OPEC Fund a “kick start” to economic development – PSC
The Private Sector Commission (PSC) has given its “thumbs up” to a multibillion-dollar fund headed its way and said that the spill-off would do well for the economy.
PSC Chairman Eddie Boyer said the Commission was yet to meet with Finance Minister Winston Jordan to discuss an agreement he signed in Austria earlier this month, but has already done a review of the fund.
The Finance Ministry said earlier this month that the Private Sector was set to benefit from new avenues for finance and investments with the signing of the Agreement for Encouragement and Protection of Investment with the OPEC Fund for International Development (OFID).
The Finance Minister signed the Agreement in Vienna, Austria with OFID Director General Suleiman J Al-Herbish. It is the first such agreement with a multilateral partner and sets in motion a framework for the start of Private Sector operations in Guyana.
According to the PSC Chairman, based on the Commission’s review, the fund could see money being pumped into the operation of small and medium-sized businesses, including the Institute of Private Enterprise Development (IPED). According to Boyer, the fund will help fast-track the economy.
OFID’s Private Sector facility supports the Private Sector in developing countries through loans to micro, small and medium enterprises, as well as directly to specific projects. As a pre-condition to such Private Sector investments, OFID requires the signature of a framework agreement with the country concerned for the encouragement and protection of investment. The agreement accords OFID the same privileges as those normally granted to international development institutions.
The Finance Ministry had said that the signing of the Agreement came at a time when a number of other initiatives were being implemented by Government to help drive Private Sector growth, including the design of a fiscal regime and a fiscal sustainability framework to address the management of natural resources wealth, development of a local content policy and the development of a time-lined work-plan on what the Private Sector needs to do to prepare for oil and thereafter. Additionally, building on the wide-ranging concessions granted by the previous Government, the coalition has introduced several legislative and operational changes in support of the manufacturing industry, which include the importation of raw materials free of excise tax, waivers on duty and taxes for items that are not listed on the approved list of raw materials once applications are made to the Council for Trade and Economic Development (COTED), initiatives by the Guyana Revenue Authority (GRA) to reduce processing time, the introduction of the ‘Trusted Trader Status’ for compliant importers, including manufacturers, the implementation of one-year tax exemption letters for manufacturers, and the reduction of the corporate tax rate paid by the manufacturing sector from 30 per cent to 27.5 per cent.
More recently, the Government announced the first Round Table Meeting with the Guyana Manufacturing and Services Association (GMSA) scheduled for July 28. This Round Table Meeting aims for a more structured dialogue and effective engagement with key players in the sector.
OFID is the inter-governmental development finance institution established in 1976 by the Member States of the Organisation of the Petroleum Exporting Countries (OPEC) and is based on “the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment”.
OFID has 13 member countries: Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Nigeria, Libya, Kuwait, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
Resources for the Fund come from voluntary contributions made by members and its various operations.
Between 1976 to present, OFID has committed more than US$55 million to Guyana through its Public Sector operations. Much of this amount was provided as debt relief – some within the framework of the Enhanced Heavily Indebted Poor Countries Initiative – while more than US$29 million was earmarked for Guyana’s energy, agriculture and financial sectors.