GUYANA

	FY 1998 Actuals	FY 1999 Estimate	FY 2000 Request
Development Assistance	$3,185,000	$2,180,000	$3,200,000

Introduction

Over the past few years, Guyana has made significant strides in moving toward a market economy and transitioning to democracy. However, these advances are fragile. Guyana remains the third poorest country in the hemisphere. With modest funding, USAID is playing an important role in leveraging donor resources to stimulate economic growth, and is serving as a catalyst to promote democratic norms and practices within government and in civil society. In this way, USAID's development program in Guyana responds to two areas of U.S. national interest: (1) the promotion of broad-based economic growth in developing and transitional economies, and (2) the increase in adherence to democratic practices and respect for human rights. Improvements in these areas will promote both internal and regional stability and assist Guyana in addressing a growing narcotics trans-shipment problem. A substantial improvement in the investment climate, coupled with Guyana's wealth of natural resources, has potential for increasing opportunities for U.S. investment.

The Development Challenge

The level of poverty in Guyana remains high, structural distortions continue and the distribution of income is still skewed. Public institutions remain weak and years of emigration have drained the country of technical and professional leadership. These economic and structural weaknesses create an environment in which the undercurrent of tension between the two major racial groups in the country is often used to seek political advantage. The December 1997 election, won by the People's Progressive Party/Civic, primarily with Indo-Guyanese support, led to street demonstrations and a continued threat of violence by the opposition People's National Congress (supported by Afro-Guyanese) who refused to accept the results, despite election audit findings from a high-level Caribbean Community (CARICOM) team. This political tension and uncertainty over the past year dampened the climate for both foreign and local investment, contributing to a significant downturn in the economy, one which Guyana can ill afford. However, there is cautious optimism that all political parties now realize that it is in their self interest to peacefully resolve differences and move constitutional reform forward, to stabilize democracy and to restore investor and consumer confidence.

In addition to the already formidable development obstacles, the ability of the Government to adequately address improvements in the quality of life for its people is further constrained by its heavy debt burden. Approximately $1.49 billion dollars in external debt is owed, about $35.7 million to the United States. Recognizing that reducing this debt is essential to its future, Guyana has consistently maintained its compliance with the International Monetary Fund (IMF) and donor conditionality, and is participating in a special debt reduction initiative for heavily indebted poor countries (HIPC). Since 1991, $127 million in U.S. debt has been forgiven. For Guyana to reach income levels comparable to those of most other countries in the region and strengthen its ability to meet the needs of its citizens, multilateral budgetary support and bilateral development assistance will be needed over the long term.

USAID's strategic objectives (SOs) address two of Guyana's most critical problems: the need for significant, equitable economic growth and a stable, participatory democracy. Given the scope of Guyana's constraints resulting from two decades of misguided, socialist rule, progress over the four years (since USAID reopened its office in Guyana) has been impressive. In the area of democracy and governance, USAID assistance resulted in the computerization of the primary laws of Guyana (an essential starting point for law reform), the introduction of modern court reporting to expedite judgments, and the exposure of political party and civil society leaders to models of constitutional reform and political solutions to ethnic, racial and religious conflicts. A better understanding of the American, Irish, and South African experiences will positively influence the newly-established 20 member Constitutional Reform Commission, since several members participated in these activities. In the area of economic growth, USAID assistance resulted in: the introduction of strategic planning in the Ministry of Trade and the Ministry of Finance as an integral part of the annual budget preparation process; the establishment of a fledgling trade policy unit to help the Ministry of Trade address and take advantage of the new realities of globalization and liberalization; the preparation and recent publication of Guyana's Investor's Guide; and the development of an investment strategy.

