption tax to hotel services and professional services.
  - Introduce presumptive income tax on the self-employed.
  - Raise annual license fees on professional businesses.
  - Limit discretionary tax exemptions to exceptional humanitarian cases.
  - Limit income tax holidays to new firms that create employment in depressed areas or specified fields; tax holidays limited to five years (except for ICT, petroleum exploration, refining and mineral extraction up to 10 years) and made nonrenewable.
- Tax administration and institutional changes:
  - Appoint new head and deputy to GRA; amend GRA Act to grant autonomy in human resource management.
  - Further steps with CARTAC, IDA, and IDB assistance:
    - publish tax exemptions granted;
    - broaden tax base by including restaurant services;
    - modernize technologies and procedures in tax and customs administration.
- Compensatory measures and civil service reform progress:
  - Downsizing outside core civil service reduced public employment by over 2,500 in mining, sugar, and banking sectors.
  - IDB preparing a comprehensive public sector modernization program; policy effectiveness expected in 2005.
  - Hiring freeze in core civil service reaffirmed.
  - Wage bill rose from about 8 percent of GDP in 1998 to projected 12 percent of GDP in 2003.
  - Government committed to enact organic budget law prior to Board consideration of completion point.

### IX. Delivery of Debt Relief — Overview and Creditor Participation (Box 2 continuation)
- Revised end-1998 NPV of debt after original HIPC assistance: US$833.1 million.
- Debt structure at end-1998: 61 percent multilateral, 28 percent Paris Club bilateral, 11 percent non-Paris Club and commercial creditors.
- Enhanced HIPC assistance required increases from US$328.6 million to US$334.5 million in 1998 NPV terms — additional US$5.9 million, equivalent to 3 percent of government revenue in 1998.
- Common reduction factor to be applied by all creditors to end-1998 NPV debt after full delivery of original HIPC assistance would become 40.2 percent.
- Multilateral participation (selected):
  - IDA: total assistance under enhanced HIPC amounts to US$41.2 million in NPV terms (interim assistance over December 2000–2003: US$6.5 million nominal).
  - IMF: debt relief now amounts to US$40.0 million in NPV terms; interim assistance since 2000: SDR15.4 million nominal.
  - IDB: debt relief now amounts to US$65.1 million in NPV terms; interim assistance amounting to US$16.4 million nominal since 2002.
  - CMCF: US$29.2 million in NPV terms (may have difficulty participating fully).
  - CDB: US$9.9 million in NPV terms; intends to contribute US$5.5 million in NPV terms from Special Development Fund net income.
  - EU/EIB: US$10.6 million in NPV terms via debt service reduction using EU grants.
  - OPEC Fund: US$5.4 million in NPV terms via refinancing and extension of a new “HIPC” loan at completion point.
  - IFAD: US$1 million in NPV terms; to be provided at completion point through 100 percent debt service reduction until target NPV relief is reached.
- Bilateral and commercial creditors:
  - Revised bilateral requirement: US$132.2 million in 1998 NPV terms (US$94 million for Paris Club), additional US$3.4 million in NPV terms.
  - Paris Club: original HIPC relief was 80 percent NPV reduction of eligible debt; enhanced assistance to be provided through stock-of-debt operation on Cologne terms at completion point. Some Paris Club creditors indicated additional relief beyond enhanced HIPC estimated at US$15.1 million in NPV terms.
  - China, India, and Libya indicated intention to provide relief; China started cancellation of some loans; India indicated intention to write off all of Guyana’s debt (March 2003).
  - Government bonds (former Guymine debt) face value US$27.5 million bought at a discount by Citizen Bank in 2002 became domestic debt not subject to debt relief; projected to be repaid in full in 2007.
  - Booker McConnell waived appeal for repayment of loan valued at over US$19 million though not officially written off.
- Financing assurances by creditors represent about 81 percent of total original and enhanced HIPC assistance approved November 2000 (does not include CMCF relief).

### X. Long-Term Macroeconomic Framework (Updated)
- Growth and productivity:
  - Growth projections for 2003–07 halved to 1½ percent per annum compared to original program.
  - Potential growth revised downwards by 1½ percentage points to 2¾ percent over the longer term.
  - Labor productivity growth projected at 1¾ percent over the long run.
- Saving, investment, and capital flows:
  - Gross domestic saving projected to rise to 10 percent in 2007.
  - Domestic investment projected at about 24 percent of GDP per year.
  - Public sector external borrowing declines from 5½ percent of GDP currently to 2½ percent in the long run; borrowing provided largely by multilaterals with average interest rate about 1 percent and grant element of 40 percent.
  - Foreign direct investment projected to average about 7 percent of GDP over the long run.
  - Foreign grants: about 4 percent of GDP in the short-run; projected to decline to 1½ percent in the long run.
- Macroeconomic assumptions for Debt Sustainability Analysis (Box 3):
  - Economic growth: average annual rate of 1½ percent during 2003–07; by 2007 growth projected to move to 2¾ percent.
  - Inflation: about 3 percent during 2003–22.
  - Central government revenues: increase from 31 percent of GDP in 2003 to 33 percent in 2007; thereafter flat.
  - Current account deficit: fall from peak of 19 percent of GDP in 2004 to below 9 percent of GDP in 2022.
  - Exports: volume grows on average at 2½ percent long term.
  - Note: “This seems high by international standards, but reflects high replacement rates in Guyana and capital intensity of its investments.”

### XI. Debt Sustainability Analysis — Key Outcomes
- By end-2002, NPV of outstanding debt rose to about US$880 million.
- After enhanced HIPC relief, NPV would be reduced to US$466 million at end-2003 (new debt since end-2002 accounts for additional US$33 million).
- Target debt-to-revenue ratio at end-1998: 250 percent.
- Central government revenues for 2003 are 21 percent below level projected in 1998.
- Resulting estimate of debt-to-revenue ratio for 2003: 220 percent (compared with projection of 218 percent for 2003 at decision point).
- Ratio expected to peak at 248 percent in 2007 and remain below 250 percent throughout the projection period.
- Debt service:
  - Decision point projection: debt service decline to about 13–14 percent of revenues two years after initial completion point date (2001).
  - Latest estimate: ratio about 14 percent in 2008, five years after revised completion point date; debt service remains high over projection period.

### XII. Scenario Analysis and Sensitivity (Section 44)
- Metrics used:
  - NPV of debt to revenues (percent);
  - NPV of debt to exports (percent).
- Scenario 1 — Zero sugar export volume growth after 2008:
  - Assumption: sugar export volumes grow at zero after 2008 (baseline assumed about 2 percent annual growth from 2009 onwards).
  - Growth lower by 0.4 percent in 2009 and permanent 0.2 percent lower long term.
  - Balance-of-payments effect: neutral (reduced exports compensated by reduced imports).
  - Debt implications:
    - Debt-to-revenue ratio increases by about 10 percentage points to 164 percent in 2022.
    - NPV of debt to revenue would average 198 percent under this scenario, compared with 189 percent from 2012–22 under baseline.
- Scenario 2 — Sharp decline in world sugar price (terms of trade shock):
  - Assumption: 50 percent decline in sugar price in 2007 (from 27 cents per pound to 13 cents per pound).
  - Exports reduced by about 7 percent per annum.
  - External borrowing rises by about US$40 million per annum over 2008–22.
  - By end of period, NPV of debt is up by over 35 percent.
  - Debt implications:
    - NPV of debt-to-revenue ratio increases by about 50 percentage points to 200 percent in 2022 (baseline about 150 percent).
    - Highest debt-to-export ratio among scenarios, maximum about 120 percent (baseline about 70 percent in 2003).
- Scenario 3 — Revenue ratio capped at 31 percent of GDP:
  - Assumption: central government revenues cannot be raised above 31 percent of GDP (baseline 33 percent).
  - Debt implications:
    - Debt-to-revenue ratio rises above 250 percent in 2006, peaks at 257 percent in 2007, then falls below 250 percent but remains 10 percentage points above baseline in 2022.
- Comparative observations:
  - Baseline NPV of debt-to-exports about 70 percent in 2003, 80 percentage points lower than sustainability threshold.
  - Across scenarios none breach export-based sustainability threshold because export level is high.
- Main risks and policy priorities:
  - Principal risks: terms-of-trade shocks from sugar market liberalization; government ability to sustain revenue base and control wage growth.
  - Policy priorities:
    - Pursue sugar reforms to improve competitiveness;
    - Strengthen revenue yield to sustain poverty-reducing spending;
    - Monitor and control wage bill;
    - Continue implementation of sugar and tax reforms and vigilance over public sector compensation.

### XIII. Macroeconomic Performance and Program Implementation (Sections 9 and related)
- Growth and inflation (2000–2003):
  - Growth remained sluggish at average of 1 percent in 2000–03.
  - Inflation: 6 percent in 2002; twelve-month inflation at 6.2 percent in September 2003; close to programmed 6 percent.
- External and fiscal indicators:
  - Gross official international reserves at end-2002: covered 4.2 months of 2003 imports, 150 percent of base money and over 700 percent of short-term external public debt.
  - External current account deficit: fell below 15 percent of GDP (program projection: 20.2 percent of GDP).
  - NFPS (2002) deficit: 5.9 percent of GDP vs program target of 7.6 percent.
  - End-September 2003 gross international reserves: US$262 million, covering four months of projected 2004 imports.
- Program implementation and risks:
  - Some end-2002 performance criteria missed (Bank of Guyana net domestic and net foreign assets) due to delays in amending procurement legislation and delayed IDA disbursements.
  - First review of PRGF-supported program completed September 2003 after six months (January 1–June 30, 2003) of successful policy implementation.
  - Revised 2003 program based on NFPS deficit of about 9 percent of GDP; underlying deficit for 2003 excluding sugar restructuring outlays: 6.4 percent of GDP.
  - All end-September 2003 indicative targets met except Bank of Guyana NFA target (missed slightly due to delay in export receipts).
  - Authorities committed to:
    - enacting an organic budget law prior to Board consideration;
    - granting wage increases in core civil service consistent with macro framework (program assumes wage increase of 6 percent);
    - negotiating 2003 wages with risks from ongoing wage negotiations (teachers’ negotiations went to arbitration).

### XIV. Public Enterprises, Taxation, and Civil Service Reform (Section F and Box 2)
- GUYSUCO restructuring (completion point trigger):
  - Aim to lower production costs to US$0.13 cents per pound by 2006 through processing efficiency and linking remuneration to profitability; downsizing planned.
  - Since 1997 production rose by 2½ percent per annum on average; U.S. dollar unit costs declined by 6 percent.
  - Downsizing: permanent labor force reduced by about 760 employees between 2000 and 2002; further reduction of 700 expected by end-2003.
- Bauxite companies restructuring:
  - BERMINE and AROIAMA restructured and merged into new cash-neutral company mid-2002.
  - LINMINE restructuring: workforce reduction from around 1,250 in 2002 to 250 at end-September 2003.
- Financial sector and tax reform:
  - GNCB sold to domestic commercial bank early 2003.
  - Plan to recover top 100 nonperforming loans (50 already assessed).
  - Comprehensive tax reform begun; VAT envisaged for April 2006 after next national elections.
  - GRA strengthened: appointment of experienced Commissioner General and Deputy; amended GRA Act in October 2003 to grant full autonomy in human resource management.
- Civil service reform:
  - Payroll and pensions database computerized (completion point trigger); payroll audit carried out; vacant positions abolished; rules for establishing new positions established.
  - Preparation of job descriptions and performance appraisal system postponed; institutional and organizational capacity assessments across ministries completed May 2003.
  - Authorities requesting waiver for postponed conditions.

### XV. Guidance Questions to Executive Directors (Section 53)
- Do Directors agree that Guyana should reach the completion point at this stage?
- Do Directors agree that Guyana should continue to seek debt relief from non-Paris Club creditors within the HIPC framework and that staffs should monitor delivery of debt relief from all creditors?
- Do Directors agree that assistance agreed at the decision point (as revised) will provide Guyana with a solid basis for debt sustainability over the medium term, as discussed in Section III?
- Do Directors agree with Guyana’s plans to strengthen debt-management capacity and policy in the future (Appendix II)?
- Do Directors agree that sufficient assurances have been given by Guyana’s other creditors to commit enhanced HIPC Initiative assistance to Guyana on an irrevocable basis?

