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World Bank Document ReportNo. 11753-GUA Guyana Public SectorReview In Two Volumes Volume II: Main Reportand Annexes Public Disclosure Authorized May 17, 1993 CaribbeanDivision CountryDepartment III LatinAmerica and the CaribbeanRegion FOR OFFICIAL USEONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized byrecipients mynt otherwise CURRENCY EOUIVALENTS Average exchange rates prevailing during recent years, Guyanese dollars (G$) per US$1.00, period average: 1988 10.00 1989 27.16 1990 39.53 1991 111.80 1992 125.50 FISCAL YEAR January 1 - December 31 TABLES Totals in tablos do not always equal the sum of their components because of rounding. FOR OFFICIAL USE ONLY ACRONYMS AND ABBREVIATIONS ATC Air Traffic Control BERMINE Berbice Mining Corporation BIDCO Bauxite Industry Development Company Ltd. BoG Bank of Guyana CAD Civil Aviation Directorate CARICOM Caribbean Community CDB Caribbean Development Bank CET Common External Tariff CGCED Caribbean Group for Cooperation in Economic Development CIDA Canadian International Development Agency CFR Crash Fire Rescue Services CTPU Central Transportation Planning Unit CDFA Cooperative Financial Institutions Agency D&I Drainage and Irrigation DIEC Department of International Economic Cooperation DME Distance Measuring Equipment dwt deadweight EC European Community ERP Economic Recovery Program FAA US Federal Aviation Administration GDP Gross Domestic Product GEC Guyana Electric Corporation GCE General Certificate of Education GNEC Guyana National Engineering Corporation GNFS Goods and Non-factor Services GNP Gross National Product GNSC Guyana National Shipping Corporation GOG Government of Guyana grt gross registered tonnage GS&WC Georgetown Sewerage and Water Commissioner GTT Guyana Telephone and Telegraph GUYMINE Guyana National Bauxite Company GUYSUCO Guyana Sugar Cane Corporation GUYWA Guyana Water Authority HF High Frequency IATA International Air Transport Association ICAO International Civil Aviation Organization IDA International Development Agency IDB Inter-American Development Bank ILS Instrument Landing System IMF International Monetary Fund IRP Intra Regional Payment Arrangements LINMINE Linden Mining Corporation MET Meteorological Services MIGD Million Imperial Gallons Per Day MOPWCRD Ministry of Public Works, Communications and Regional Development NDB Non-Directional Beacon NIS National Insurance Scheme PAP Public Administration Project PCS Public Corporations Secretariat PFP Policy Framework Paper PPF Project Preparation Facility PSIP Public Sector Investment Program This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ACRONYMS AND ABBREVIATIONS (continued) PSM Public Sector Management RD Roads Division RDC Regional Democratic Council RV Ratable Values RWD Regional Water Division SILWFC Sugar Industry Labor Welfare Committee SIMAP Social Impact Amelioration Program SPS State Planning Secretariat tau twenty foot equivalent units (containers) THD Transport and Harbors Department UNDP United Nations Development Program USAID US Agency for International Development VHR Very High Frequency VOR Very High Frequency Omni-directional Range vpd vehicles per day WB World Bank This report in based on the work of a World Bank mission to Guyana in December, 1992, supported by BDD, CIDA and the EC. The mission benefited greatly from the extensive support provided by the State Planning Secretariat in Guyana. Mission participants were Axel Peuker (task manager), Rosaria Troia (PSIP), Jos Verbeek (RMSMX), Richard Moore (public administration), Monica Fidel (public administration), Nizar Jetha (resource mobilization), Henry de Greef (tax administration), Keith Herbert (customs administration), Prince Taylor-Lewis (resource allocation), Martin Greeley (agriculture), Olaf van Duin (sea defenses), Pauline Kehoe (transport), Tom Lauga (coastal and river transport), Emmanuel Njomo (water) and Carolyn Winter (social sectors). The report was produced under the general direction of Jose Sokol. Laura Bishop provided invaluable secretarial assistance. WTA UZ Zc OF O I. INTRODUCTION . .......................................................... I PART I: MACROECONOMIC FRAMEWORK II. MACROECONOMIC POLICIES . 3 A. Background . ............... 3 B. The Zconomic Recovery Program . ..... ..... 3 C. Economic Porformance under the ERP, 1989-92 . ..... 4 D. The Macroeconomic Policy Agenda ... .. ... ...... 11 III. PUBLIC SZCTOR FINANCES . ... .. 13 A overview ............ .13 B. Central Government Finances .... .. ..... ...... 13 C. Non-Financial Public Enterprises and Privatization . 21 D. Recommendations ....... ... .. .. i. .23 IV. THE 1993-96PUBLIC SECTOR INVESTMENTP.OG.A.. 26 A. Introduction.. 