Guyana - Development Policy Review : The Challenges of Governance and Growth

Abstract

The objective of this Development Policy Review, is to provide an up-to-date, integrated assessment of Guyana's development policy agenda, with the main focus on governance, growth, and poverty alleviation. The report consists of three parts: assessment of development outcomes, discussion of the development policy agenda, and, assessment of the medium-term outlook. It discusses some of the key political economy issues, critical to this review - ethnic and political tensions, as well as the surge in crime and violence. The report draws on the extensive wealth of existing analysis, within, and outside the Bank, and, highlights critical areas where further research is needed. Among the key structural measures adopted recently, are the amendment of the tax law, and of the procurement law, and the start of implementation of the sugar restructuring program. These achievements come on top of progress made in other reform areas, since the adoption of the Poverty Reduction Strategy Paper (PRSP) in 2001. The pressing issue is the implementation of the remaining reform agenda. The PRSP needs to be updated, as the economic situation has since deteriorated, with economic growth rate, and government revenue collection much lower than anticipated. Radical improvement in the business climate, namely through macroeconomic stability, better governance, and improved social capital, and physical infrastructure; diversification of the economic base into high-value, competitive activities; and, the restructuring of the traditional sectors - mining and sugar - are necessary conditions for a better economic outlook. Specifically, attaining fiscal and debt sustainability, revitalizing agriculture, restructuring the mining sector, promoting an investment climate, improving public sector management, and investing in human development, should stand at the forefront of the development agenda.