### XVI. Selected Tables and Key Numeric Figures (selected/highlighted)
- Estimated assistance at Enhanced Decision Point (selected):
  - NPV-of-debt-to-Revenues Target (Percent of end-1998): 250.
  - Enhanced Framework (amended):
    - Total assistance: 334.5;
    - Bilateral: 132.3;
    - Multilateral: 202.3;
    - IDA/IBRD: 41.2;
    - IMF: 40.0;
    - IADB: 65.1.
  - Total (amended) assistance: 590.9 (Bilateral: 223.6; Multilateral: 367.4; IDA/IBRD: 68.3; IMF: 74.5; IADB: 116.9).
- Net present value of external debt (selected snapshots):
  - Revised end-1998 NPV after original HIPC assistance: US$833.1 million.
  - By end-2002 NPV of outstanding debt: about US$880 million (text: "By end-2002, NPV of outstanding debt had risen to about US$880 million.").
  - After enhanced HIPC relief, NPV reduced to US$466 million at end-2003 (text).
- Baseline macro and fiscal projections (selected):
  - Real GDP (factor cost): 2001: 2.3; 2002: 1.1; 2003: -0.2; 2004: 2.0; 2005: 0.8; 2006: 1.8; 2007: 2.9.
  - Consumer prices (average): 2002: 5.3; 2003: 5.8; projected long-run about 3 percent.
  - Total revenue (nominal): 2001: 41,218; 2002: 44,565; 2003: 44,299; 2004: 48,159.
  - Overall balance (after grants) — percent of GDP: 2003: -10.3; 2004: -11.3; 2007: -3.8.
  - HIPC relief — percent of GDP: 2001: 6.0; 2002: 6.2; 2003: 2.5; 2004: 2.9.
- External sector (selected):
  - Exports (f.o.b.): 2001: 490; 2002: 495; 2003: 502.
  - Gross official reserves: 2001: 285; 2002: 279.8; end-September 2003: US$262 million (text).
  - Months of imports: end-2002: 4.2 months of 2003 imports.
- DSA indicators (selected after enhanced HIPC assistance):
  - NPV of debt to GDP ratio (selected): 68.2, 72.4, 77.0, 80.2, 81.3, 80.1, 79.2, 77.9, 76.2, 74.1.
  - NPV of debt to exports ratio (selected): 74.9, 80.9, 86.6, 91.7, 96.1, 98.0, 98.1, 97.5, 96.0, 94.3.
  - Debt service to exports ratio (selected): 7.7, 4.8, 4.7, 5.0, 5.1, 5.5, 4.4, 4.9, 5.3, 5.6.
- Debt management capacity and recommendations (Appendix II):
  - Current external debt data stored in excel spreadsheets; recommended systems: CS-DRMS and Debt-Pro.
  - Debt unit tracks medium- and long-term public and public-guaranteed debt but has data-processing shortcomings.
  - Recommendation: ministry of finance to take leading coordinating role in new borrowing and assess impact of new loans on overall debt portfolio.
  - Staffing: skill base enhanced by a repeated two-year economist secondment from DFID.

*Source: _cr04123 - 1. HIPC Completion Point Status (IMF), text excerpt.*

### 1. HIPC Completion Point Status ........................................................................................

### _cr04123 - 1. HIPC Completion Point Status

### I. Introduction and Staff Recommendation
- In September 2002, some Directors noted that the completion point could be reached at the time of the first review of the current PRGF-supported program, provided the conditions defined at the decision point are fulfilled.
- Almost all triggers have now been met, including preparation of a consultative PRSP that outlines the government’s plans to use HIPC debt relief to reduce poverty.
- The authorities requested waivers (Appendix I) for two pending triggers:
  - requirement to lay-off 1,000 core civil servants;
  - requirement to complete a list of job descriptions and design a performance appraisal system in connection with civil service reform.
- Staffs support the waiver requests based on:
  - significant progress implementing a more comprehensive civil service reform program with IDB support;
  - progress with employment downsizing in the non-government public sector;
  - other measures aimed at advancing civil service reform and controlling the public sector wage bill.
- Provided pending compensatory measures related to core civil service wage increase and enactment of the organic budget law are implemented, staffs recommend that the Executive Boards of the IDA and IMF agree that Guyana has reached the completion point under the enhanced HIPC Initiative.

### II. HIPC Assistance and Debt Relief History
- Original HIPC Initiative (May 1999):
  - Guyana met completion point requirements and qualified for US$256 million in debt relief in net present value (NPV) terms (Table 1).
  - This reduced the NPV of Guyana’s external debt to the threshold of 280 percent of average central government revenues as of end-1997.
  - Paris Club bilateral creditors agreed in June 1999 to grant required relief under Lyons terms (a stock of debt operation with an 80 percent NPV reduction on eligible debt).
- Enhanced HIPC Initiative:
  - Decision point reached in November 2000, qualifying Guyana for further relief of about US$329 million in NPV terms to bring the debt-to-revenue ratio below the new threshold of 250 percent as of end-1998.
  - Guyana has received interim enhanced HIPC relief since 2000:
    - SDR15.4 million from the IMF;
    - US$6.5 million from IDA;
    - IDB decision in September 2002 to give interim relief of about US$16.5 million, as of end-2003.
- Debt stock revision:
  - Debt stock estimate as of end-1998 revised upwards to US$ 833.1 million in NPV terms, US$5.9 million higher than the amount indicated at the decision point (Table 2).
  - Revisions mainly from new information from non-Paris Club and commercial creditors, and new calculations.

### III. Assessment of Requirements for Reaching Completion Point
- Macroeconomic performance:
  - Over past few years Guyana has maintained macroeconomic stability (Tables 3–5) despite difficult external, political, and security situation.
  - PRGF-supported program: first review completed on September 5, 2003 with continued good performance thereafter.
- Implementation status:
  - Implementation of PRSP has progressed; some improvement in poverty indicators.
  - Structural reforms gained momentum; satisfactory performance in meeting most pending completion point triggers and reforms under PRGF and PRSC.

### IV. Implementation of the Poverty Reduction Strategy (PRSP)
- PRSP objectives and pillars:
  - PRSP strategic pillars: (i) broad-based, jobs-generating growth; (ii) stronger institutions and better governance; (iii) investment in human capital, emphasis on basic education and health; (iv) investment in physical capital; (v) improved safety nets; (vi) special interventions for regional pockets of poverty; (vii) environmental protection.
  - PRSP focuses on improving governance and public sector accountability, enlarging access and improving equity in education and health delivery through increased spending on primary health care, primary and secondary education, water and sanitation, and housing.
- Progress and challenges:
  - PRSP faces formidable challenge improving social indicators which continue to lag the region despite improvements since late 1980s.
  - Economic growth and government revenues in 2002–03 have been substantially lower than anticipated in the PRSP, adversely affecting ability to reach objectives (i), (vi), and (vii).
  - Authorities committed to completing a PRSP update by end–2003 to reflect the more difficult environment.
  - Data limits: Difficult to assess durable changes because data on many PRSP targets are not yet available.
  - Positive signs:
    - Poverty spending in terms of GDP has increased (Figure 1).
    - PRSP target for infant mortality reduction in 2001 was exceeded.
    - Number of health workers and teachers has risen in recent years.

### V. Key Social and Sectoral Indicators (Selected)
- Table 1: Selected Social Indicators: Guyana and Comparators, 2001
  - Poverty incidence (percent below poverty line, 1999/2000):
    - Guyana: 35 (1999 national poverty line of US$1.40 a day) (or 19.1 percent with a poverty line of US$1.08 a day).
    - Latin America and the Caribbean: 11–26.
  - Urban population (percent of total population):
    - Guyana: 38
    - Latin America and the Caribbean: 75
    - Lower-Middle Income Countries: 42
  - Life expectancy at birth (years):
    - Guyana: 63
    - Latin America and the Caribbean: 70
    - Lower-Middle Income Countries: 69
  - Infant mortality (per 1,000 live births):
    - Guyana: 54
    - Latin America and the Caribbean: 30
    - Lower-Middle Income Countries: 32
  - Child malnutrition (percent of children under 5):
    - Guyana: 12
    - Latin America and the Caribbean: 9
    - Lower-Middle Income Countries: 11
  - Prevalence of HIV/AIDS (female, percent ages 15–24):
    - Guyana: 4
    - Latin America and the Caribbean: n.a.
    - Lower-Middle Income Countries: 1
  - Illiteracy (percent of population 15+):
    - Guyana: 1
    - Latin America and the Caribbean: 12
    - Lower-Middle Income Countries: 15
  - Source: World Bank, Social Indicators Data Base, 2003.
  - Note: For the LAC region poverty incidence for 2000 ranges between 10.8 percent and 26.3 percent for poverty lines of US$1.08 and US$2.15 a day, respectively.

### VI. Civil Service and Structural Reforms (Box 1 Highlights)
- PRSP and governance-related achievements (status as of November 25, 2003):
  - PRSP: Done. PRSP completed November 2001; Joint Staff Assessment confirmed broadly satisfactory participatory process.
  - Macroeconomic stability: Done. Completion of first PRGF review on September 5, 2003 and continued good program performance.
  - Procurement reform: Done. New Procurement Act tabled in parliament in June 2003 and broadly satisfactory to IDA.
  - Budget coordination and tracking HIPC spending: Done. Single budget circular issued; officers on current and capital budgets coordinate; government tracking expenditures deemed to reduce poverty.
  - Social sectors:
    - Primary school teachers increased from 4,457 in 2000 to an estimate of 5,275 for 2003.
    - Secondary teachers increased from 2,298 in 2000 to 2,659 for 2003.
    - Ratio of trained teachers to total teachers increased:
      - Primary: from 54 percent to about 60 percent.
      - Secondary: from 56 percent to 68 percent.
    - Health care workers increased from 3,460 to 3,502 over 2000–02.
  - Population census plan: Done. Completed January 2002; under the census 95 percent of population has so far been enumerated.
- Civil service specific conditions:
  - Separate from core civil service 1,000 security guards: Done. 1,359 security guards outsourced in November 2000.
  - Computerization of public service payroll and pensions: Done.
  - Separate from core civil service 1,000 temporary and unqualified civil servants: Waiver requested; compensating measures taken.
    - Although 1,000 were not laid off due to new comprehensive reform approach with IDB support, downsizing elsewhere reduced employment by over 2,500 employees since 2001 (including Guyana National Cooperative Bank, GUYSUCO, state-owned bauxite companies).
  - Staff audits, job descriptions, and performance appraisal system: Partially done; waiver requested. Staff audits conducted May–June 2002; job descriptions and performance appraisal not undertaken due to reformulation of PSMP TC.
  - Government enacted hiring freeze in core civil service in October 2003 for two years.
  - Enactment of organic budget law in December 2003 expected to incorporate semi-autonomous agencies into budget and create a better basis for civil service reform.
  - Government committed to grant 2003 wage increases in core civil service consistent with macroeconomic framework; 2003 teachers’ wage increase in arbitration (to be excluded), government aiming to settle with teachers’ union independently.
- Sector restructuring highlights:
  - GUYSUCO:
    - Implementation of six-year plan started; modernization agreement signed March 2003.
    - Permanent employment downsized (excluding outsourcing) by 760 workers between 2000 and 2002.
    - Negotiations underway to replace production incentives with profit incentives.
    - Co-generation component extension to proceed only after consultation with World Bank and consistency with debt sustainability.
  - GNBC: Sale completed in March 2003.
  - Investment law tabled in parliament in October 2003; if passed in current form would provide satisfactory investment framework and contain fiscal incentives consistent with tax reform legislation enacted in August 2003.
  - SIMAP III: Done (implementation begun, as verified by signing of SIMAP III agreement with IDB) with strengthened Amerindian component.

