The Inter-American Development Bank (IDB) is helping Guyana strengthen the institutional capacity of its Ministry of Finance which will be in charge of the development and implementation of a Medium-Term Development Strategy. That document, the IDB explained, will essentially help Guyana better leverage its oil and gas revenues to grow investment, increase employment and strengthen economic resilience.
The assistance being provided by the IDB will also see the establishment of an economic development unit at the ministry. This division will be responsible for promoting the diversification of the economy through the identification of growth poles that will encourage the increased development of businesses, particularly Small and Medium Sized Enterprises (SMEs). It will also be tasked with the identification and promotion of possible large-scale infrastructure projects that could be implemented in partnership with the private sector and, therefore, provide opportunities for significant foreign direct investment.
The IDB said it is expected that the Economic Strategy Unit that is currently being developed and strengthened through the present Technical Cooperation (TC) will be absorbed into the Office of the Vice president.
The US$1.8M project is already in the implementation mode and according to project documents published as recently as March 21, 2022, the exercise will last for 36 months.
The financial institution was keen to note that there are concerns Guyana would fall victim to the dreaded Dutch Disease. It noted however that the Government of Guyana has been carrying out actions to support economic diversification and productivity, value added and export readiness. The bank said that the government has initiated actions to build capacity at several levels to prepare for the expected spill-offs from oil production, including managing public spending by creating a long-term strategy and building administrative capacity. In this regard, it said the government is taking actions to strengthen the capacity of the Ministry of Finance by creating a dedicated unit in charge of developing an economic strategy under the oil and gas impacts on the country, including actions for economic diversification and promotion of strategic projects with private sector participation under a sustainable social and environmental framework and incorporating aspects of transparency, rule of law, diversity and gender.
In this regard, the Ministry of Finance requested financial and technical support for the creation and implementation of the Medium-Term Economic Development Strategy. OilNOW understands that US$296,764 will be dedicated towards this specific component.
In addition to the development of a strategy, the financial institution said consultants would be hired to conduct analyses and develop and implement recommendations to facilitate diversification in the medium and long term, such as promotion of value chains and clusters for local firms.
The consultants would also engage, in coordination with the lead economic advisor for the project, with stakeholders including the Private Sector Commission, the Guyana Manufacturing and Services Association (GMSA), Guyana Women’s Chamber of Commerce, Guyana Office for Investment (GO-Invest), the Fair-Trade Commission as well as representatives from academia, civil society, indigenous communities, and vulnerable groups. This session is expected to allow for the identification and selection of potential growth poles and sectors for sustainable economic diversification; and areas for technical exchanges and training on best practices on developing economic diversification strategies under an oil and gas context.
