Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
GUYANA
FY 1998 Development Assistance . . . . . . . . . . . . . . . . . $2,200,000 Introduction
Guyana, the third poorest country in the Western Hemisphere, is emerging from over 20 years of authoritarian rule and a state controlled economy. It is in the interest of the United States to assist this process of democratization and market liberalization because (1) investment opportunities for U.S. businesses, which are already significant, will expand as Guyana begins to more thoroughly develop its vast natural resources, (2) Guyana has been a key supporter of critical U.S. political and strategic interests, as demonstrated by its active role in the Haiti intervention and cooperation in narcotics trafficking, and (3) a stable democracy and renewed economic growth will help prevent social and ethnic strife, thereby promoting internal and regional stability.The Development Challenge
Guyana, a small country of 750,000 people located on the northern coast of South America, has a per capita gross domestic product of just $680. From 1972 until the mid-1980s, the State controlled essentially all aspects of economic, political, and social development. Extensive nationalizations in the 1970s were accompanied by a rapid expansion of unproductive and costly social services. By 1979, the State controlled over 70% of economic activity and employed almost one third of all working persons. Increasingly, borrowed funds were used to support the growing number of inefficient state enterprises, and capital investment to maintain the physical infrastructure almost ceased. The results were catastrophic: deterioration and collapse of the infrastructure, widespread poverty, virtual cessation of essential utilities, disintegration of basic services, and massive emigration of skilled human resources. State rule and ethnic polarity strengthened as the economy collapsed and the role of civil society weakened. In 1988, the Government of Guyana (GOG) had no choice but to accept the International Monetary Fund (IMF) sponsored Economic Recovery Program (ERP). The first free and fair national elections since 1965 were held in 1992. Voting is primarily along ethnic lines, and ethnic tensions remain a threat to the political and economic stability of Guyana.Although there are tremendous developmental constraints in every sector, Guyana has made remarkable progress in moving toward a democratic government and a market economy. Through adherence to other donor reform programs, Guyana has regained international credit worthiness. It has enjoyed solid economic growth since early 1990 of between 5% and 9% per year, and the balance of payments gap has narrowed considerably. Foreign reserves have climbed to an eight month equivalent of imports (as compared to only a few weeks' reserve in 1991), the exchange rate and inflation have been stabilized, banking laws have been liberalized, and the GOG is making steady progress in its privatization program. USAID has played an important role in this process through reinforcing IMF conditionality, promoting the reform of agricultural policies, and providing macroeconomic, trade, and private sector policy advice to the GOG. Agricultural policy reforms, for example, resulted in liberalized policies, and the elimination of certain taxes and price controls. Coupled with P.L. 480 Title III infrastructure activities, the program has been a major factor in an astounding turnaround in agricultural productivity. Largely due to USAID assistance, free and fair national elections (1992) and local elections (1994) have been conducted local government has been strengthened.
While Guyana's progress in the last six years has been excellent, and the GOG has indicated its intent to continue measures necessary to unlock its vast potential, the toll of years of mismanagement has been tremendous. For example, despite very impressive gains in agriculture, the amount of land under cultivation is now only back to the same levels of the 1960s. Prior to the 1996 Paris club debt rescheduling agreement, Guyana, with an external debt of US $2.1 billion, was one of the word's most indebted countries, when measured on a per capita basis. The 1996 agreement, acknowledging the success of Guyana's adjustment program, has reduced Guyana's external debt to $1.56 billion. Despite great potential, Guyana is not an early candidate for graduation from traditional development assistance. There will be an important role for USAID to play over the medium-term horizon, but that role can be effectively fulfilled with modest funding targeting economic development and reform, and governance.
Other Donors
Donor assistance to Guyana in CY 1995 totalled approximately $73 million. In 1995, the United States, measured in terms of actual disbursements and including the PL 480 Title I program, was the largest bilateral donor. Other major contributors include: the World Bank, the European Union, the IMF, Canada, and the United Kingdom.FY 1998 Program
Until relatively recently, the U.S. had limited economic or strategic interest in Guyana due to its authoritarian government and closed economic system. The return to a free market economy, however, represents an opportunity for increased investment, particularly in view of Guyana's tremendous natural resource base, its political stability, low wage structure, and strategic geographic position between the Americas and the Caribbean. In response to the government's willingness to liberalize the economy, foreign investment, including from the U.S., increased significantly following the adoption of the economic recovery program. Investment has noticeably levelled off in the last two years as investors wait for a more coherent statement of government investment policies and further improvement of the economic infrastructure.USAID development assistance concentrates on stimulating economic growth and strengthening democratic institutions, and broadening participation in both. In both the economic and political arenas, the key is broad-based participation. With limited funding, USAID fills critical gaps in assistance from other donors to develop and implement economic, judicial, and governance policies which broaden participation. USAID plays the lead role in coordinating and planning economic reform, and is the major donor in strengthening democracy (including the administration of justice). In view of current funding constraints, further reductions would result in USAID terminating assistance in one of the two areas.