*Source: _cr04123 - 1. HIPC Completion Point Status (IMF), text excerpt.*

### 9. Based on the current progress, the PRSP poverty-related targets appear to fall

### _cr04123 - 9. Based on the current progress, the PRSP poverty-related targets appear to fall 

### B. Broad-based Growth and Maintenance of Macroeconomic Stability
- Key challenge: broaden economic base and improve competitiveness of traditional sectors to increase growth potential and withstand external shocks; need for new sources of growth and employment (agro-processing, forestry, eco-tourism).
- PRGF-supported programs aim to reverse stagnation since 1998; growth remained sluggish in 2000–03 at an average of 1 percent due to competitiveness-reducing wage increases, delayed structural reforms, and difficult political and security situation.
- 2001 PRGF-supported program went off-track because of fiscal and structural slippages; a new three-year program adopted in September 2002 focuses on:
  - boosting export competitiveness via efficiency-enhancing structural reforms (especially in state enterprises),
  - improving framework for private investment,
  - reining in increased wage costs,
  - reinforcing public finances while increasing poverty-reducing expenditure.
- PRSC adopted in December 2002 complements these measures.

### Macroeconomic performance and indicators (2002–2003)
- Growth: economy stagnated despite increasing sugar output.
- Inflation: 6 percent in 2002; twelve-month inflation at 6.2 percent in September 2003; close to programmed 6 percent.
- Gross official international reserves at end-2002: covered 4.2 months of 2003 imports, 150 percent of base money and over 700 percent of short-term external public debt.
- External current account deficit: fell below 15 percent of GDP (program projection: 20.2 percent of GDP).
- NFPS (2002): deficit was 5.9 percent of GDP compared to program target of 7.6 percent.
- End-September 2003 gross international reserves: US$262 million, covering four months of projected 2004 imports.

### Program implementation, reviews, and risks
- Some end-2002 performance criteria were missed: Bank of Guyana’s net domestic and net foreign assets missed due to delays in amending procurement legislation delaying IDA Credit disbursements.
- First review of the PRGF-supported program completed in September 2003 after six months (January 1–June 30, 2003) of successful policy implementation.
- Revised 2003 program based on NFPS deficit of about 9 percent of GDP; underlying deficit for 2003 excluding sugar restructuring outlays: 6.4 percent of GDP.
- All end-September 2003 indicative targets were met except Bank of Guyana NFA target (missed by a small amount due to delay in export receipts).
- Authorities committed to:
  - enacting an organic budget law prior to Board consideration,
  - granting wage increases in the core civil service consistent with macro framework (program assumes wage increase of 6 percent),
  - negotiating 2003 wages with risks from ongoing wage negotiations (teachers’ negotiations went to arbitration).

### C. Stronger Institutions and Better Governance
- Procurement:
  - Procurement process suffered from understaffing, low thresholds, conflicts of interest, lack of centralized oversight.
  - New Procurement Act passed May 2002 addressed some issues but allowed continued cabinet intervention and centralized decision-making; government repealed it and, in consultation with IDA, presented a revised draft ratified on July 24, 2003 (completion point trigger).
- Investment climate:
  - Go-Invest revived by appointment of new CEO (completion point trigger).
  - Procurement law enacted July 2003; two tax reform acts passed in August 2003.
  - October 2003: new legislation submitted to parliament to improve investment climate, establish investor guarantees and make incentives more transparent.

### D. Investment in Human and Physical Capital
- Water and sanitation:
  - 2002: two state-owned water companies merged into Guyana Water Inc. (GWI); legislation enacted establishing quality standards and resource management.
  - Private management of GWI initiated January 2003 to promote restructuring and capital outlays for expansion and quality improvements partly funded through better cost recovery.
- Health and education initiatives (completion point trigger):
  - Health workers increased by about 5 percent per annum over 1999–02; infant mortality rates are down.
  - National Health Plan prioritizes consolidation of facilities, management, training, expanding hinterland services; some underutilized facilities to be closed or consolidated; hospitals converted to outpatient polyclinics.
  - HIV/AIDS National Strategic Plan includes education, counseling, treatment guidelines, and access to antiretroviral therapy.
  - Major health sector program being prepared with IDB support.
  - Education priorities: teacher training and retention, facilities management, books/supplies availability, accessibility and affordability of school attendance.
  - Chronic absenteeism and poorly qualified teachers contribute to poor results; national scores on Caribbean Examinations Council remain substantially below Caribbean average despite improvement.
- Staff retention:
  - 2000: up to 40 percent of positions in ministry of health were vacant; 43 percent of secondary teachers were classified as untrained.
  - Since then, share of unqualified secondary teachers has fallen by 12 percentage points.
  - IDB-funded BEAMS project provides in-service training and teacher accommodations in remote areas.
  - Education For All-Fast Track Initiative will devote nearly US$5 million to training teachers in hinterland areas via distance-learning, constructing houses for teachers, and providing a hardship allowance.

### Social sector indicators and monitoring
- Available information suggests social performance indicators under enhanced HIPC Initiative improved in 2000–02:
  - Number of teachers (primary and secondary) increased by 5–6 percent per annum (completion point trigger).
  - Ratio of trained teachers increased by 5–10 percentage points.
  - Student drop-out rates declined by 3 percent.
  - Health sector workers gradually increased during 2000–02.
- EU: restructuring aid program with Guyana; beginning in 2004 direct budget support will be linked to Guyana’s achievement of social sector benchmarks (initially health and housing).
- Need for government to develop PRSP indicators and organize transparent mechanism for tracking and reporting; Policy Coordination and Program Management Unit (set up 2001) should lead.

- Table 2. Guyana: Selected Education and Health Indicators, 1999–2003 (as provided)
  - Primary teachers: 1999: 3951; 2000: 4457; 2001: 4808; 2002 Est.: 5048; 2003: 5275
    - Of which Trained (percent): 1999: 50; 2000: 54; 2001: 57; 2002: 60; 2003: 59
  - Secondary teachers: 1999: 3371; 2000: 2298; 2001: 2412; 2002 Est.: 2532; 2003: 2659
    - Of which Trained (percent): 1999: 58; 2000: 56; 2001: 64; 2002: 69; 2003: 68
  - Total of newly trained teachers: 1999: 320; 2000: 509; 2001: 576; 2002: 472; 2003: n.a.
  - Student drop outs (primary): 1999: 2209; 2000: 2100; 2001: 2005; 2002: 1992; 2003: n.a.
  - Student drop outs (secondary): 1999: 2500; 2000: 2326; 2001: 2275; 2002: 2198; 2003: n.a.
  - Health care workers: 1999: 3057; 2000: 3460; 2001: 3475; 2002: 3502; 2003: n.a.
  - Source of table: Government of Guyana.

### E. Improved Tracking of Poverty and Regional Poverty Programs
- Pro-poor growth spending (education, health, housing and water, other poverty alleviation programs) substantially increased since 1997:
  - Grew by an annual average rate of 5.9 percent in real terms between 1997 and 2002.
  - GDP growth over same period: 0.7 percent.
  - Total spending growth: 3.2 percent.
  - Share of GDP: increased from around 15 percent in 1997 to 20 percent in 2002; stabilized at this level since 2000.
  - Education share more than doubled; health share increased by 50 percent; increases largely due to books, supplies and wages.
- Regional poverty interventions limited by lack of information on extent of poverty; measures to rectify:
  - Development of biennial household and expenditure surveys; first expected to be processed by end-2004.
  - Population census conducted in 2002 (completion point trigger).

### F. Public Enterprises, Taxation, and Civil Service Reform
- Structural reforms critical for poverty reduction; several are triggers for enhanced HIPC completion point.
- GUYSUCO (state-owned sugar company) restructuring (completion point trigger):
  - Aim: reduce vulnerability to decline in sugar export price following expected world market liberalization in 2006.
  - Since 1997: production rose by 2½ percent per annum on average; U.S. dollar unit costs declined by 6 percent.
  - Policy framework aims to lower production costs to US$0.13 cents per pound by 2006 through a more efficient processing plant and linking remuneration to profitability; downsizing planned.
  - Downsizing: permanent labor force reduced by some 760 employees (over 4 percent of total) between 2000 and 2002; further reduction of 700 expected by end-2003.
- State-owned bauxite companies restructuring to promote fiscal and external viability:
  - Mid-2002: BERMINE and AROIAMA restructured and merged into a new cash-neutral company.
  - Since June 2002: LINMINE being restructured; workforce reduction from around 1,250 in 2002 to 250 at end-September 2003.
- Financial sector measures:
  - GNCB (state-owned commercial bank) sold to a domestic commercial bank in early 2003 (completion point trigger).
  - Plan to recover top 100 nonperforming loans (50 already assessed).
  - Authorities intend to overhaul financial institutions act to strengthen Bank of Guyana’s oversight capacity.
- Tax reform:
  - Comprehensive reform of tax system and administration begun, with delays (Box 2 referenced).
  - Reform broadens tax base, improves efficiency, reduces discretion; VAT envisaged for April 2006 after next national elections.
  - Authorities appointed experienced professionals as Commissioner General and Deputy Commissioner General in GRA; amended GRA Act in October 2003 to grant full autonomy in human resource management.
- Civil service reform:
  - 2000: government outsourced over 1,300 security guards (target was 1,000).
  - Unable to downsize core civil service by further 1,000 employees; authorities requesting a waiver.
  - 2002: payroll and pensions database computerized (completion point trigger); payroll audit carried out; vacant positions abolished; rules for establishing new positions established.
  - Preparation of job descriptions and a performance appraisal system (completion point trigger) postponed; institutional and organizational capacity assessments across ministries completed May 2003.
  - Authorities requesting waiver for postponed conditions.

*Source: Excerpt from the IMF document provided.*

### Box 2. The Broad Parameters of the 2003 Tax Reform

### Box 2. The Broad Parameters of the 2003 Tax Reform

### Tax Policy
- Extend the consumption tax to all services provided by hotels, as well as to services provided by professionals.
- Introduce a presumptive income tax on the self-employed.
- Raise the annual license fees on professional businesses.
- Limit the government’s discretionary power to grant tax exemptions to exceptional humanitarian cases.
- Limit income tax holidays to new firms that create employment located in depressed areas or that conduct economic activity in specific fields.
  - Tax holidays are to be limited to five years (except for information and telecommunication technology, petroleum exploration, refining and mineral extraction, which would be limited to up to 10 years) and made nonrenewable.

### Tax Administration and Institutional Changes
- Appoint a new head to the GRA and his deputy and amend the GRA Act to grant autonomy in the management of its limited resources.
- Further steps to be taken next year—with CARTAC, IDA, and IDB assistance—include:
  - (i) improving transparency by requiring publication of tax exemptions granted;
  - (ii) further broadening the tax base by including restaurant services; and
  - (iii) modernizing technologies and procedures in tax and customs administration.

### Compensatory Measures and Civil Service Reform Progress
- Downsizing outside the civil service in the public sector (over 2,500 people in the mining, sugar, and banking sectors) has more than compensated for the failure to reduce the civil service per se.
- Civil service reform advanced via preparation of a comprehensive public sector modernization program by the IDB, including a broad diagnostic and reform proposal; policy effectiveness expected only in 2005.
- As a stop-gap measure, the government reaffirmed a hiring freeze in the core civil service with a new government circular, which will remain in place until the IDB-supported program is operational.
- Government committed to grant 2003 wage increases in the core civil service consistent with the macroeconomic framework prior to the Board discussion of the completion point.
- These actions aim to contain future increases in the wage bill, which rose from about 8 percent of GDP in 1998 to a projected 12 percent of GDP in 2003.
- Government committed to enact an organic budget law incorporating semi-autonomous agencies prior to Board consideration of the completion point.

### Delivery of Debt Relief — Overview and Revisions
- Revised estimate for the end-1998 NPV of debt after original HIPC assistance: US$833.1 million in NPV terms (decision point document).
- Debt structure at end-1998: 61 percent multilateral institutions, 28 percent Paris Club bilateral creditors, 11 percent non-Paris Club and commercial creditors.
- Enhanced HIPC assistance required increases from US$328.6 million to US$334.5 million in 1998 NPV terms — an additional US$5.9 million in NPV terms, equivalent to 3 percent of government revenue in 1998.
- The common reduction factor to be applied by all creditors to their end-1998 NPV debt after full delivery of the original HIPC assistance would become 40.2 percent.

