Govt signs loan agreements for 2 projects with World Bank
Government on Thursday signed loan agreements for two projects, one in education (US.3 million) and one in the financial sector (US million), funded by credits from the International Development Association (IDA) through the World Bank.
Director of Projects at the Finance Ministry, Tarchand Balgobin, said that both projects will contribute to laying the foundation for the Guyanese economy to address opportunities and challenges in relation to the high expectations arising from the upcoming investments in the nascent oil and gas sector. He noted that a high quality education and a strengthened financial sector infrastructure will be critical.
Balgobin explained that the Guyana Education Sector Improvement Project, involving more than 150,000 students and teachers, will improve Mathematics learning and teaching, and benefit from an improved medical faculty as a result of a US$13.3 million credit from World Bank. According to the Ministry official, Guyana has achieved near-universal primary education enrollment between 2014 and 2017, and secondary education is expanding rapidly.
“Education continues to be a priority for the Government. However, low quality of teaching and learning at all levels and inequalities in learning outcomes present significant challenges. Only 14 percent of grade 2 students achieved ‘standard’ scores in literacy and numeracy in 2016,” Balgobin explained.
Among concrete results to be achieved by the project are: a new curriculum framework; teaching guides and course outlines for nursery, primary, and lower secondary levels; 6,500 teachers trained in the new curriculum; a new building and facilities for the University of Guyana’s Faculty of Health Sciences; and improved standards for the University of Guyana’s medical programme, in line with the Caribbean Accreditation Authority in Medicine and other Health Professions.
Balgobin said the project builds on a long engagement in education in Guyana, including two previous and three ongoing projects amounting to about US$62 million. It is financed by IDA, the World Bank Group’s concessional financing window.
“It also builds on UNICEF-Bank collaboration to improve nursery education, and will help Guyana meet health education standards of the Pan-American Health Organization (PAHO)… The credit has a final maturity of 25 years, including a grace period of 5 years,” he added.
Meanwhile, the Ministry official said the next loan is for the Guyana National Payment System Project, which deals with the development of the national payments system which supports Guyana’s economic growth and diversification.
“The objective of the project is to improve Guyana’s national payments system (NPS) by enhancing safety and efficiency of payments. The Government of Guyana could save up to $266 million (0.04 % of GDP) annually by switching from paper-based payment mechanisms to electronic payments,” he explained.
The banking system, according to Balgobin, will have the capability of settling transactions across banks in real time, benefiting a wide range of consumers, including individuals and small businesses, commercial banks, money transfer agencies and the business community.
Development of the NPS supports economic growth through a financial sector that is stable and enables efficient financial intermediation. Payment and securities settlement systems have a strong bearing on financial stability. A sound payment system can mitigate financial crises by reducing operational credit, legal liquidity investment, general business and custody risks in a system. Improvements in payments infrastructure are critical for efficient provision of financial services.
The Ministry has emphasized that a safer and more efficient domestic financial system will support economic diversification in Guyana, and a well-functioning domestic financial sector is essential for diversification.
Guyana is a resource-rich economy, mainly dominated by large extractive sectors that are funded from abroad. This includes forecasted large revenues from the oil industry. The national payment system is one of the principal components of a country’s financial system, and is therefore crucial to a country’s economic development.
For example, improvements in Guyana’s NPS would raise economic efficiency through fiscal gains for the Government, by reducing usage of paper-based payment instruments and increasing electronic payments.
Consumers benefit from more efficient financial intermediation by enhancing the quality and improving the cost-efficiency of all types of payments; wider availability and usage of payments instruments for consumers, such as e-money and debit cards. Development of these instruments has great potential to reach the financially excluded.