Other Donors

Donor assistance in terms of actual disbursements in 1998 totalled approximately $79 million. With the combined disbursements of USAID and P.L. 480 Title I, the United States remains the largest bilateral donor. The Inter-American Development Bank (IDB), IMF and World Bank (WB) provide the largest funding for macroeconomic assistance, primarily allocated to the public sector investment program. Bilateral donors with programs of comparable size to USAID's support the policy agenda of the IMF/WB and assist in policy analysis, institution-building, social infrastructure and other technical assistance programs. Sectoral programs of the multilateral organizations in health, agriculture, environment and education, are complemented by the major bilateral donors--Canada, the United Kingdom and the European Union (EU). USAID's technical assistance and training resources have helped leverage the funding of the multilateral banks by assisting the GOG to meet conditionalities. Aside from elections support, generally multidonor funded, USAID is the principal donor in democracy and governance.

FY 2000 Program

USAID's country strategy for FY 1999-FY 2003 builds upon prior investments and continues its focus on economic growth and democracy. The two SOs are: Expanded Opportunities for the Urban and Rural Poor and More Responsive and Participatory Governance and Rule of Law. By FY 2000, implementation of the two new SOs will be well under way. The strong synergy between these sectors will support long term sustainability of democracy and economic growth.

Increasing economic pressure creates an environment where racial tensions can be exploited and the democratic process could backslide. USAID's economic growth objective will help Guyana with the tools needed to achieve broad-based economic growth, increased equity and more employment opportunities. The democracy and governance program will assist in this effort by helping the courts and other regulatory bodies develop the institutional capacity to ensure that the policies and regulations critical to increased investment are fairly, promptly and uniformly enforced. Increased capacity of the judiciary to adjudicate cases is an important factor in attracting more private investment and in assuring citizens regardless of race or party, that they will have fair, timely access to justice. Strengthening NGOs and private sector organizations and increasing dialogue on important social, political and economic issues with affected parties at the outset, will encourage civil society to take on a greater role in influencing public policy. USAID's new strategy is targeted at addressing these issues.

Results anticipated in the new economic growth objective are: development of trade policies conforming to international norms; wide availability of marketing and investment information; more effective application of laws relating to commerce and investment; enhanced capacity of the private sector to influence public policy; and increased services to support small and micro-enterprises. The democracy and governnance objective will result in: improved lawmaking and regulatory processes; increased capacity to resolve disputes in a timely manner; strengthened capacity to conduct free and fair elections; increased influence of civil society on public policy; and strengthened local government.

Although requested financial resources are modest ($2.9 million for FY 2000), the focus on technical assistance and training in the two strategy areas is not resource-intensive. Based on USAID's performance in the last strategy, similar resource levels have yielded very positive results.

USAID/GUYANA

FY 2000 PROGRAM SUMMARY
(in Thousands of Dollars)

USAID Mission Director: Carol Becker

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
S.O 1. Expanded Opportunities for the Urban and Rural Poor - DA	1,700	---	---	---	---	---	1,700
S.O. 2. More Responsive and Participatory Governance and Rule of Law - DA	---	---	---	1,500	---	---	1,500
Totals - DA	1,700	---	---	1,500	---	---	3,200

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ACTIVITY DATA SHEET

PROGRAM: Guyana
TITLE AND NUMBER: Expanded Opportunities for the Urban and Rural Poor, 504-S01
STATUS: New
PROPOSED OBLIGATION AND FUNDING SOURCES: FY2000: $1,700,000 DA
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003

Summary: In 1995 when USAID began work on this objective through its recently concluded Building Equity and Economic Participation (BEEP) project, the Government of Guyana (GOG) lacked minimum, acceptable capacity to implement economic, financial and other business-related policy and regulatory reforms to produce progressive economic growth. USAID used its limited resources to leverage funds from the international donor community by supporting the policy agenda of international financial institutions, and filling critical niches in other bilateral donors’ programs. USAID's assistance enabled the GOG to increasingly satisfy donor conditionalities, to increase its implementation and analytic capacity, and to provide an improved enabling environment for private sector development, including microenterprises. The purpose of this new SO is to continue to strengthen the business environment in order to bring about more equitable economic growth. The activities will benefit all Guyanese but the greatest proportional benefit should accrue to the disadvantaged because of emphasis on equity. Reduction in the proportion of the population in poverty will be monitored.