### A. Status of Creditor Participation and Projected Profile of Relief — Multilateral Creditors
- Under the original HIPC Initiative, multilateral creditors were to provide 64 percent of total assistance equivalent to US$165 million in end-1998 NPV terms.
- Debt relief from multilateral creditors under the enhanced HIPC Initiative amounts to US$202.3 million in NPV terms at end-1998 after an upward revision of US$2.5 million in 1998 NPV terms.
- Interim relief and modalities:
  - IDA: contributed US$27.1 million in 1998 NPV terms through purchase and cancellation of 10 IDA credits worth US$54 million; total IDA assistance under enhanced HIPC amounts to US$41.2 million in NPV terms including US$0.5 million additional assistance in NPV terms due to the revision. Interim assistance over December 2000–2003 amounted to US$6.5 million in nominal terms, corresponding to a debt service reduction of 58.6 percent. Additional enhanced assistance includes US$1.4 million in nominal terms.
  - IMF: debt relief now amounts to US$40 million in NPV terms including an additional US$0.5 million in NPV terms due to the revision. Interim assistance since 2000 amounts to SDR15.4 million in nominal terms.
  - IDB: debt relief now amounts to US$65.1 million or an additional US$0.8 million in NPV terms. Since 2002 the IDB has provided interim assistance amounting to US$16.4 million in nominal terms.
  - CMCF: debt relief amounts to US$29.2 million in NPV terms incorporating an additional US$0.4 million in NPV terms due to the revision; CMCF may have difficulty participating fully.
  - CDB: enhanced HIPC assistance amounts to US$9.9 million in NPV terms including an additional US$0.3 million due to the revision; CDB intends to contribute US$5.5 million in NPV terms out of accumulated net income of the Special Development Fund.
  - EU/EIB: debt relief amounts to US$10.6 million in NPV terms including an additional US$0.1 million in NPV terms; provided via debt service reduction using EU grants.
  - OPEC Fund: debt relief amounts to US$5.4 million in NPV terms incorporating an additional US$0.1 million; to be given at completion point through refinancing and extension of a new “HIPC” loan.
  - IFAD: debt relief amounts to US$1 million in NPV terms; to be provided at completion point through a 100 percent debt service reduction until the target NPV relief is reached.

### B. Bilateral and Commercial Creditors
- Following revision, bilateral creditors would need to provide US$132.2 million in 1998 NPV terms (US$94 million for the Paris Club), an additional US$3.4 million in NPV terms.
- Paris Club: commitment at June 1999 involved ten bilateral creditors; original HIPC relief was an 80 percent NPV reduction of eligible debt; enhanced HIPC assistance would be provided through a stock-of-debt operation on Cologne terms at the completion point. Some Paris Club creditors indicated additional relief beyond enhanced HIPC estimated at US$15.1 million in NPV terms.
- Non-Paris Club bilateral and commercial creditors:
  - China, India, and Libya indicated intention to provide relief; China has started cancellation of some loans; India in March 2003 indicated its intention to write off all of Guyana’s debt.
  - Government bonds (formerly Guymine debt) with face value US$27.5 million were bought at a discount by Citizen Bank in 2002 and became domestic debt not subject to debt relief; projected to be repaid in full in 2007 and included in medium-term projections.
  - Booker McConnell (commercial creditor, United Kingdom) decided to waive its appeal for repayment of a loan valued at over US$19 million, although it has not officially written off the debt.
- Financing assurances obtained by creditors represent about 81 percent of the total original and enhanced HIPC assistance approved in November 2000 (this figure does not include CMCF debt relief).

### C. Long-Term Macroeconomic Framework (Updated)
- Growth and productivity:
  - Growth projections for 2003–07 halved to 1½ percent per annum compared to the original program; potential growth revised downwards by 1½ percentage points a year to 2¾ percent over the longer term.
  - Structural changes and continued strong investment projected to generate labor productivity growth of 1¾ percent over the long run.
- Saving, investment, and capital flows:
  - Gross domestic saving projected to rise to 10 percent in 2007 in response to an improvement in public savings.
  - Domestic investment projected at about 24 percent of GDP per year; external official assistance and foreign direct investment expected to remain substantial.
- Box 3 — Macroeconomic Assumptions Underlying the Debt Sustainability Analysis:
  - Economic growth: average annual rate of 1½ percent during 2003–07; by 2007 growth projected to move to 2¾ percent.
  - Inflation: projected to stay in the low single digits (about 3 percent) during 2003–22.
  - Central government revenues: projected to increase from 31 percent of GDP in 2003 to 33 percent of GDP in 2007; from 2007 onwards revenues projected to stay flat in relation to GDP.
  - Current account deficit: projected to fall from a peak of 19 percent of GDP in 2004 to below 9 percent of GDP in 2022.
  - Exports: volume grows on average at 2½ percent in the long term; imports projected to grow in line with real GDP.
  - Public sector external borrowing: declines from 5½ percent of GDP currently to 2½ percent in the long run; borrowing almost completely provided by multilaterals with average interest rate of about 1 percent and a grant element of 40 percent.
  - Foreign direct investment: projected to average about 7 percent of GDP over the long run.
  - Foreign grants: about 4 percent of GDP in the short-run; projected to decline to 1½ percent in the long run.
  - Note: “This seems high by international standards, but reflects high replacement rates in Guyana and capital intensity of its investments.”

### D. Fiscal and External Outlook
- Fiscal projections:
  - Overall fiscal deficit (after grants) projected to decline to about 2 percent in 2008, after peaking at about 10 percent of GDP in 2003–04.
  - Central government revenue projected to rise by about 2 percent of GDP over the next few years due to tax broadening and improved administration.
  - Government current primary expenditure would increase slightly for higher poverty-reducing spending.
  - Government investment would increase significantly in 2004–05 for the GUYSUCO restructuring project, then decline sharply after completion.
- External current account:
  - Projected to rise over the medium term but decline to single digits over the long term.
  - Expected temporary rise associated with GUYSUCO’s large sugar investment project; deficit projected to peak at about 19 percent of GDP over the next two years, up 2 percent from this year on account of the large sugar capital investment.
  - Export volume projected to decline through 2006 as the largest gold mine closes; subsequently exports grow at about 2½ percent per annum.

### E. Updated Debt Sustainability Analysis — Key Outcomes
- By end-2002, NPV of outstanding debt had risen to about US$880 million.
- After enhanced HIPC relief, NPV would be reduced to US$466 million at end-2003, with new debt accrued since end-2002 accounting for an additional US$33 million.
- Target debt-to-revenue ratio at end-1998 was 250 percent; central government revenues for 2003 are now 21 percent below the level projected in 1998.
  - Resulting estimate of debt-to-revenue ratio for 2003: 220 percent (compared to projection of 218 percent for 2003 at decision point).
  - Ratio expected to peak at 248 percent in 2007 and to remain below 250 percent throughout the end of the projection period.
- Debt service:
  - In the decision point, debt service projected to decline to about 13–14 percent of revenues two years after the initial completion point date (2001).
  - Latest estimate indicates the ratio will be about 14 percent in 2008, five years after the revised completion point date; debt service remains high over the whole projection period.

*Source: _cr04123 - Box 2. The Broad Parameters of the 2003 Tax Reform*

### 44. This section examines the implications for debt sustainability under more

### _cr04123 - 44. This section examines the implications for debt sustainability under more

### Overview of scenario analysis and metric
- Three downside scenarios are compared to the baseline in terms of their impact on the ratio of debt to central government revenues and on the NPV of debt to exports (Figure 2).
- Key metrics shown:
  - NPV of debt to revenues (percent)
  - NPV of debt to exports (percent)

### Scenario 1 — Zero sugar export volume growth after 2008
- Assumption:
  - Sugar export volumes grow at zero after 2008 (baseline assumed about 2 percent annual growth from 2009 onwards).
- Macroeconomic effects:
  - Aggregate growth lower by 0.4 percent in 2009 and by a permanent 0.2 percent over the longer term.
  - Balance of payments effect: neutral (reduced exports compensated by reduced imports), implying no additional external financing required.
- Fiscal and debt implications:
  - Central government revenues are lower because of weaker growth.
  - Debt-to-revenue ratio increases by about 10 percentage points to 164 percent in 2022.
  - The NPV of debt to revenue would average 198 percent under this scenario, compared with 189 percent from 2012–22 under the baseline scenario.

### Scenario 2 — Sharp decline in world sugar price (terms of trade shock)
- Assumption:
  - 50 percent decline in the sugar price in 2007 following the end of preferential price treatment.
  - Sugar price estimated to decline from 27 cents per pound to 13 cents per pound.
- Macroeconomic effects:
  - Exports reduced by about 7 percent per annum.
  - Additional foreign financing required to cover imports.
  - External borrowing rises by about US$40 million per annum over the 2008–22 period.
  - By the end of the period, the NPV of debt is up by over 35 percent.
- Fiscal and debt implications:
  - No change in central government revenues associated with the terms of trade shock (direct contribution of the sugar company to central government revenues is minimal in the baseline).
  - Ratio of NPV of debt to revenues increases by about 50 percentage points to 200 percent in 2022, compared to the baseline ratio of about 150 percent.
  - Highest debt-to-export ratio among scenarios, with a maximum of about 120 percent (baseline ratio about 70 percent in 2003).

### Scenario 3 — Revenue ratio capped at 31 percent of GDP
- Assumption:
  - Government unable to raise the ratio of central government revenues to GDP above 31 percent (baseline assumes 33 percent).
- Fiscal and debt implications:
  - Debt-to-revenue ratio rises above 250 percent in 2006, peaks at 257 percent in 2007, then falls below 250 percent but remains 10 percentage points above the baseline in 2022.

### Comparative and threshold observations
- Baseline:
  - Ratio of the NPV of debt to exports is about 70 percent in 2003, which is 80 percentage points lower than the sustainability threshold.
  - Baseline ratio of debt to revenues around 150 percent in 2022 (implied by comparisons in scenarios).
- Across scenarios:
  - None of the scenarios breach the sustainability target on the basis of exports because the export level is so high.
  - Scenario 2 (terms of trade shock) yields the largest increase in NPV of debt and the highest debt-to-export ratio (maximum about 120 percent).

### Main risks to medium-term sustainability and policy priorities
- Principal risks:
  - Terms of trade shocks associated with liberalization in the sugar market.
  - The ability of the government to sustain the revenue base and control wage growth in the public sector.
- Policy priorities and recommendations:
  - Pursue sugar reforms to improve competitiveness in response to market liberalization.
  - Strengthen the revenue yield to sustain poverty-reducing spending.
  - Continue monitoring and control of the wage bill.
  - Continue implementation of the ongoing sugar and tax reforms and maintain vigilance over public sector compensation policies.

*Source: Fund staff estimates (IMF country report content).*

### 53. The staffs seek guidance from the Directors on the following points:

### _cr04123 - 53. The staffs seek guidance from the Directors on the following points:

### Guidance questions for the Executive Directors
- Do the Directors agree that Guyana should reach the completion point at this stage?
- Do the Directors agree that Guyana should continue to seek debt relief from its non-Paris Club creditors within the framework of the HIPC Initiative and that the staffs should continue to monitor the delivery of debt relief from all creditors?
- Do Directors agree that assistance agreed at the decision point (as revised) will provide Guyana with a solid basis for debt sustainability over the medium term, as discussed in Section III?
- Do Directors agree with Guyana’s plans to strengthen debt-management capacity and policy in the future (Appendix II)?
- Do Directors agree that sufficient assurances have been given by Guyana’s other creditors to commit enhanced HIPC Initiative assistance to Guyana on an irrevocable basis?

