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Guyana - First Programmatic Financial and Fiscal Stability Development Policy Credit Project (English)

The Programmatic Development Policy Credit (PDPC) series supports Guyana’s reform efforts to reinforce sound financial sector development and to strengthen fiscal management. The proposed operation is the first in a series of two operations. The series builds on three pillars of policy reforms. The first pillar supports the Bank of Guyana’s (BOG’s) ability to manage financial stress including establishing a deposit insurance scheme. The second pillar supports both regulatory reform for the insurance sector as well as domestic and international payment transactions. The third pillar supports stronger fiscal management through a sovereign wealth fund (SWF) for intergenerational savings, better debt management, and improved public investment management. The first credit will be in the amount of SDR 24.4 million (US$35 million equivalent). The PDPC forms part of a developing engagement with the Co-operative Republic of Guyana spanning financial sector, fiscal, and oil and gas sector management. Complemented by the increased financial envelope due to the IDA18 Replenishment, this policy dialogue led to the development of the PDPC series as well as a now planned FY19 Systematic Country Diagnostic (SCD) and Country Partnership Framework (CPF). The first operation in the series supports the Government of the Co-operative Republic of Guyana’s (GCRG’s) strong financial sector reform efforts while recognizing through triggers the GCRG’s efforts to accelerate fiscal reform. The newfound wealth will increase demands on fiscal policy, long-term savings, and domestic investments. Fiscal policy will need to be designed to manage the additional sources of volatility in both economic activity and fiscal revenues. Although natural resource extraction has long been a feature of the Guyanese economy, the increase in discovered wealth raises the question of intergenerational savings and the extent to which revenues from extracted resources should be set aside for future generations. To the extent the wealth is not invested abroad, it must be invested wisely in the Co-operative Republic of Guyana. For the private sector that requires an efficient financial sector that allocates the resources to the most economical investments, and for public investment it requires an efficient public investment management system. The GCRG’s commitment to prudent debt management needs to be supported by a modernization and streamlining of the legislative and institutional framework. With the increase in wealth and progressive market access of the country, The Co-operative Republic of Guyana will need to develop a unified and modernized legal framework for debt management and implement a comprehensive medium-term debt strategy to ensure that borrowing is aligned with macroeconomic policy objectives and undertaken at acceptable levels of risk and cost.

Details

  • Document Date

    2018/05/21

  • Document Type

    Program Document

  • Report Number

    PGD8

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Guyana,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2018/06/02

  • Disclosure Status

    Disclosed

  • Disclosure Type

    Simultaneous Disclosure

  • Board Meeting Date

    2018-06-22T00:00:00Z

  • Doc Name

    Guyana - First Programmatic Financial and Fiscal Stability Development Policy Credit Project

  • Keywords

    Combating the Financing of Terrorism; Financial Sector; Public Investment Management System; Oil and Gas Sector; Oil & Gas; current account deficit; oil revenue; oil production; heavily indebted poor country; Efficiency of Public Expenditures; Agriculture, Fishing and Forestry; oil and gas institutional; Public and Publicly Guaranteed; real exchange rate appreciation; public sector investment program; oil and gas reserve; financial sector reform; sovereign wealth fund; macroeconomic policy framework; fiscal management; emergency liquidity assistance; debt sustainability analysis; external debt service; international good practice; deposit insurance scheme; asset and liability; resource rich countries; financial institution deposit; total public debt; long term finance; fiscal policy; Fiscal policies; Financial Stability; state holding company; structure of production; loss of competitiveness; cyclical fiscal policy; external public debt; net oil import; Public Debt Management; debt service costs; natural resource extraction; employment and unemployment; barrels per day; National Risk Assessment; publicly guarantee debt; official exchange rate; current account surplus; asset price bubble; risk of debt; Finance for Development; Development Policy Financing; short term liquidity; Investment Project Financing; central government support; world oil price; errors and omission; operational risk management; Insurance and Pension; real estate mortgage; medium-term expenditure framework; resource-rich developing country; long-term climate change; exchange rate regime; summary of risks; stable exchange rate; wages and salary; household budget survey; financial sector development; standard of living; per capita income; labor force participation; illiquid financial institutions; domestic financial sector; international capital market; financial sector stability; sovereign wealth management; private sector resource; medium-term budget framework; public investment program; share of employment; labor force survey; composition of employment; foreign direct investment; debt management strategy; current account balance; fiscal responsibility framework; prudent fiscal policy; economic growth performance; commodity price fluctuation; national payment system; high growth rate; prudent risk management; balance of payment; effective deposit insurance; public-private partnership policy; public investment spending; fiscal management system; systemic banking crisis; international financial transaction; private sector credit; oil wealth; failing bank; financial system; foreign reserve; crisis management; monetary policy; sound financial; Exchange Rates; human capital; legal framework; life insurance; fiscal resource; resource wealth; adverse shock; fiscal revenue; Natural Resources; gold production; dutch disease; financial intermediation; extractive sector; reform effort; domestic electricity; small states; weak bank; political pressure; current expenditure; real gdp; partial transfer; weighted average; budget speech; government spending; downside risk; oversight arrangement; financial asset; Electronic Payment; tradable sector; financial service; financial crisis; insurance sector; Oil Export; depositor protection; Fiscal Reform; fiscal framework; enhanced transparency; insurance companies; unemployment rate; treasury bill; stabilization fund; long-term saving; bank resolution; guyanese dollar; evaluation framework; asset value; external borrowing; macroeconomic stabilization; external shock; credit crunch; fiscal regime; improved public; reform priorities; fiscal cost; debt negotiation; Macroeconomic Stability; strategy formulation; concessional loan; expenditure rule; bankruptcy procedure; Bank Insolvency; export production; spatial development; fiscal support; Advisory services; Insurance Law; debt accumulation; oversight mechanism; effective governance; economic prosperity; sustainable management; resilient infrastructure; environmental service

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Citation

Guyana - First Programmatic Financial and Fiscal Stability Development Policy Credit Project (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/489761528122701470/Guyana-First-Programmatic-Financial-and-Fiscal-Stability-Development-Policy-Credit-Project