Abstract
In 1997, Guyana started to receive debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. In 2001, to qualify for the Enhanced HIPC Initiative, Guyana developed a Poverty Reduction Strategy (PRS) that committed the country to a reorientation of its economic and social policies towards the objectives of the PRS and the achievement of the Millennium Development Goals. Against this background, this article examines whether the HIPC initiatives and the accompanying PRS have translated into increases in the level and quality of social expenditure. We find that there has been a substantial increase in social spending since 1997. In terms of quality of expenditure, our analysis suggests that without further strengthening of institutions responsible for managing and monitoring public expenditure, debt relief is unlikely to provide more than temporary succour.
En 1997, la Guyane est devenue bénéficiaire d′un allègement de ses dettes dans le cadre de l′initiative PPTE. En 2001, afin de pouvoir bénéficier de l′initiative PPTE renforcée, la Guyane élabora une Stratégie de Réduction de la Pauvreté (SRP) engageant le pays à mettre en œuvre une réorientation de ses politiques économiques et sociales au service des Objectifs du Millénaire pour le développement et de la réduction de la pauvreté. Le but de cet article est de déterminer si les initiatives PPTE et la SRP qui les a accompagnées, se sont traduites par des augmentations quantitative et qualitative des dépenses sociales. Nous constatons que les dépenses sociales ont augmenté substantiellement depuis 1997. Par contre, notre analyse suggère qu’en ce qui concerne la qualité des dépenses, si les institutions chargées de gérer et de contrôler les dépenses publiques ne sont pas renforcées davantage, l′allégement de la dette risque de ne procurer qu′un soulagement temporaire.
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Notes
See World Bank (2002) and Bank of Guyana (2009a, 2009b) for details.
See www.worldbank.org/hipc/ for details on HIPC debt relief.
In 2000, Guyana was the fourth-poorest country in the Western Hemisphere (World Bank, 2002).
The authors use a composite measure of institutional quality ranging from −10 to +10, which includes four dimensions: (1) competitiveness of executive recruitment, (2) openness of executive recruitment, (3) constraints on the chief executive and (4) competitiveness of political participation. A lower (higher) score indicates more autocracy (democracy).
Guyana is divided into 10 regions and the eight consultations took place in Regions 1, 2, 4, 6, 7, 8, 9 and 10. Residents of Regions 3 and 5 participated in the consultations held in Regions 2 and 6, respectively.
See www.undp.org.gy.
PCPMU (2005) defines social sector spending as expenditure on education, health and poverty programmes, which is consistent with the definition used for monitoring HIPC.
SIMAP targets specific communities identified on the basis of rapid poverty assessments. The BNTF follows a similar approach and targets poor communities. The student loan programme targets students who would like to pursue tertiary education.
Social expenditure remained stable as a percentage of GDP between 2001 and 2006. Without resources from the E-HIPC initiative, it might have returned to 1997 levels.
The increased share of capital expenditure in total government expenditure might be related to reduced current expenditure in the form of interest payments.
Series of current social spending in absolute numbers are not available.
Total public sector investment is defined as Central Government investment plus investment in the Guyana Sugar Corporation.
Other Ministries are unlikely to have a high share of priority poverty spending.
Details are available in De Jong and Bedi (2007).
The critique of SIMAP is similar to analyses of the use of social funds in other countries (Dijkstra, 2004).
For example, in a school located along the Pomeroon river (region 2), rather than using a contractor to execute works, the community asked SIMAP for material and carried out construction on its own. Their decision to ‘take matters into their own hands’ was motivated by their poor experiences when a contractor had cut corners and built structures that ‘in no time were rotten’.
Between 1997 and 2006, Guyana's index of freedom from corruption rose from 25 to 30, indicating a mild reduction.
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Acknowledgements
We would like to thank Geske Dijkstra, Kristin Komives and two anonymous referees for their helpful comments.
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Bedi, A., Jong, N. Guyana's Poverty Reduction Strategy and Social Expenditure. Eur J Dev Res 23, 229–248 (2011). https://doi.org/10.1057/ejdr.2010.31
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DOI: https://doi.org/10.1057/ejdr.2010.31