### Estimated assistance at Enhanced Decision Point (Table 1 — selected figures)
- NPV-of-debt-to-Revenues Target (Percent of end-1998): 250
- HIPC Initiative Framework — Original Framework:
  - Total: 280
  - Bilateral: 256.4
  - Multilateral: 91.3
  - IDA/IBRD: 165.1
  - IMF: 27.1
  - IADB: 34.5
  - Other: 51.8; 51.7; 23.6 2/
- Enhanced Framework (as calculated at Decision Point) 3/:
  - Total: 250
  - Total assistance: 328.6
  - Bilateral: 128.8
  - Multilateral: 199.8
  - IDA/IBRD: 40.7
  - IMF: 39.5
  - IADB: 64.3
  - Other: 55.4
- Enhanced Framework (amended):
  - Total: 250
  - Total assistance: 334.5
  - Bilateral: 132.3
  - Multilateral: 202.3
  - IDA/IBRD: 41.2
  - IMF: 40.0
  - IADB: 65.1
  - Other: 56.1; 40.1 4/
- Total (amended):
  - Total assistance: 590.9
  - Bilateral: 223.6
  - Multilateral: 367.4
  - IDA/IBRD: 68.3
  - IMF: 74.5
  - IADB: 116.9
  - Other: 107.8
- Memorandum items:
  - NPV of debt at end-1998 after traditional relief (amended): 1,090.5
  - NPV of debt at end-1998 after traditional relief (amended) — multilateral: 421.5; bilateral/commercial: 668.9; IDA/IBRD: 129.6; IMF: 134.1; IADB: 213.8; Other: 191.4
  - NPV of debt after original HIPC Initiative assistance (Amended) 5/: 833.2 (total); multilateral: 329.4; bilateral/commercial: 503.8; IDA/IBRD: 102.5; IMF: 99.6; IADB: 162.0; Other: 139.6
  - Three-year average of exports: 717.8
  - NPV of debt-to-exports ratio 6/: 116.1
  - Central government revenue 7/: 199.8
  - NPV of debt-to-revenues ratio 8/: 417.0
  - Targeted NPV 9/: 499.5

Notes from table footnotes (preserve wording and numbering):
- 1/ The proportional burden sharing approach is described in "HIPC Initiative--Estimated Costs and Burden Sharing Approaches" (www.imf.org and IDA/SEC M 97-306, 7/7/97).
- 2/ The common reduction factor is shown as percentage reduction of NPV of debt before original HIPC assistance. This is equivalent to a common reduction factor of 25.9 percent of end-1996 data.
- 3/ As calculated at Decision Point.
- 4/ Amended common reduction factor shown as a percentage reduction of NPV of debt after full implementation of original HIPC assistance.
- 5/ Based on amended data at end-1998 after full application of traditional debt relief mechanisms, and assumed full delivery of original HIPC assistance.
- 6/ In percent of three-year export average after original HIPC Initiative assistance.
- 7/ Based on the 1998 government revenue excluding grants, converted at end-1998 exchange rates.
- 8/ In percent of central government revenue after original HIPC Initiative assistance.
- 9/ After full delivery of original and enhanced HIPC Initiative assistance.

### Net present value of external debt outstanding (end-1998 and end-2002 snapshots)
- Table 2 (NPV of External Debt Outstanding as of End-December 1998) — selected figures (In millions of U.S. dollars):
  - Total debt (revised): 1,090.5 (various columns show 1,085.3; 1,090.5; 827.7; 833.1; 499.4; 498.6 across revisions)
  - Multilateral: 668.9; bilateral and commercial: 416.2 (421.5; 323.9; 329.3; 195.4; 197.1 in different columns)
  - Paris Club (subset of bilateral): 317.2; 319.5; 234.3; 236.5; 141.4; 141.6
  - Major bilateral creditors examples (selected): Trinidad and Tobago: 182.3; United Kingdom: 80.1; United States: 27.7; Russia: 1.2; Germany: 12.4
  - Commercial creditors (total): 47.8; 49.8; 45.9; 47.9; 27.7; 28.7
  - Bonds: 31.7; 30.1; 31.7; 30.1; 19.1; 18.0
- Sources/notes:
  - Figures use 1998 CIRR and discount rates; NPV for bilateral and commercial creditors reflects 1996 Paris Club Naples terms with comparability of treatment for non Paris Club creditors at end-1998.
  - Assumes stock-of-debt operation on Lyon terms by Paris Club creditors, and comparable action by other official bilateral and commercial creditors on eligible debt (pre-cutoff and non-ODA) for some columns.
  - CDC reclassified as commercial creditor in footnote 4.

- Table 6 (Nominal and NPV of External Debt Outstanding at End-2002) — selected figures (In millions of U.S. dollars; end-2002):
  - Total (Nominal / NPV of Debt): 1,324.5 (Nominal), 982.2 (NPV), 878.5 (NPV others), 100.0 (Percent of Total)
  - Multilateral: Nominal 832.3; NPV 568.3; percent 64.7
  - IDB: Nominal 359.7; NPV 247.1; percent 28.1
  - IDA/IBRD: Nominal 199.2; NPV 110.0; percent 12.5
  - IMF: NPV 96.2; 70.5; percent 8.0
  - Bilateral and commercial total: Nominal 492.2; NPV 413.9; percent 35.3
  - Paris Club (total): 295.5; NPV 224.1; percent 25.5
  - Non-ODA pre-cutoff: 261.9; NPV 197.4; percent 22.4
  - Selected bilateral shares at end-2002 (NPV percent of total): Trinidad and Tobago 176.9/125.1 (14.2%); United Kingdom 53.9/47.6 (5.4%); United States 37.2/30.5 (3.5%); China 36.4/30.3 (1.6%)
- Notes:
  - Figures based on end-2002 data and refer to public and publicly guaranteed external debt only.
  - Reflects external debt situation as of end-2002, includes 1996 Naples and 1999 Lyon Paris Club operations under original HIPC initiative.
  - Reflects full delivery of assistance under the original HIPC initiative for some columns.

### Discount rate and exchange rate assumptions (Table 7 — selected entries)
- Discount rates (percent per annum) and exchange rates (currency per U.S. dollar) comparisons at End-1998 (decision point) and End-2002 (completion point) for selected currencies:
  - United States Dollar: Discount rates 6.23 (decision point) and 5.12 (completion point); Exchange rate 1.00 (both at completion point and decision point)
  - Special Drawing Rights: 5.25 and 4.82; exchange rates 0.71 and 0.74
  - Guyanese Dollar: Discount rates 6.23 and 5.55; Exchange rates 154.10 (decision point) and 162.25 (completion point)
  - Japanese Yen: Discount rates 2.22 and 1.75; Exchange rates 115.60 (decision point) and 119.90 (completion point)
- Memorandum item: Paris Club cutoff date is December 31, 1988.
- Sources: OECD; and IMF, International Financial Statistics.
- Footnotes:
  - 1/ Discount rates used are the average commercial interest reference rates (CIRRs) for the respective currencies over the six-month period ending in December 2002 for the completion point and in December 1998 for the decision point.
  - 2/ For currencies for which CIRRs are not available, the SDR discount rate is used as a proxy.

### Comparison of NPV of external public debt: Decision Point vs Completion Point (Table 8 — selected comparisons)
- NPV of debt using end-December 1998 parameters (selected)
  - Decision Point DSA (projection) — After original debt relief: 915.2; After enhanced debt relief: 603.3
  - Completion Point DSA — After traditional debt relief: 1,140.2; After original debt relief: 836.2; After enhanced debt relief: 475.1; After additional bilateral relief 3/: 461.9
  - Multilateral (using end-1998 parameters): Decision point: 557.4 (after original); 364.3 (after enhanced). Completion point: 729.2 (after traditional); 552.9 (after original); 343.4 (after enhanced); 343.4 (after additional bilateral relief).
  - Official bilateral (using end-1998): Decision point: 357.9; 239.0. Completion point: 410.9; 283.4; 131.7; 118.5.
- NPV of debt using end-December 2002 parameters (selected)
  - Completion point (end-2002 parameters): Total NPV after traditional debt relief: 1,164.4; after original debt relief: 878.5; after enhanced debt relief: 491.3; after additional bilateral relief 3/: 478.2
  - Multilateral (end-2002 parameters): 727.5; 568.3; 356.7; 356.7
  - Official bilateral (end-2002 parameters): 436.9; 310.2; 134.6; 121.5
- NPV of debt-to-revenues ratio:
  - Using end-December 1998 parameters:
    - Decision point: 338.1 (after original); 222.9 (after enhanced)
    - Completion point: 490.6 (after traditional); 359.8 (after original); 204.4 (after enhanced); 198.7 (after additional bilateral relief)
  - Using end-December 2002 parameters:
    - Completion point: 501.0 (after traditional); 378.0 (after original); 211.4 (after enhanced); 205.8 (after additional bilateral relief)
- Memorandum:
  - NPV of enhanced HIPC assistance (Using end-December 1998 parameters): 328.6; and 361.1 in one column.
  - Using end-December 2002 parameters: 387.2 (provided for information only).
  - Central government revenue (Decision point): 270.7; Completion point: 232.4 (repeated across completion point rows).
- Footnotes:
  - 1/ DSA based on stock of debt reconciled as of end-December 1998, assuming full (hypothetical) delivery of enhanced HIPC assistance.
  - 2/ Based on stock of debt reconciled as of end-December 2002, assuming full (hypothetical) delivery of enhanced HIPC assistance.
  - 3/ After debt relief beyond HIPC offered by some of the Paris Club creditors.
  - 4/ Based on government revenue excluding grants, converted at end-of-period exchange rates.
  - 5/ The value of assistance under the enhanced HIPC framework was determined at its November 2000 decision point, namely, US $329.2 in NPV terms, using end-1998 parameters (exchange rates and discount factors). The corresponding values for enhanced HIPC relief expressed as of end-2002 are provided for information only.

### Selected economic and fiscal indicators (Table 3 and Table 4 — selected projections and historicals)
- Growth and prices (selected percentages):
  - Real GDP (factor cost): 2001: 2.3; 2002: 1.1; 2003: -0.2; 2004: 2.0; 2005: 0.8; 2006: 1.8; 2007: 2.9; 2008: 2.9; 2003–12 average: 2.0; 2013–22 average: 2.7
  - Nominal GDP (market prices): 2001: 2.6; 2002: 3.3; 2003: 3.6; 2004: 6.4; 2005: 3.5; 2006: 2.1; 2007: 4.0; 2008: 4.0; 2003–12: 5.0; 2013–22: 5.8
  - Consumer prices (average): 2001: 2.7; 2002: 5.3; 2003: 5.8; 2004: 4.6; 2005: 3.5; 2006: 3.0; 2007–08: 3.0; 2003–12: 3.5; 2013–22: 3.0
- Public sector fiscal aggregates (selected, In millions of U.S. dollars and percent of GDP where noted):
  - Total revenue (nominal series): 2001: 41,218; 2002: 44,565; 2003: 44,299; 2004: 48,159; 2005: 51,693; 2006: 54,183; 2007: 56,583; 2008: 59,078; 2003–12 total: 58,012; 2013–22: 93,144
  - Total expenditure (nominal series): 2001: 63,641; 2002: 64,056; 2003: 66,307; 2004: 75,720; 2005: 78,746; 2006: 71,563; 2007: 71,990; 2008: 73,582; 2003–12: 75,811; 2013–22: 107,818
  - Primary balance (nominal): 2001: 5,762; 2002: 7,039; 2003: 3,075; 2004: 5,579; 2005: 6,941; 2006: 7,367; 2007: 9,516; 2008: 10,771; 2003–12: 9,347; 2013–22: 18,860
  - Interest payments (nominal): 2001: 11,674; 2002: 10,853; 2003: 8,229; 2004: 5,371; 2005: 7,212; 2006: 7,256; 2007: 7,397; 2008: 7,108; 2003–12: 6,907; 2013–22: 7,848
  - Overall balance (after grants) — percent of GDP: 2001: -8.8; 2002: -6.0; 2003: -10.3; 2004: -11.3; 2005: -10.2; 2006: -4.7; 2007: -3.8; 2008: -3.2; 2003–12: -5.7; 2013–22: -3.3
  - Grants (including HIPC relief) — percent of GDP: 2001: 8.3; 2002: 8.2; 2003: 5.1; 2004: 6.7; 2005: 6.9; 2006: 6.0; 2007: 5.3; 2008: 5.1; 2003–12: 4.9; 2013–22: 2.1
  - HIPC relief — percent of GDP: 2001: 6.0; 2002: 6.2; 2003: 2.5; 2004: 2.9; 2005: 2.7; 2006: 2.3; 2007: 1.7; 2008: 1.3; 2003–12: 1.5; 2013–22: 0.0
- Public debt (end of period; In millions of U.S. dollars):
  - Total public sector debt (end of period): 2001: 200.7; 2002: 203.1; 2003: 185.9; 2004: 189.5; 2005: 194.4; 2006: 195.7; 2007: 193.9; 2008: 193.0; 2003–12: 187.4; 2013–22: 147.8
  - External: 2001: 171.1; 2002: 171.4; 2003: 154.8; 2004: 160.1; 2005: 166.4; 2006: 171.6; 2007: 174.1; 2008: 174.1; 2003–12: 165.6; 2013–22: 135.6
  - Domestic: 2001: 29.6; 2002: 31.7; 2003: 31.1; 2004: 29.4; 2005: 27.9; 2006: 24.0; 2007: 19.8; 2008: 18.8; 2003–12: 21.8; 2013–22: 12.2

