Currently, there is much public debate in the United States and in developing countries, including Guyana, on the proposed reduction of U.S. foreign aid and the closing of USAID overseas missions. Guyana has been the recipient of US foreign aid and continues to be appreciative of such assistance. However, the proposed reduction of financial and technical assistance could have tremendous negative implications for Guyana.

Evidently, it is not too soon for Guyana to initiate strenuous diplomatic efforts in Washington to ensure that US foreign aid is not eliminated or further diminished. As part of the decision-making body, it is important for Members of Congress to understand Guyana's lobby for the continuance of foreign aid within its particular political and economic context.

In October 1992, Guyana held its first free and fair elections after a long period of 28 years of non-democratic rule, and the country now has a democratically-elected government. The Administration of President Bush played a signal role in this development by prodding the pre-1992 Government of Guyana to institute electoral reforms and hold free elections.

While the new Guyana Government perceives the foundation of our economic take-off as democracy, one cannot deny that economic development is essential for maintaining a stable social climate and thus for consolidating democracy. Bearing in mind the United States' interest in Guyana's return to democracy, one would hope that the US Administration would have a parallel interest in Guyana's economic development.

Guyana, as is documented, is one of the poorest countries in the Western Hemisphere and needs a substantially greater infusion of external assistance to support national efforts at economic development. Furthermore, Guyana's fragile economic situation warrants economic aid since structural and financial constraints are the major obstacles to socio-economic progress.

Debt servicing continues to impede national efforts at sustainable growth and development. With two-thirds of the government revenues committed to debt servicing, any contribution from its national budget toward maintaining the basic infrastructure, crucial to food and other economic sectors, is severely limited. Consequently, the support of both multilateral and bilateral donors is vital for national development. it is therefore necessary for US aid to be sustained in order to avoid any dislocation of efforts at rectifying our basic infrastructure.

From this perspective, a bilateral program such as the PL-480 program, is critical to Guyana since it contributes approximately G$800 million (US$6 million) in counterpart funds generated in Guyana. These funds are channelled toward the maintenance of infrastructure, sea defense and roads.

In addition, economic cooperation in the form of financial and technical assistance can contribute to the alleviation of severe social problems. This in turn can help to stem the tide of immigrants and escalating social problems associated with immigration which are exported to the United States.

It is within this context that the rationale for Guyana's request for the continuance of foreign aid must be understood. It is notable that the Government of Guyana is cognizant of the fact that aid flows of whatever magnitude cannot substitute for sound macro-economic management and that efforts are being made to cope with the changes in the global international economy together with the market-oriented requirements and structural adjustment. However, in the absence of healthy domestic capital formation, the Government of Guyana recognizes that US aid could stimulate efforts at sustainable development, support the implementation of internal policy reform and stabilize fragile institutions. Foreign aid from the United States is therefore perceived as significant primarily because it could serve to lay the foundation for long-term self-reliant development.

On the other hand, it is difficult to envisage a discontinuation of aid purely on economic grounds, for Guyana has complied with all the set conditions to qualify for such assistance. Generally, the Government of Guyana has indicated its commitment to programs which the US Government considers important. These include environmental protection, removal of trade barriers, privatization of state-owned or controlled corporations and transparency in policy making. In addition, Guyana has signed and observes the obligations of the Optional Protocol for Civil and Political Rights.

Moreover, in both its internal and external policies the Government of Guyana is supportive of an open economy and free market policies. The private sector is recognized as the major partner in the development process. Market inspired incentives, leading to increased agricultural production, are being pursued. Guyana supports free trade, is a member of GATT and has reciprocal investment treaties with the United Kingdom and Germany. Efforts are being made to conclude similar treaties with the United States of America. Therefore, if economic assistance is conditioned by the free market policies of recipient countries, Guyana should qualify.

However, even if the United States were no longer interested in promoting the economic security of poor countries such as Guyana, new reasons for international cooperation have become increasingly pertinent, above all environmental ones. Guyana continues to give priority to matters relating to the sustainable development of the environment and has donated just over 900,000 acres of its rain forest to facilitate studies of Sustainable Forestry Resources. It has recently signed an agreement with the Smithsonian Institution to manage part of these studies. However, external financial and technical assistance is required to buttress the Government efforts.

In this era, in which the elected Heads of State and Governments of the Americas are committed to advancing prosperity, democracy and security within our Hemisphere, the long-term benefits which can accrue from financial assistance and increased cooperation should not be underestimated. These benefits include the consolidation of traditional US markets in the region, the greater integration of capital markets and an accelerated movement toward a free market area. US assistance also sets a favorable environment for US trade and investment in the Caribbean region. As is well known, if the US economy is to continue to grow, new markets have to be developed in the developing world which will form the most important markets in the near future. Further, US aid, trade and investment help developing countries like Guyana to establish fair business codes, viable commercial banks and reasonable tax and tariff standards. As was emphasized at the Summit of the Americas, development within the Hemisphere depends on urgent infrastructural measures and demands the priority allocation of financial resources. This principle should influence the continuance of existing aid to Guyana.

The Government of Guyana is hopeful that the US Government will consider it, in keeping with its obligation to the international community, to continue to demonstrate in practical terms its interest in human and social development and will consider Guyana's case favorably.

The Government of Guyana appeals to all members of Congress to assist in furthering bilateral relations between the United States of America and Guyana. Their efforts in sensitizing others about Guyana's unique case could be vital to the future of our country given the increasing world-wide competition for foreign resources.


13 February 1995

Source: Embassy of Guyana, Washington D.C