Wednesday, March 15, 2006
Misperceptions
I WANT to correct two misperceptions in the letter about the IMF’s approach to good governance published recently in the Stabroek News (`Glad to see that the European Union has terminated its relationship with GuyFlag’, March 1).
First, there is no inconsistency between the IMF and the World Bank on the criteria that have been applied to Guyana for its qualification for debt relief under the Multilateral Debt Relief Initiative. Briefly, debt relief was granted to Guyana taking into account its performance in the areas of macroeconomic stability, progress toward implementation of its poverty reduction strategy, and public expenditure management. These were the criteria that the G8 countries asked the World Bank and the IMF to apply.
There was complete agreement between the IMF and the World Bank that Guyana qualified; this decision had the full support of the international community as expressed in the decision of the Boards of Governors of both institutions approving full debt relief.
Second, it is incorrect that the IMF is not interested in governance. We, in the IMF, are deeply committed to assisting countries strengthen governance. The IMF was asked in 1996 by its Board of Governors to "promote good governance in all its aspects, including by ensuring the rule of law, improving the efficiency and accountability of the public sector, and tackling corruption, as essential elements of a framework within which economies can prosper."
We value good governance because weak governance (and corruption) are detrimental to economic activity and welfare, which are the core of the IMF’s mandate.
The IMF’s commitment to good governance is seen in its policy advice, financial support, and technical assistance. The commitment to improving governance or reducing corruption in IMF-supported programmes is clearly demonstrated by the fact that over two-thirds of the letters of intent for IMF programmes published since 2002 have contained explicit goals related to these categories. Much of the technical assistance provided by the IMF also has a direct bearing on governance-related issues such as tax and customs administration.
In addition, the IMF contributes to enhancing good governance through its efforts to promote standards and codes — fiscal, monetary, data — that help to strengthen transparency, the debt relief initiative (HIPC) and, more recent, efforts to combat money laundering and the financing of terrorism.
Guyana’s PRGF-supported programme provides a useful example of this shared commitment. Under the programme, which began in 2002, important steps have been taken to contain the scope for discretion in providing tax exemptions, to boost the independence of monetary policy, and to enhance the transparency of policies including with regard to the government’s Poverty Reduction Strategy Paper.
The IMF will remain firmly committed to promoting and assisting the strengthening of governance in Guyana and in all of its member countries.
SAQIB RIZAVI
RESIDENT REPRESENTATIVE
INTERNATIONAL MONETARY FUND, GUYANA
Copyright GNNLMarch 2006