Key Results: Four key intermediate results were agreed upon to achieve this objective: (1) increased capacity to implement economic policy for more equitable growth; (2) improved climate for private investment; (3) strengthened capacity of private sector to influence public policy; and (4) increased services available to support small and microenterprises.

Performance and Prospects: Performance over the life of the recently concluded BEEP project was good, particularly considering the problems of deteriorated infrastructure and limited human and financial resources. USAID assisted the GOG to satisfy macro reform conditionalities, to qualify for debt relief, and to develop a debt reduction plan. USAID also assisted in the current reorganization of the Ministry of Finance (MOF) and the computerization of the MOF and Ministry of Trade, Tourism and Industry, resulting in improved economic and trade policy analytical capacity. Improved dialogue between the public and private sectors on economic policy has led to the publishing of an investor’s guide and the re-introduction of income tax holidays in 1998. USAID’s continued support for the microenterprise sector was responsible for over 2,200 micro credit loans in 1998, with approximately 80% to women. In addition, the delinquency rate of the institution was reduced from over 30% in 1996 to under seven percent in 1998. In spite of a projected negative growth rate of 1.1% in 1998, primarily due to the El Niño phenomenon, Asian financial crisis, and political instability after national elections in December 1997, growth of real GDP averaged 7.2% per year between 1991-1997, while inflation was reported at 4.8% for 1998.

Although there have been significant improvements in the physical infrastructure, the lack of a skilled and qualified workforce will continue to constrain both the private and public sectors. The multilateral and bilateral donors are providing assistance for human resources development. USAID will continue to leverage this additional support.

The New Economic Growth Activity will be more focused than the previous project, and will build on successful initiatives. USAID will target its resources on increasing and improving the opportunities and climate for trade and investment, in keeping with the new realities of liberalization and globalization. Emphasis will be placed on diversifying the economy from its current narrow raw material production base to growth in new areas of economic activity such as manufacturing, tourism and non-traditional agri-business. USAID will also encourage a more collaborative private/public sector approach to prepare Guyana for the Free Trade Area of the Americas, and assist the private sector to become the driving force for economic development, job creation and wealth. In addition, advice and training will be provided to several micro credit institutions, and increased loans will be made to indigenous and other disadvantaged groups.

Other Donor Programs: The USAID program will be implemented in coordination with the programs of the World Bank, International Monetary Fund and the IDB which provide the macro framework for economic and policy reform. Other key donors providing assistance in economic growth and reform include the European Union, Canada and the United Kingdom.

Principal Contractors, Grantees or Agencies: A competitive bidding process is being used to select a contractor for the new activity. The RFP has been issued and a contractor is expected to be selected during the second quarter of 1999.

Selected Performance Measures: Preliminary measures for the new strategic objective are: (1) reduction in the proportion of population in poverty; (2) unemployment rate remains stable or falling relative to December 1998 benchmark; (3) non-traditional export growth exceeds growth of GDP; (4) real GDP grows by at least four percent per year; and (5) inflation is less than five percent per year.

Baseline data and targets will be established once a contractor is selected.

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ACTIVITY DATA SHEET

PROGRAM: Guyana
TITLE AND NUMBER: More Responsive and Participatory Governance and Rule of Law, 504-SO02
STATUS: New
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $1,500,000 DA
INITIAL OBLIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2003

Summary: In 1994, USAID initiated a program to strengthen the Guyana legal system, which had been systematically starved of funds during the previous 28 years of authoritarian rule. This support followed the 1992 election of a new government under an electoral process which was regarded to be the first free and fair general election in two decades. In addition to the Guyana Justice Improvement Project (GJIP), a complementary project, the Guyana Strengthening Democracy Project (GSD) was initiated to promote democracy and good governance. This activity focused on improving parliamentary systems, strengthening local government, and enhancing capacity of the elections commission. Both projects will end on March 31, 1999. The new strategic objective (SO), More Responsive and Participatory Governance and Rule of Law, will build and expand upon the gains made by the two current projects.