Agency Goal: Encouraging Broad-based Economic Growth
The GOG has indicated commitment to fostering private sector-led growth but it lacks the requisite policies, experience, and institutional structures. Lack of implementation capacity to most effectively use national and donor resources is also a major constraint. Although significant economic progress has occurred, it has not been equitable; approximately 35% - 40% of the population is living below the poverty level. USAID has one strategic objective responding to this goal.
Strategic Objective 1: Expanded Economic Opportunities for the Urban and Rural Poor The USAID program addresses the primary constraints of poor GOG program implementation capacity and an inadequate enabling environment for private sector growth. The objective also seeks to ensure that the impact of an improved economy more equitably benefits all social classes. As a result of USAID assistance, bottlenecks in implementing development programs, economic reforms and creating a business environment conducive to private investment have been identified and are being addressed. The implementation ratio of the Public Sector Investment Program increased from approximately 81% to over 90% between 1995 and 1996, the GOG now consults with a private sector umbrella body on a monthly basis to identify and address issues, and the number of loans being made to microenterprises is growing. Residual funds from the completed P.L. 480 Title III program are being used for activities which directly contribute to achieving the objectives of its bilateral activities. USAID assistance alsoenabled the GOG to formulate its first comprehensive national development strategy in over 30 years.
Agency Goal: Building Democracy
By conducting free and fair national and local elections, Guyana took the first steps toward democracy. However, its socialist past, extreme poverty, and ethnic tensions threaten progress made. A severely deteriorated judicial system has also eroded confidence in the law being the basis for the resolution of disputes, the protection of personal and property rights, and protection from arbitrary acts of government. USAID has one strategic objective which responds to this goal.
Strategic Objective 2: Strengthened Democratic and Legal Institutions and Processes Activities in this area are intended to promote due process and the rule of law, improve the efficiency and effectiveness of the judicial system, encourage good governance through increasing transparency and accountability, and develop civil society through civic education and support for advocacy non-governmental organizations (NGOs).
Excellent progress is being made in justice improvement. USAID assistance focuses on infrastructure, access to law, court management, and training. The outlook for sustained progress is very good due to strong public and private sector support.
USAID assistance in democracy also focuses on electoral management support, short-term training for locally elected representatives, establishment of a parliamentary library, and institutional strengthening of advocacy NGOs.
GUYANA
(000's)
FY 1998 PROGRAM SUMMARY
USAID Strategic Objectives Encouraging Economic Growth Stabilizing Population Growth Protecting the Environment
Building Democracy Humaitarian Assistance Total 1. Expand Economic Opportunities Dev. Assistance 700
275
975
2. Strengthen Democracy and Legal Institutions Dev. Assistance
1,225
1,225
Total Dev. Assistance
700
1,500
2,200
USAID Representative: Patrick Mc Duffie
ACTIVITY DATA SHEET PROGRAM: GUYANA STRATEGIC OBJECTIVE: Expanded Economic Opportunities for the Urban and Rural Poor 504-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $975,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2002
Purpose: To encourage broad-based economic growth by expanded economic access and opportunity.
Background: Years of socialist orientation left Guyana with an extremely weak private sector and a severely limited capacity to implement public sector economic development programs. Recent macroeconomic gains have not been equitable, and equitable, broad-based economic growth is the foundation of sustainable development. USAID has three activities which address this objective; a program to improve the business environment, assistance in the formulation of a national development strategy, and a small microenterprise program which will start in FY 97. The GOG's commitment to these activities is amply demonstrated by its satisfaction of all agricultural policy and infrastructure targets under the recently completed P.L. 480 Title III programs and its adherence to a rigorous and unpopular structural adjustment program which has been an economic shock to thousands of households, particularly the poor and marginalized. While progress has been significant, political will in economic reform has not always matched stated intentions, and progress has been slow in some areas due to lingering socialist philosophy.
Role and Achievements to Date: The USAID program to support this objective has focused on reinforcing the conditionalities of other donors, accelerating implementation of national and donor programs, and filling critical gaps in other assistance programs. Although the Title III program was terminated early due to lack of funding, agricultural policy reforms continue to have an impact. Rice yields, production, and exports continue to increase. The area cultivated in 1996 increased by 10,000 acres over 1995, 7% over USAID's targets. The expenditures for sea defense rehabilitation that all protect agriculltural lands has surpassed USAID's targets by 16%. The national development strategy has been completed after extensive participation by all major donors and over 200 Guyanese professionals in the private and public sectors. The strategy is currently being printed and should be desseminated in December 1996. Two key ministries are now using comprehensive strategic plans to develop and implement policies to promote economic development. The dialogue previously promoted by USAID between the public and private sectors is becoming institutionalized and different structures have been established to ensure ideas and perspectives are shared.
