Macroeconomic stability is of major concern to many developing countries. The adverse effects of economic shocks have threatened the markets of many developing countries. World growth is declining, posing another serious threat to the macroeconomic stability of these poor countries.

The Government of Guyana remains committed to sustaining macroeconomic stability. The Bank of Guyana and the Ministry of Finance continue to work in collaboration to establish a macroeconomic environment which endorses national competitiveness. The Government of Guyana continues to facilitate a sound macroeconomic environment by formulating a budget to ensure that a modest growth rate is achieved, especially in the present state of global economic turmoil. Also, the Government of Guyana continues to ensure that fiscal deficit is consistent with medium-term sustainability.

The International Monetary Fund (IMF) recently commended the Government of Guyana for their ability to maintain a sound macroeconomic environment, and its advancement to achieve fiscal discipline. The guidelines and policies of the IMF are not easy to follow, since poor countries are compelled to lower inflation, limit fiscal deficits and government borrowing, and increase foreign currency reserves.

The IMF report from the concluded Article IV consultation with Guyana lauds Government for the effective implementation of some policy initiatives and its ability to maintain macroeconomic stability, achieve real growth rate of 3.1 percent in 2008, following rates of 5.1 and 5.4 percent in 2006 and 2007, respectively, and stabilizing inflation rate; the inflation rate for 2008 was 6.40% which was lower than the 14.05% rate in 2007amid the global financial crisis.

The IMF Public Information Notice (PIN) No. 09/61 states that, “the fiscal deficit widened to 7.9 percent of GDP (6 percent target) due to measures adopted in early 2008 to reduce the impact of high fuel prices, most of which have since been eliminated. So far, the financial system has been relatively unaffected by the global turmoil.”

As the World Bank (WB) researchers conclude, “the best way forward for developing countries is to develop comprehensive strategies to fight macroeconomic volatility on several fronts, including improving their ability to absorb external shocks.” Luis Serven, Research Manager in the Banks Development Research Group also stated, “action is warranted because macroeconomic volatility is a fundamental development concern, and that, “it has much higher welfare costs for poor countries than for rich countries.”

For the past few years, Government has managed to achieve substantial debt relief under the Enhanced Heavily Indebted Poor Countries (E-HIPC) initiative, G8 Debt Relief initiative, the IMF, and the International Development Association (IDA). Because of debt relief, more funds are available to for servicing the social service sectors, to further facilitate growth and development.