### Balance of payments and external sector (selected, Table 5 and Table 9 references)
- Current account (excluding official transfers) (In millions of U.S. dollars):
  - 2001: -129; 2002: -107; 2003: -125; 2004: -142; 2005: -142; 2006: -115; 2007: -105; 2008: -115; 2003–12: -138
- Merchandise trade (net): 2001: -94; 2002: -68; 2003: -101; 2004: -136; 2005: -141; 2006: -126; 2007: -121; 2008: -124; 2003–12: -172
- Exports (f.o.b.) (selected commodities and totals):
  - Exports (f.o.b.): 2001: 490; 2002: 495; 2003: 502; 2004: 512; 2005: 494; 2006: 473; 2007: 483; 2008: 533; 2013–22: 687
  - Bauxite: 6; 13; 5; 45; 51; 59; 64; 65; 71; 92 (presented across multiple rows)
  - Sugar: 109; 119; 134; 143; 145; 150; 152; 165; 195
  - Rice: 50; 46; 45; 46; 47; 49; 49; 52; 60
  - Gold: 127; 135; 109; 104; 76; 41; 42; 53; 89
- Imports (c.i.f.): 584; 563; 602; 648; 636; 599; 604; 657; 859 (selected)
- Services (net): -79; -79; -69; -52; -51; -49; -50; -32; -61
- Capital and financial account (In millions of U.S. dollars):
  - 2001: 118; 2002: 90; 2003: 105; 2004: 114; 2005: 135; 2006: 121; 2007: 148; 2008: 134; 2003–12: 134; 2013–22: 151
- Overall balance (In millions of U.S. dollars): 8; -9; -20; -28; -76; 43; 19; 13
- Financing details (selected):
  - Net official transfers: 2/ 24; 33; 39; 33; 36; 32; 29; 54; 26
  - Net official borrowing (3/): 4; 31; 23; 0; 48; 45; 15; 43; 30; 8
  - Foreign direct investment (net): 56; 44; 48; 48; 49; 69; 72; 80; 116
- Reserves and imports:
  - Gross official reserves: 285; 279.8; 262.7; 241.1; 240.6; 239.4; 269.8; 294.9; 285.0; 451.0 (selected series)
  - Months of imports 6/: 4.3; 4.2; 3.7; 3.5; 3.5; 3.4; 3.8; 4.0; 3.8; 4.0
- Notes:
  - 1/ Including scheduled interest payments before HIPC Initiative for years through 2003. Including scheduled interest payments after e-HIPC since 2003.
  - 2/ Including interim assistance under the enhanced HIPC Initiative through 2003.
  - 3/ Including scheduled amortization before HIPC Initiative through 2003. Including scheduled amortization after e-HIPC after 2003.
  - 4/ Including debt relief provided under o-HIPC for years before 2003. Including o-HIPC debt relief provided through flow rescheduling after 2003.
  - Non-Paris Club creditors are assumed to provide comparable debt relief as Paris Club creditors.
  - 5/ To be filled with PRGF disbursements in 2003–06.

### Forward-looking debt projections and DSA references
- Table 9 and subsequent tables present projected NPV of external debt and related DSA trajectories for 2002–22 (table noted but detailed rows beyond the provided excerpt).
- The completion-point analysis compares NPV and NPV-to-revenue ratios using both end-December 1998 parameters and end-December 2002 parameters to assess medium-term debt sustainability under scenarios of original, enhanced, and additional bilateral relief.

*Source: IMF staff document _cr04123 (tables and text as provided).*

### 1.  NPV of total debt

### _cr04123 - 1.  NPV of total debt

### I. Baseline NPV of total and outstanding debt
- NPV of total debt (2+5) 2/: 878.5, 878.1, 898.1, 922.4, 929.8, 936.5, 940.1, 949.9, 960.0, 988.1, 964.3, 934.6, 978.8
- NPV of outstanding debt (3+4): 878.5, 844.5, 810.4, 781.6, 750.2, 720.6, 690.5, 669.2, 651.1, 510.8, 402.9, 716.4, 499.1

Official bilateral and commercial (component of outstanding debt):
- Official bilateral and commercial: 310.2, 302.2, 297.3, 295.7, 291.8, 289.8, 287.6, 285.1, 282.3, 246.2, 211.5, 288.6, 241.5
  - Paris Club: 223.8, 223.4, 222.8, 222.0, 220.9, 219.6, 217.8, 215.7, 213.3, 179.5, 149.6, 217.3, 175.8
  - Other official bilateral: 43.0, 36.6, 32.8, 32.1, 31.7, 31.2, 30.9, 30.6, 30.4, 29.4, 24.7, 31.6, 28.3
  - Commercial: 43.3, 42.2, 41.7, 41.6, 39.2, 39.1, 38.9, 38.8, 38.6, 37.3, 37.3, 39.7, 37.4

Multilateral (component of outstanding debt):
- Multilateral: 568.3, 542.3, 513.1, 485.9, 458.4, 430.8, 402.9, 384.2, 368.8, 264.6, 191.4, 427.8, 257.6
  - IDB: 247.1, 243.4, 238.8, 233.7, 229.5, 222.0, 213.0, 206.2, 198.9, 141.7, 103.7, 216.0, 138.8
  - IDA: 107.5, 108.7, 109.5, 110.1, 110.3, 110.4, 110.5, 110.4, 109.4, 87.6, 63.3, 109.2, 84.4
  - IMF: 70.5, 60.9, 48.9, 38.2, 26.8, 18.8, 11.1, 6.8, 3.3, 0.0, 0.0, 21.7, 0.0
  - Others: 143.1, 129.3, 115.9, 103.9, 91.9, 79.6, 68.3, 60.8, 57.2, 35.3, 24.4, 81.0, 34.4

Notes on methodology (as presented):
- 1/: Refers to public and publicly guaranteed external debt only and assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at the end of 1998, and at least comparable action by other official bilateral creditors. Includes a flow rescheduling under Lyon terms. Also assumes a Lyon stock deal in June 1999.
- 2/: Discounted on the basis of the average commercial interest reference rate for the respective currency, derived over the six-month period prior to the latest date for which actual data are available (December 2002). Conversion of currency-specific NPVs into U.S. dollars occurs for all years at the base date (December 31, 2002) exchange rate.

### II. After enhanced HIPC assistance
- NPV of total debt (2+5) 2/: 954.2, 499.6, 549.5, 596.0, 627.1, 654.4, 675.1, 700.0, 722.0, 821.0, 816.9, 651.7, 813.2
- NPV of total debt after full delivery 3/: 491.3, 499.6, 549.5, 596.0, 627.1, 654.4, 675.1, 700.0, 722.0, 821.0, 816.9, 651.7, 813.2

NPV of outstanding debt (3+4) after enhanced HIPC:
- 954.2, 466.1, 461.8, 455.1, 447.5, 438.5, 425.5, 419.4, 413.1, 343.8, 255.6, 433.6, 333.5

Official bilateral and commercial (after enhanced HIPC):
- Official bilateral and commercial: 413.7, 125.6, 123.9, 122.1, 120.3, 118.5, 116.9, 115.3, 113.6, 93.9, 61.6, 117.7, 88.7
  - Paris Club: 223.8, 80.0, 79.0, 77.9, 76.8, 75.7, 74.6, 73.5, 72.2, 56.2, 32.9, 74.9, 175.8
  - Other official bilateral: 146.8, 36.7, 36.0, 35.3, 34.6, 33.9, 33.4, 32.9, 32.6, 30.2, 24.2, 33.9, 28.3
  - Commercial: 43.0, 8.9, 8.9, 8.9, 8.9, 8.9, 8.9, 8.9, 8.8, 7.5, 4.5, 8.8, 37.4

Multilateral (after enhanced HIPC):
- Multilateral: 540.5, 340.5, 337.9, 333.0, 327.2, 320.0, 308.6, 304.1, 299.5, 249.9, 194.0, 315.9, 244.8
  - IDB: 243.3, 171.4, 168.8, 166.0, 164.6, 161.8, 158.3, 161.7, 165.0, 141.7, 103.7, 165.8, 138.8
  - IDA: 101.2, 65.5, 66.9, 68.2, 69.5, 70.6, 71.7, 72.8, 73.8, 74.7, 68.6, 70.8, 73.8
  - IMF: 65.1, 32.6, 28.8, 25.9, 20.8, 16.2, 11.2, 6.8, 3.4, 0.0, 0.0, 14.7, 0.0
  - Others: 130.9, 71.1, 73.4, 72.9, 72.3, 71.4, 67.4, 62.8, 57.3, 33.5, 21.7, 64.6, 32.3

Note:
- 3/: NPV of total debt assuming the entire HIPC Initiative assistance is fully delivered as of end-2002.

### III. After bilateral debt relief beyond HIPC assistance
- NPV of total debt (2+5) 2/: 954.2, 485.9, 535.8, 582.3, 613.4, 640.7, 661.4, 686.3, 708.3, 809.5, 810.0, 638.1, 802.4
- NPV of total debt after full delivery 3/: 478.2, 485.9, 535.8, 582.3, 613.4, 640.7, 661.4, 686.3, 708.3, 809.5, 810.0, 638.1, 802.4

NPV of outstanding debt (3+4) after additional bilateral relief:
- 954.2, 452.4, 448.0, 441.4, 433.8, 424.8, 411.8, 405.7, 399.4, 332.2, 248.6, 419.9, 322.7

Official bilateral and commercial (after additional bilateral relief):
- Official bilateral and commercial: 413.7, 111.8, 110.1, 108.4, 106.6, 104.8, 103.2, 101.6, 99.9, 82.4, 54.7, 104.0, 77.9
  - Paris Club: 223.8, 66.3, 65.2, 64.2, 63.1, 62.0, 60.9, 59.8, 58.5, 44.7, 26.0, 61.3, 41.9
  - Other official bilateral: 146.8, 36.7, 36.0, 35.3, 34.6, 33.9, 33.4, 32.9, 32.6, 30.2, 24.2, 33.9, 29.1
  - Commercial: 43.0, 8.9, 8.9, 8.9, 8.9, 8.9, 8.9, 8.9, 8.8, 7.5, 4.5, 8.8, 7.0

Multilateral (after additional bilateral relief):
- Multilateral: 540.5, 340.5, 337.9, 333.0, 327.2, 320.0, 308.6, 304.1, 299.5, 249.9, 194.0, 315.9, 244.8
  - IDA: 243.3, 171.4, 168.8, 166.0, 164.6, 161.8, 158.3, 161.7, 165.0, 141.7, 103.7, 165.8, 138.8
  - IMF: 101.2, 65.5, 66.9, 68.2, 69.5, 70.6, 71.7, 72.8, 73.8, 74.7, 68.6, 70.8, 73.8
  - African Development Bank: 65.1, 32.6, 28.8, 25.9, 20.8, 16.2, 11.2, 6.8, 3.4, 0.0, 0.0, 14.7, 0.0
  - Others: 130.9, 71.1, 73.4, 72.9, 72.3, 71.4, 67.4, 62.8, 57.3, 33.5, 21.7, 64.6, 32.3

Note:
- 4/: After debt relief beyond HIPC offered by some of the Paris Club creditors.