26 B. Size and Composition of the PIP ...... 2.6 C. PSIP Planning, Implmentation and Monitoring . 31 D. PSIP Financing Requirements . 35 E. Recommendations.. .. 35 V. ZCONOMIC OUTLOOK, FINANCING REOUIREMENTS AND DB ...LIZF 37 A. Introduction ....... .. .. .... .. 37 B. Economic Outlook .. ...... 37 C. External Financing Requirementt..... 40 D. Debt Relief ....... .. .. .. .. ... .... 42 PART II: PUBLIC SECTOR MAKAGEMET AND ADMINIS3TAXIOU VI. PUBLIC SECTOR ADMINISTRATION. .. .... 44 A. Introduction.. 44 B. Institutional Setting . 46 C. Decentralization and the Regional Administrations . 51 D. Management of the Public Servic- . .54 Z. Public Service Employment 56 F. Recommendations.. 61 VII. RESOURCE MOBILIZATION: INSTITUTIONAL ASPECTS S. 63 A. Introduction. .. 63 B. Tax Structure. 64 C. Inland Revenue Administration . 70 D. Customs Administration. 75 E. Recommendations ....................... 82 VIII. RESOURCE ALLOCATION: INSTITUTIONAL ASPECTS 84 A. Introduction .... 84 B. The Budget Process ... 84 C. Expenditure Management and Control: The Regulatory Framework ... 86 D. Deficiencies of the Existing Budget and Expenditure Control Processes .90 E. Recommendations ... 93 PART III: SECTOR STRATEGIES AND EXPENDITURZS IX. AGRICULTURE . ..... ..... 96 A. Introduction. ............. 96 B. Sector Overview. ............. 97 C. Institutional and Regulatory Framework ........... 102 D. Sector Finances.. .............. 105 E. Main Sectoral Issues.. .............. 114 F. Proposed Strategy ................ 121 G. Action Plan. ............. 124 H. Proposed Investment Program ................ 127 X. SEA AND RIVER DEFENSES ... 129 A. Introduction ... 129 B. Sector Overview ... 129 C. Institutional and Regulatory Framework ........... 132 D. Sector Finances ... 135 E. Main Sectoral Isues ... 139 F. Proposed Strategy ... 141 G. Action Plan ... 142 H. Proposed Investment Program ... 144 XI. TRANSPORTATION ... ... 146 A. Introduction ... 146 B. Sector Overview ... 147 C. Institutional and Regulatory Framework ........... 159 D. Sector Finances ... 161 E. Main Sectoral Issues ... 167 F. Proposed Strategy ... 176 G. Action Plan ... 184 H. Proposed Investment Program ... 185 XII. WATER SUPPLY AND SANITATION .. 187 A. Introduction ... 187 B. Sector Overview ... 187 C. Institutional and Regulatory Framework ........... 189 D. Sector Finances ... 192 E. Main Sectoral Issues ... 201 F. Proposed Strategy ... 204 G. Action Plan ... 205 H. Proposed Investment Program ................. 206 XIII. THE SOCIALSECTORS 207 A. Introduction . ... 207 B. Trends in Social Sector Spending .............. 208 C. Poverty Reduction Efforts ... .. 212 D. The Zducation Sector ... ..... 214 B. The Health Sector ... ... 230 ANNEX A: SEAAND RIVER DEFENSES: TECHNICAL NOTES .251 1. Breaches and Overtopping .252 2. Project Execution Unit .257 ANNEX B: THE 1993-96 PUBLIC SECTOR INVESTMENT PRO.RAM 265 STATISTICAL APPENDIX .271 1. Historical Tables .272 2. Projection Tabls .301 MAPS (IBRD 11683R1, 24650 & 24651) I. INTRODUCTION 1.1 Guyana has abundant natural resources. Yet its per capita gross national product (GNP), US$290 in 1991, is the lowest in the western hemisphere. This is in large part a direct consequence of the increasingly dominant role that the state played in the economy since independence. All major economic activities were subject to state intervention, either directly through state ownership, or indirectly through price, credit and foreign exchange controls. Private initiative, including that in the social sectors, was discouraged. These policies resulted in a rapid decline in output in the 1980s, the exodus of many of the better-educated and skilled workers, and a severe deterioration of the economic and social infrastructure and the provision of public services. 1.2 In light of this experience, the previous Government embarked on a medium-term Economic Recovery Program (ERP) in mid-1988, comprised of a set of far-reaching adjustment measures and structural reforms to transform Guyana's state-dominated economy to a market-oriented one. Fiscal performance improved considerably through expenditure restraint and tax reforms; the exchange rate and trade regimes were liberalized; and the incentive framework for the private sector was improved substantially.. 1.3 The current Government has set out its policy agenda in the 1992- 94 Policy Framework Paper (PFP). The paper expresses the Government's strong commitment to the fundamental principles of the ERP, including the pursuit of a sound macroeconomic framework and of market-oriented sectoral policies. At the same time, it attaches highest priority to human resource development and poverty reduction efforts. 1.4 Despite of the progress achieved
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