## Press Release: IMF Approves Three-Year Arrangement Under the ESAF for Guyana

_IMF News, July 15, 1998_

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## Bibliographic details
- Published: July 15, 1998

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### Overview
- The IMF approved a three-year loan under the Enhanced Structural Adjustment Facility (ESAF) equivalent to SDR 53.76 million (about US$71 million) to support Guyana’s economic program for 1998–2001.
- The first annual loan is SDR 17.92 million (about US$24 million), available in two equal semiannual installments, the first of them shortly.

### Background and recent performance
- Liberalization, privatization, structural reforms, and financial system strengthening achieved important progress in recent years.
- Economic outcomes 1991–96:
  - Average real GDP growth of 7 percent a year during 1991–96.
  - Inflation decline from about 100 percent in 1991 to 4½ percent in 1996.
  - Relatively stable exchange rate and strengthened balance of payments and international reserves.
- 1997 setback:
  - Economic performance faltered in 1997 due to political disturbances surrounding the December elections, adverse effects of the El Niño weather phenomenon on agriculture, and deterioration in external terms of trade.
- In December 1997 the IMF Executive Board determined Guyana qualified for assistance under the Initiative for Heavily Indebted Poor Countries (HIPC).

### Medium-term strategy and the 1998–99 program
- Program objectives for 1998–2001:
  - Achieve average real GDP growth of about 4 percent a year.
  - Reduce inflation to about 3.6 percent (period average).
  - Narrow the external current account deficit while maintaining gross international reserves at the equivalent of 4–5 months of imports.
- Main program elements:
  - Reduction in the fiscal deficit.
  - Tightening of credit policy.
  - More flexible exchange rate policy.
  - Continuation of structural reforms.
- 1998–99 specific assumptions and targets:
  - Correct the 1997 growth slippage; assume slowdown in real GDP growth to about 3 percent in 1998 reflecting slow recovery in agricultural output.
  - Period-average inflation of about 4.6 percent in 1998.
  - Strengthen external position with accumulation of gross international reserves to maintain import cover at about 4½ months.
- Fiscal measures to achieve objectives:
  - Reduce overall public sector deficit from about 9 percent of GDP in 1997 to 2 percent of GDP in 1998.
  - New revenue measures: sharp upward adjustment of fees and charges for government services; increase in taxes on tobacco and related products; strengthening tax administration.
  - Central government expenditure reduced by 1½ percent of GDP through lower interest payments and cuts in capital expenditures in nonpriority areas.
  - Credit policy remains restrained, consistent with inflation and balance of payments objectives.

### Structural reforms
- Focus: reduce the role of the public sector and create an environment conducive to private sector development.
- 1998–99 priorities:
  - Financial sector reform and improving the business environment.
  - Restructuring public enterprises.
  - Civil service reform.
- Financial sector reforms include:
  - Modernization of central bank operations — including reorganization, recapitalization, and increased autonomy — to improve capacity for monetary management.
- Civil service reform emphasis:
  - Rationalization and improvement of the remuneration structure to attract and retain skilled personnel.

### Addressing social needs
- The authorities emphasize maintaining appropriate social and environmental policies.
- Social objectives and measures:
  - Improve standards of living through increased emphasis on health and education and well-targeted poverty-reduction programs.
  - Reforms developed with assistance from international financial institutions and other donors to raise enrollment rates in primary education.
  - Reinvigorate primary health care through greater awareness campaigns and increased provision of essential drugs to low-income groups.
  - Management of natural resources and improvement of urban areas are major concerns.

### The challenge ahead
- Remaining priorities:
  - Further strengthen general administration of the central government.
  - Increase public sector efficiency in service delivery.
  - Expand social sector infrastructure to strengthen the foundation for lasting progress.

### IMF relationship and financing position
- Guyana joined the IMF on September 26, 1966.
- Guyana’s quota is SDR 67.2 million (about US$89 million).
- Outstanding use of IMF financing currently totals SDR 30 million (about US$39 million).

### Guyana: Selected Economic Indicators
- Real GDP (percent change)
  - 1996: 7.9
  - 1997*: 6.2
  - 1998**: 3.1
  - 1999**: 4.4
  - 2000**: 4.2
  - 2001**: 4.9
- Consumer prices (period average)
  - 1996: 7.1
  - 1997*: 3.6
  - 1998**: 4.6
  - 1999**: 4.5
  - 2000**: 4.0
  - 2001**: 3.5
- Overall fiscal balance (deficit -) (percent of GDP)
  - 1996: -3.2
  - 1997*: -8.8
  - 1998**: -2.0
  - 1999**: -0.8
  - 2000**: -0.1
  - 2001**: 1.3
- External current account balance, excluding official transfers (deficit -) (percent of GDP)
  - 1996: -9.3
  - 1997*: -14.5
  - 1998**: -10.7
  - 1999**: -10.4
  - 2000**: -9.1
- Gross official reserves (months of imports)
  - 1996: 5.2
  - 1997*: 4.7
  - 1998**: 5.0

*Estimates.  
**Projections.  
Sources: Guyana authorities; and IMF staff estimates and projections.*

*Press Release No. 98/29, July 15, 1998 — International Monetary Fund.*

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## References

- [Guyana and the IMF](http://www.imf.org/external/country/GUY/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [see Press Release No. 97/64](https://www.imf.org/external/np/sec/pr/1997/pr9764.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9829_