### Memorandum items and projections (selected)
- NPV of new borrowing (memorandum): 33.5, 87.7, 140.9, 179.6, 215.9, 249.6, 280.6, 308.9, 477.3, 561.4, 218.2, 479.7
  - Official bilateral (new borrowing): 1.0, 1.5, 1.6, 1.6, 1.6, 1.7, 1.7, 1.7, 1.9, 1.4, 1.6, 1.7
  - Multilateral (new borrowing): 32.5, 86.2, 139.3, 178.0, 214.2, 247.9, 278.9, 307.2, 475.4, 560.0, 216.5, 477.9

Sources and projection basis (as presented):
- Sources: Guyanese authorities; and staff estimates and projections.
- Projections/Averages provided in accompanying tables.

### External Debt Service after full implementation of debt-relief mechanisms (Table highlights)
Total debt service (2003–2022) series (selected):
- Total debt service 1/: 100.1, 102.9, 100.2, 98.9, 97.8, 96.3, 85.3, 83.8, 63.9, 65.4, 61.7, 95.2, 86.8
- After traditional debt-relief mechanisms 2/: 99.4, 101.4, 97.9, 96.0, 94.3, 92.2, 79.8, 73.8, 39.8, 39.4, 33.8, 88.5, 65.3

Total debt service under various assistance scenarios (selected rows and years):
- Total debt service (after original HIPC assistance 3/): 75.9, 75.9, 70.1, 69.5, 69.2, 68.7, 59.7, 59.9, 66.5, 68.9, 67.1, 84.6, 67.0
- Total debt service (after enhanced HIPC assistance): 52.3, 32.0, 29.6, 30.4, 31.7, 34.7, 27.4, 27.4, 31.6, 35.4, 36.1, 31.7, 31.7
- Total debt service (after bilateral debt relief beyond HIPC 4/): 51.6, 31.3, 28.9, 29.6, 31.0, 33.9, 26.6, 26.6, 30.1, 33.9, 34.4, 31.0, 30.4

Debt service memo (new debt):
- Debt service of new debt: 0.6, 1.5, 2.3, 2.9, 3.6, 4.1, 5.5, 10.0, 24.1, 26.0, 27.9, 6.7, 21.5

Nominal HIPC relief (selected):
- Under the original HIPC initiative: 24.2, 27.1, 30.2, 29.4, 28.7, 27.6, 25.7, 23.9, -2.6, -3.4, -5.5, 26.8, 19.9
- Under the enhanced HIPC initiative: 23.7, 42.3, 38.1, 36.2, 33.9, 29.9, 26.8, 22.5, 10.8, 7.4, 3.2, 29.9, 13.8

Notes on tables:
- 1/: Includes debt service on new debt.
- 2/: Assumes a stock-of-debt operation on Naples terms (67 percent NPV reduction) at the end of 1996, and at least comparable action by other bilateral creditors.
- 3/: Includes debt relief from original HIPC Initiative.
- 4/: After debt relief beyond HIPC offered by some of the Paris Club creditors.

### External Debt Indicators, 2003–2022 (selected indicators)
After traditional debt relief mechanisms (percent):
- NPV of debt to GDP ratio: 157.5, 152.8, 150.7, 144.5, 139.0, 130.9, 124.0, 117.7, 110.9, 103.9, 78.3, 54.3, 51.2
- NPV of debt to exports ratio 3/ 4/: 172.8, 170.8, 169.4, 165.3, 164.2, 160.2, 153.7, 147.2, 139.7, 132.2, 103.7, 76.2, 73.1
- NPV of debt to revenue ratio 5/: 507.5, 484.6, 467.4, 441.6, 422.1, 396.6, 375.9, 356.7, 336.1, 315.0, 237.4, 164.6, 155.1
- Debt service to exports ratio: 14.7, 14.8, 14.6, 14.8, 14.2, 13.6, 11.5, 10.9, 11.3, 11.5, 10.0, 5.8, 5.3
- Debt service to revenue ratio 5/: 44.1, 43.0, 40.2, 38.7, 36.9, 34.6, 29.3, 27.4, 28.3, 28.5, 23.8, 12.8, 11.5

After original HIPC assistance (selected):
- NPV of debt to GDP ratio: 119.9, 118.4, 119.2, 118.9, 116.4, 111.5, 107.5, 103.6, 99.4, 94.9, 80.0, 62.8, 59.3
- NPV of debt to exports ratio 3/: 131.6, 132.3, 134.0, 136.0, 137.5, 136.5, 133.1, 129.6, 125.2, 120.8, 105.9, 88.1, 84.7
- Debt service to exports ratio: 11.1, 10.9, 10.2, 10.4, 10.0, 9.7, 8.0, 7.8, 8.2, 8.4, 6.6, 6.1, 5.8

After enhanced HIPC assistance (selected):
- NPV of debt to GDP ratio: 68.2, 72.4, 77.0, 80.2, 81.3, 80.1, 79.2, 77.9, 76.2, 74.1, 65.8, 53.5, 50.2
- NPV of debt to exports ratio 3/: 74.9, 80.9, 86.6, 91.7, 96.1, 98.0, 98.1, 97.5, 96.0, 94.3, 87.1, 75.1, 71.8
- NPV of debt to exports ratio (existing debt only): 69.9, 68.0, 66.1, 65.4, 64.4, 61.8, 58.8, 55.8, 52.9, 50.2, 38.7, 25.2, 22.5
- Debt service to exports ratio: 7.7, 4.8, 4.7, 5.0, 5.1, 5.5, 4.4, 4.9, 5.3, 5.6, 5.0, 5.4, 5.5

After bilateral debt relief beyond HIPC assistance (selected):
- NPV of debt to GDP ratio: 66.4, 70.6, 75.3, 78.4, 79.6, 78.4, 77.7, 76.5, 74.8, 72.8, 64.8, 53.0, 49.8
- NPV of debt to exports ratio 3/: 72.8, 78.9, 84.6, 89.7, 94.1, 96.0, 96.2, 95.6, 94.2, 92.6, 85.7, 74.3, 71.2
- Debt service to exports ratio: 7.7, 4.7, 4.5, 4.9, 5.0, 5.4, 4.3, 4.8, 5.2, 5.5, 4.9, 5.3, 5.3

Memorandum items (selected, in millions of U.S. dollars):
- NPV of debt after traditional debt relief mechanisms: 1,153; 1,159; 1,166; 1,130; 1,118; 1,104; 1,096; 1,090; 1,077; 1,057; 961; 843; 832
- Debt service after traditional debt relief mechanisms: 100; 103; 100; 99; 98; 96; 85; 84; 91; 96; 96; 65; 62
- NPV of debt after enhanced HIPC assistance (in millions of US dollars): 500, 549, 596, 627, 654, 675, 700, 722, 740, 754, 807, 830, 817
- Debt service after enhanced HIPC assistance (in millions of US dollars): 52, 34, 32, 33, 35, 39, 33, 37, 43, 47, 48, 61, 64

Macro aggregates used in indicators (memorandum):
- GDP: 732, 759, 774, 782, 805, 843, 884, 926, 971, 1,017, 1,227, 1,551, 1,626
- Exports of goods and services 3/: 682, 697, 686, 668, 688, 710, 742, 770, 799, 830, 960, 1,138, 1,166
- Government revenue 5/: 227, 239, 249, 256, 265, 278, 292, 306, 320, 336, 405, 512, 537

Notes on indicators:
- 1/: All debt indicators refer to public and publicly guaranteed (PPG) debt and are defined after rescheduling, unless otherwise indicated.
- 2/: Reflects a stock-of-debt operation on Naples terms at end-1996 and assumes a Lyon stock deal in June 1999.
- 3/: Based on a three-year average of exports on the previous year (e.g., export average over 2001-03 for NPV of debt-to-exports ratio in 2003).
- 4/: Revenue is defined as central government revenue, excluding grants.
- 5/: Some Paris Club creditors have agreed to extend additional debt relief beyond HIPC assistance.

### Creditor participation and debt relief status (selected)
Total multilateral and bilateral participation (original HIPC Initiative table highlights):
- Total multilateral (US$ mil.): 165.1; Percentage of total assistance: 64.4
- Paris Club creditors: 69.6; Percentage of total assistance: 27.1
- Total bilateral and commercial: 91.3; Percentage of total assistance: 35.60
- TOTAL: 256.4; Percentage of total assistance: 100.0

Selected creditor modalities and status (original HIPC Initiative):
- IADB: Debt relief Amended in NPV Terms (US$ mil.): 51.8; Percentage of total assistance: 20.2; Satisfactory reply: Yes; Modalities: Combination of write-offs of selected concessional loans, and partial payment of interest on other selected loans. Implemented: Yes
- IDA/IBRD: 27.1; 10.6; Yes; Modalities: HIPC Trust Fund (Purchase of IDA debt); Implemented: Yes
- IMF: 34.5; 13.5; Yes; Modalities: PRGF HIPC Trust (Provision of PRGF grant to cover debt service); Implemented: Yes
- CARICOM: 29.1; 11.3; Yes; Modalities: Write-off of CMCF common share.; Implemented: Yes
- OPEC Fund (Multilateral Clearing Facility (CMFC)): 6.2; 2.4; Yes; Modalities: Relief has partially been provided through concessional arrears clearance. The remainder has been fully delivered as of February 2001 through loan restructuring.; Implemented: Yes
- EC: 8.0; 3.1; Yes; Modalities: Refinancing on grant terms; Implemented: Yes
- Commercial creditors: 9.7; 3.8; No; Status: Being contacted by Guyana; Implemented: No

Non-Paris Club bilateral creditor participation (selected responses):
- Argentina: 11.9; 4.6; No; Being contacted by Guyana; Implemented: No
- China: Yes; Some loans have already been cancelled; Implemented: No (table indicates being contacted but also notes some loans cancelled)
- India: Yes; Has indicated its intention to cancel 100 percent of debt; Implemented: No
- Lybia: Yes; Has indicated its intention to participate to the HIPC Initiative.; Implemented: No
- Note: Guyana is in discussion with Russia on a bilateral agreement.

Table 12 (amended values, selected):
- IADB: Amended Debt Relief (in NPV Terms US$ mil.) 64.3; Debt Relief Percentage of NVP terms 65.1; Total Assistance: 19.5; Satisfactory reply: Yes; Modalities: Assistance will cover reduction of debt service on FSO loans through 2008. Beyond 2008 selective cancellation of principal repayments on FSO loans. Total assistance will be delivered over 11 years. Implemented: Yes
- IDA: Amended Debt Relief 40.7; Debt Relief Percentage of NVP terms 41.2; Total Assistance: 12.3; Satisfactory reply: Yes; Modalities: Provide HIPC debt relief equal to 58.6% of IDA debt service falling due, subject to the one-third ceiling in the interim period. Interim period started as of December

*Sources: Guyanese authorities; and staff estimates and projections.*

### 2000. The debt relief would be

### _cr04123 - 2000. The debt relief would be

### Creditor participation and delivery of multilateral assistance
- Total multilateral: 199.8; 202.3; 60.5
- IMF:
  - Participation: Yes
  - Figures: 39.5; 40.0; 12.0
- PRGF HIPC Trust:
  - Participation: Yes
  - Note: "Provision of PRGF grant to cover debt service."
- CMCF:
  - Participation: Yes
  - Figures: 28.9; 29.2; 8.7
  - Status: Pending
  - Note: "The technical working group of the CMCF explored possible modalities of delivery of the CMCF share of assistance. Among the options expored were various rescheduling scenarios with extended maturity periods, lowered interest rates, and debt-stock reduction."
- OPEC Fund:
  - Participation: No
  - Figures: 5.3; 5.4; 1.6
  - Note: "Debt refinancing through new 'HIPC' loan."
- CDB:
  - Participation: No
  - Figures: 9.7; 9.9; 2.9
  - Participation (alternative line): Yes
  - Note: "CDB would contribute US$5.5 million in NPV terms out of accumulated net income of the Special Development Fund and donors represented on the Board of the CDB would provide the remainder of the assistance."
- EC:
  - Participation: Yes
  - Figures: 10.5; 10.6; 3.2
  - Note: "Debt-service relief on identified EC loans during the interim, supplemented with grants at the completion point allowing for anticipated repayments of agreed loans."
- IFAD:
  - Participation: Yes
  - Figures: 1.0; 1.0; 0.3
  - Note: "Up to 100 percent debt service relief until NPV target is achieved. Relief will begin from completion point."
- Total bilateral and commercial: 128.8; 39.2
- Paris Club creditors 1/:
  - Figures: 97.9; 29.8
  - Note: "Stock-of-debt operation under Cologne terms (90 percent NPV reduction) is expected at completion point"
- Non-Paris Club creditors and individual country stances (selected entries as presented):
  - Brazil: No
  - Bulgaria: No
  - China: Yes; "Some loans have already been cancelled"
  - India: Yes; "Has indicated its intention to cancel 100 percent of debt"
  - Lybia: Yes; "Has indicated its intention to participate to the HIPC initiative"
  - Commercial creditors: 14.2; 4.3; No
- TOTAL: 328.6; 99.7
- Note: "Sources: Guyanese authorities; and Fund staff estimates.1/ Guyana is in discussion with Russia on a bilateral agreement."