Key Results: Five intermediate results were determined to be necessary to achieve the new activity's objective: (1) improved and more informed law and regulation-making; (2) increased capacity to resolve disputes in a timely manner; (3) sustained institutional capacity to conduct free and fair elections; (4) increased civil society influence on public policy; and (5) strengthened local governance.

Performance and Prospects: Both the GJIP and GSD projects have exhibited strong performance and have shown good to excellent results in a wide array of activities. For example, the criminal case backlog is now 57% of its level two years ago and eight Guyanese have been professionally trained as court reporters and are now formally assigned to the court system using the latest court reporting technology. Previously, proceedings were transcribed in longhand by judges. All the primary laws of Guyana have been placed on a computerized database, and very soon the GOG will be able to update its laws electronically. Sixteen courts have been refurbished, nine more than the initial target, and the high court library has been renovated and furnished for use by the legal community. Despite impressive progress, there is still a great backlog of civil cases, judges and magistrates require ongoing upgrading of skills, numerous laws need reform, and greater efficiency in the judicial system is required to ensure timely and effective justice.

Under the GSD Project, USAID has provided materials and technical assistance to strengthen Parliament, enhance local government capacity, improve electoral management in the 1994 local, and the 1997 general elections, and increase participation of civil society in constitutional reform dialogue. With the renovation of the Parliamentary library, members of Parliament as well as the wider citizenry of Guyana now have access to one of the finest libraries in the region to inform themselves more fully regarding important issues of the day. This will lead to better laws being enacted for Guyana.

Possible Adjustments to Plans: The proposed activities under the new democracy and rule of law SO have been the subject of lengthy and intensive review by the GOG, not because of their inherent nature but rather due to the politically and racially charged atmosphere since the December 1997 elections. The delays in negotiating an agreement with government have postponed the obligation of initial funds and the issuance of a Request for Assistance (RFA) to implement the new objective. High-level negotiations have recently taken place, including Cabinet review, and ratification of an agreement is imminent. The GOG now appears to be on board with the results to be achieved under the SO and its commitment enhances the prospects of successful implementation over the course of the strategy period. While an agreement with the Ministry of Legal Affairs was signed for the Guyana Justice Improvement Project four years ago, the agreement with the GOG for the new SO will mark the first time since its return to democracy that the GOG will sign an agreement with USAID for democracy activities. USAID plans to extend its two current grants for a few months until a new grant award is made in order maintain momentum in the judicial reform area and in the critical constitutional reform process which has just received Parliament's approval.

Other Donor Programs: USAID is the only donor with a comprehensive approach to democracy and rule of law. Several donors have supported local and national elections and there is particular interest by the IDB in strengthening the electoral process. The United Nations Development Program has a number of small projects in the democracy area. The Canadian International Development Agency (CIDA) has been engaged in strengthening the management capacity of indigenous NGOs and USAID plans to work in close collaboration with both CIDA and NGOs working to improve the status of women, children and indigenous peoples. USAID has been actively seeking greater engagement of donors in the democracy and rule of law area. Discussions with the European Union have been encouraging. Wherever possible, USAID also plans to use its local government capacity-building activities in coordination with the IDB's local government infrastructure program.

Principal Contractors, Grantees or Agencies: The National Democratic Institute (NDI) and the University of the West Indies are current democracy and rule of law grantees. A competitive process will be used to select a primary implementing entity for the new SO. This primary implementing entity will have the capability to provide subcontracts and subgrants to other entities in the achievement of activity objectives. A RFA is anticipated to be issued in the first quarter of 1999.

Selected Performance Measures: Preliminary measures for the new SO are: (1) reduction in the civil and criminal case backlogs; (2) establishment of a permanent, effective Elections Commission; (3) more expeditious drafting of laws which have greater public input; (4) increased organizational capacity of civil society organizations directed to improve the status of women, children and indigenous people; and (5) increased capacity of local government to respond to the needs of their communities.

Baseline data and targets will be established once a cooperating agency is selected.

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