Description: The USAID program to improve the business environment stresses increasing private sector investment in productive sectors, better macroeconomic analysis and planning, and improved public resource management. Issues and policy constraints have been identified through joint consultation with the public and private sectors and emphasis will now be placed on devising and implementing strategies for their resolution. Major activities planned include an investor's guide, an investment code, installation of a management information system, and the institutional strengthening of selected private sector business organizations and NGOs which contribute to economic development. Additionally, ministry personnel will receive training in data collection, compilation, and analysis, and assistance will be provided to restructure two ministries to increase productivity.
Host Country and Other Donors: The USAID program is designed to complement or fill critical gaps in other donor programs. Key donors include the World Bank, the British, the Inter-American Development Bank, the European Union, and the Canadian International Development Agency. The GOG has met or exceeded required host country contributions.
Beneficiaries: The activities benefit all Guyanese but, because of the emphasis on equity, small farmers, small businesses, micro-entrepreneurs, and the lower income strata of society will be the main beneficiaries.
Principle Contractors, Grantees, or Agencies: USAID has contracted IGI International to assist in the implementation of the program to improve the business environment.
Major Results Indicators Baseline TargetsShare of consumption by the 12% (1992) 16% (1997) poorest 40%
Number of individuals benefitting 256 (1994) 4,000 (1997) by micro loans (one sentinel institution)
GOG expenditures on sea defences $4,000,000(1994) 12,000,000 (1997)
ACTIVITY DATA SHEET
PROGRAM: GUYANA
STRATEGIC OBJECTIVE: Strengthened Democratic Institutions and Processes 504-S002
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $1,225,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 1999
Purpose: To promote a more pluralistic, responsive, open government by removing barriers to a sustainable democracy and strengthening democratic institutions and processes.
Background: Guyana's economic and social development depends on sustainable institutions and processes. This objective directly responds to Guyana's social development requirements, and it also supports economic development since open, responsive government encourages economic growth. Similarly, the effectiveness of the justice system is as important to business as it is to good government. Due to more than 20 years of authoritarian ideology, Guyana's democratic institutions and processes are extremely fragile, and the judicial system has severely deteriorated. USAID's justice improvement activity is designed to improve the effectiveness and efficiency of the judicial system, and its strengthening democracy activity promotes a pluralistic society and a responsive, open government. Other donors have provided short-term assistance in the electoral process, but USAID is the only donor providing long-term assistance in strengthening democratic institutions. The GOG is clearly committed to the democratic process, and it has provided outstanding support to improve the judicial system. Guyanese institutions, however, are extremely weak, skilled human resources are scarce, and ethnic politics and voting threaten progress and stability.
USAID Role and Achievements to Date: USAID's two activities supporting this strategic objective build upon the Agency's extensive experience in assisting judicial systems in the Caribbean, and four years of short-term assistance in Guyana-specific democracy strengthening activities. Assistance to the judicial system targets increased, access to it, and improved efficiency and effectiveness. exception, all targets were either achieved or exceeded in FY 1996. Due to strong GOG financial support the judicial infrastructure program was almost doubled; initial recommendations to improve management systems are being implemented; library resources were siginificantly expanded, studies to improve efficiency were undertaken; strengthening of the local bar was initiated; law revision was initiated, and training was provided for law librarians, magistrates, and judges. USAID's long-term activity to strengthen the democratic process is now in full implementation, focusing on (1) training of locally elected officials, (2) technical assistance and training for the national elections commission, (3) establishment of a parliamentary library, and (4) strengthening the capacity of NGOs to become more involved in governance and policy formulation.
Description: While infrastructure and training assistance will continue in the justice activity, more emphasis will be placed on improving management systems and processes. Priority attention will be given to the implementation of recommendations to streamline the court registry system, establish a modern court reporting system, and regularize the docket. Law revision will also be initiated, the Guyana Bar will be further strengthened, and case law updating will be completed. Assistance in strengthening democratic institutions will continue to focus on voter education, strengthening NGO electoral monitoring capacity, training of local government officials, and strengthening the role of civil society. A critical new activity will be to initiate activities in constitutional reform.
Host Country and Other Donors: USAID is the only donor assisting the judicial system or providing long-term assistance to strengthening democracy. The British, Canadians, and European Union, have indicated growing interest in collaborating with USAID, however actual assistance is and will likely remain relatively limited.
Beneficiaries: The beneficiaries are the people of Guyana as a whole but the activities primarily benefitthose who do not have access to equal justice or who do not actively participate in the democratic process, i.e. the disadvantaged.
Principal Contractors, Grantees, or Agencies: The University of the West Indies, in collaboration with the University of Guyana, is assisting in the implementation of the justice improvement activity. The National Democratic Institute is the principle grantee for the strengthening democracy activity.
Major Results Indicators: Baseline TargetStrengthening democratic institutions 6 (1995) 5 (1997) (Freedom House Rating)
Trained local Government officials 520 (1994) 750 (1997)
Court case backlog 3,506 (1995) 2,000 (1997)
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