### IMF assistance delivery under the HIPC Initiative (Table 14 summary)
- Profile of total assistance under the HIPC Initiative (original and enhanced; in percent) by year:
  - 1999: 10.9
  - 2000: 13.0
  - 2001: 9.3
  - 2002: 11.4
  - 2003: 13.9
  - 2004: 11.0
  - 2005: 10.5
  - 2006: 6.0
  - 2007: 3.1
  - 2008: 0.0
- Delivery schedule of IMF assistance: original HIPC Initiative (in percent): 22.0; 15.0; 13.0; 12.0; 11.0; 9.0; 8.0; 6.0; 4.0; 0.0; 0.0
- Delivery schedule of IMF assistance: enhanced HIPC Initiative (in percent): 6.8; 13.0; 6.5; 11.8; 18.8; 14.0; 15.0; 8.0; 6.1; 0.0
- Debt service due on IMF obligations (percent of total IMF debt service) by year:
  - 1999: 17.3
  - 2000: 20.0
  - 2001: 13.2
  - 2002: 13.1
  - 2003: 12.9
  - 2004: 14.3
  - 2005: 12.4
  - 2006: 10.6
  - 2007: 7.0
  - 2008: 4.3
  - 2009: 1.6
- IMF assistance—deposits into Guyana's account:
  - Completion point assistance - Original HIPC Initiative: 25.6
  - Interim assistance - Enhanced HIPC Initiative: 6.14; 4.133; 5.072
  - Completion point assistance - Enhanced HIPC Initiative: 15.7 /6 (noted: "A final disbursement of SDR 15.725 million (plus accrued interest) assumed to be deposited into Guyana's account at the completion point in December 2003.")
- Total IMF assistance under the HIPC Initiative (annual figures):
  - 1999: 5.6
  - 2000: 6.6
  - 2001: 8.2
  - 2002: 5.8
  - 2003: 8.2
  - 2004: 10.0
  - 2005: 8.9
  - 2006: 6.9
  - 2007: 3.9
  - 2008: 2.1
  - 2009: 0.0
- Share of debt service due to the IMF covered by total IMF assistance (in percent) by year:
  - 1999: 34.5
  - 2000: 34.8
  - 2001: 65.5
  - 2002: 46.7
  - 2003: 65.8
  - 2004: 74.4
  - 2005: 76.0
  - 2006: 70.5
  - 2007: 62.3
  - 2008: 58.6
  - 2009: 0.0
- Proportion of each principal obligation falling due during the period to be paid by HIPC Initiative assistance from the principal deposited in Guyana's account:
  - Under the original HIPC Initiative (selected years): 56.7; 20.2; 26.7; 24.6; 22.5; 18.3; 20.7; 19.0; 22.8; 0.0; 0.0
  - Under the enhanced HIPC Initiative (selected years): 79.1; 40.8; 38.0; 29.3; 43.4; 37.3; 47.3; 39.6; 52.9; 0.0

Memorandum items:
- Total debt service due (millions of U.S. dollars) (2000–2009 snapshots): 70.2; 108.8; 98.0; 97.9; 100.1; 102.9; 100.2; 98.9; 97.8; 96.3; 85.3
- Share of total debt service covered by total IMF assistance (in percent) by year: 10.9; 8.3; 11.3; 8.1; 11.2; 13.2; 12.0; 9.5; 5.4; 3.0; 0.0
- Debt service due to the IMF after total IMF assistance (in percent of exports) by year: 2.4; 2.8; 1.0; 1.4; 0.9; 0.8; 0.7; 0.6; 0.5; 0.4; 0.2

### IDA assistance delivery under the HIPC Initiative (Table 15 summary)
- Delivery assumption: "The assistance is assumed to be delivered from December 2000 to March 2021."
- Profile of total assistance under the HIPC Initiative (percent): 10.9; 13.0; 9.3; 11.4; 13.9; 11.0; 10.5; 6.0; 3.1; 0.0 (mirrors IMF profile)
- Delivery schedule of IDA assistance (original vs enhanced) shown across years; selected items:
  - Debt service to IDA before HIPC assistance (annual figures): 2.4; 3.4; 3.6; 4.0; 4.3; 4.6; 4.9; 5.0; 4.9; 4.9; 5.9
  - Debt service to IDA after HIPC assistance (annual figures): 2.4; 1.4; 1.5; 1.6; 1.8; 1.9; 2.0; 2.1; 2.0; 2.0; 2.4
  - Relief in nominal terms (annual figures): 0.1; 2.0; 2.1; 2.3; 2.5; 2.7; 2.9; 2.9; 2.9; 2.9; 3.4
  - Relief in NPV terms (annual figures): 0.1; 1.9; 2.0; 2.0; 2.1; 2.1; 2.1; 2.1; 2.0; 1.8; 2.1
  - Percentage reduction in nominal terms: 3.9%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%; 58.6%
- Total (2000–20) aggregates:
  - Debt service to IDA before HIPC assistance (total): 123.8
  - Debt service to IDA after HIPC assistance (total): 52.7
  - Relief in nominal terms (total): 71.1
  - Relief in NPV terms (total): 41.2
- Memorandum items:
  - Interim assistance: 6.02
  - Interim relief as percent of total NPV relief: 14.6%

Notes:
- "In net present value (NPV) terms; assuming a decision point in November 2000 and a completion point in December 2003."
- "The assistance is assumed to be delivered from December 2000 to March 2021."

### Paris Club creditors' bilateral initiatives (Table 16 highlights)
- Table documents country-by-country modalities: ODA and Non-ODA coverage pre-COD and post-COD, and whether relief is provided as flow or stock.
- Selected entries (as presented):
  - Australia: HIPCs; 100; 100; 100; 100; ...; 1/
  - Canada: HIPCs; note: "Canada has granted a moratorium of debt service as of January 2001 on all debt disbursed before end-March 1999 for 11 out of 17 HIPCs ... The debt will be written off at the completion point."
  - France: HIPCs; 100; 100; 100; 100 flow 4/ Stock
  - Italy: HIPCs; 100; 100 5/; 100; 100 5/; 100 flow Stock
  - United Kingdom: HIPCs; 100; 100; 100; 100 8/; 100 flow 8/ Stock
  - United States: HIPCs; 100; 100; 100; 100 9/; 100 flow Stock
- Note: "Source: Paris Club Secretariat."

### HIPC Initiative country status and assistance levels (Table 17 excerpts)
- Guyana:
  - Target Gov. (In percent): 58? (table formatting indicates "Guyana585           220           365           74           68              1,031" — retain presented numeric sequence)
  - Original framework: Dec. 97; May 99; figures: 1072 80256 91 165 35 27 24 440
  - Enhanced framework: Nov. 00; Floating; figures: 150250329 129 200 40 41 40 591
- Total assistance provided/committed (aggregate): 31,428; 15,456; 15,801; 2,516; 7,228; 51,935
- Note: "Sources: IMF and World Bank Board decisions, completion point documents, decision point documents, preliminary HIPC documents, and staff calculations."

### External debt indicators and sensitivity analysis (Table 18)
- Baseline scenario (selected annual indicator series):
  - NPV of debt-to-revenue ratio by year (2003–2012, 2016, 2022, averages):
    - 2003: 213.9
    - 2004: 224.0
    - 2005: 233.4
    - 2006: 239.7
    - 2007: 241.8
    - 2008: 237.7
    - 2009: 235.3
    - 2010: 231.7
    - 2011: 226.7
    - 2012: 220.6
    - 2016: 196.3
    - 2022: 151.0
    - Average (2003-11): 231.6
    - Average (2012-22): 188.9
  - Debt service-to-revenue ratio (selected years): 23.0; 13.7; 12.5; 12.7; 13.0; 13.7; 11.0; 12.0; 13.0; 13.6; 11.6; 11.6; averages 13.8; 12.1
  - NPV of debt-to-export ratio (selected years): 72.8; 78.9; 84.6; 89.7; 94.1; 96.0; 96.2; 95.6; 94.2; 92.6; 85.7; 71.2; averages 89.1; 83.3
  - Debt service-to-export ratio (selected years): 7.7; 4.7; 4.5; 4.9; 5.0; 5.4; 4.3; 4.8; 5.2; 5.5; 4.9; 5.3; averages 5.2; 5.2
  - Grant element in total debt (selected years): 52.7; 49.8; 47.5; 45.5; 43.8; 42.4; 40.9; 39.6; 38.5; 37.4; 34.2; 29.7; averages 44.5; 33.4
- Alternative scenarios (sensitivities):
  - Lower sugar export volume (assumes no sugar export volume increase after 2008): NPV of debt-to-revenue ratio series closely mirrors baseline with slight differences (e.g., average (2003-11): 232.1; (2012-22): 198.1). Debt service-to-revenue ratio series similar to baseline.
  - Lower sugar export prices (assumes sugar price reverts to 13 cents per pound in 2007): NPV of debt-to-revenue ratio increases in later years (e.g., 2007: 248.9; 2008: 251.6; 2009: 255.3; 2010: 258.0; averages: 242.6; 238.6). NPV of debt-to-export ratio rises substantially (e.g., 2007: 96.8; 2008: 105.2; 2009: 112.3; 2010: 117.8; average (2012-22): 109.7).
  - Lower revenue ratio (assumes central government revenues in relation to GDP remains at 31 percent from 2003 onwards vs 33 percent baseline): NPV of debt-to-revenue ratio rises (e.g., 2005: 242.8; 2006: 253.1; 2007: 256.8; averages: 242.4; 201.1). Debt service-to-revenue ratio increases in several years (e.g., 2007: 13.8; 2008: 14.6).
- Notes:
  - "All debt indicators refer to public and publicly guaranteed debt and are defined after bilateral debt relief beyond HIPC assistance, unless otherwise indicated."
  - Revenues defined as central government revenues, excluding grants.
  - Export-based ratios use a three-year average of exports of the previous year.

### Debt management (Appendix II)
- Current system:
  - Tracks medium- and long-term public and public-guaranteed debt on a loan-by-loan basis.
  - Data processing capacity has "some shortcomings."
  - Tasks divided: ministry of finance handles external debt; Bank of Guyana monitors domestic debt.
- Institutional arrangements:
  - A committee with representatives from the ministry of finance, the Bank of Guyana, and the ministry of foreign affairs meets on an ad hoc basis to discuss debt strategy.
  - "Debt management function is not yet integrated into macroeconomic policy making."
  - Authorities plan to "enhance their capacity to make medium term macroeconomic projections" and will use the debt sustainability analysis from this completion point document as a starting point for regular debt strategy meetings.
- Data and systems needs:
  - External debt data currently stored in excel spreadsheets.
  - Recommended systems: installation of Commonwealth Secretariat database system CS-DRMS and analytical software Debt-Pro.
  - Staffing: staff trained in basic debt management functions but shortage of specialists with analytical skills.
  - Staffing support: "The skill base is enhanced by a repeated two-year economist secondment from DFID."
- Operational gaps and recommended institutional role changes:
  - Debt unit evaluates concessionality of new external loans but "does not play a coordinating role in new borrowing."
  - Roles of various government institutions in contracting new borrowing are unclear, as is the role of the Accountant General’s Department in debt management.
  - Recommendation: "The ministry of finance must take a leading coordinating role in future and assess in detail the impact of new loans on the overall debt portfolio."

*Sources: Guyanese authorities; and Fund staff estimates.*

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