Mr Wolfensohn made Herculean efforts toward debt relief for heavily-indebted countries like Guyana

Mr Wolfensohn made Herculean efforts toward debt relief for heavily-indebted countries like Guyana

Dear Editor,

I’m writing to pay homage to Mr James Wolfensohn, former President of the World Bank who passed away in late November 2020.

While we in Guyana mourn the loss of many of our countrymen and women who have passed away due to the COVID-19 pandemic and pray that their souls Rest In Peace, those of us who are still around and are knowledgeable of the contribution made by men like Mr. Wolfensohn to Guyana’s fight for debt relief and for poverty alleviation, must pay homage to him and extol his Herculean efforts toward debt relief for heavily-indebted countries like Guyana.

Guyana’s fight for debt relief at that time was spearheaded by Dr. Cheddi Jagan before, and after assuming the Presidency of the Republic.

Moreover, the fight for debt relief dominated President Jagan’s cabinet meetings and his Foreign Affairs agenda.

As the then Minister of Foreign Affairs at the time, I was fortunate to accompany the President at many meetings.

In the course of so doing, I became acquainted with Mr. Wolfensohn, President of the World Bank and Mr. Michel Camdessus Managing Director at the IMF both of whom addressed CARICOM Heads of Government on different occasions.

President Jagan met with Mr. Camdessus at the Fifth Inter-sessional Meeting of Heads of Government in March 1994, in Saint Vincent and the Grenadines.

Two years later, between February and March 1996, President Jagan was host to Mr Wolfensohn who visited Guyana to participate at the Seventh Inter-sessional meeting of the Conference of Caricom Heads of Government which took place in Georgetown.

On the eve of Wolfensohn’s visit to Guyana, President Jagan wrote a letter to him on February 12, 1996 congratulating him on his appointment as President of the World Bank.

In his letter, President Jagan stated; ‘We in Guyana are grateful for the assistance we have been receiving from the World Bank and particularly from the International Development Association (IDA). However, our huge debt overhang inhibits our capacity to grow faster than we are doing , and to alleviate, if not eradicate poverty.’

President Jagan went on to point out; ‘Our foreign debt payments of about US$112 million in 1995 was more than all capital inflows. We are caught in a vicious circle.’

The President shared with Wolfensohn that, ‘The World Bank has a crucial role to play, under your enlightened leadership, in eradicating poverty, safeguarding the environment and attaining human development.

I look forward to your meeting with Caricom Heads of Government and your solidarity and support for the world’s poor, marginalized, oppressed and suppressed.’

During Wolfensohn’s meeting with Caricom Heads in Georgetown, his attention was drawn to; ‘The continuing serious debt servicing problem faced by some member states and the increasing proportion of debt owed to the Multilateral Financial Institutions (MFI’s), which do not reschedule payments’. Caricom Heads called on the World Bank President ensure that the Bank ‘treat with highly indebted countries in a manner designed to assist in resolving the problem of diversification.’

It was Wolfensohn at the World Bank together with Camdessus of the IMF who, four years after the PPP assumed office ‘launched the Heavily Indebted Poor Countries Initiative (HIPC). That initiative provided at that time, more than US $53 billion in debt relief to the world ‘s poorest countries .’

Guyana was among a group of 39 developing countries with high levels of poverty and debt overhang that were classified as a HIPC allowing them to benefit from special assistance from the IMF and World Bank.

As a result of its classification as a HIPC, Guyana became eligible for debt relief in the form of low interest loans, cancellation or reduction of multilateral debt which, at that time, was hard to come by.  Later in 2004, according to the ‘IMF’s Country Report No. 04/123 Enhanced Initiative for HIPC Completion Point Document of May 5, 2004’:

‘The staff of the IMF and IDA consider that Guyana’s performance with respect to the conditions for reaching the completion point under the Enhanced Highly Indebted Poor Country has been satisfactory.’

Twenty-four years have passed since Wolfensohn’s visit to Guyana to meet with President Jagan and his Caricom colleagues, yet poverty persists in many Caricom member states and the foreign debt still hangs like a sword of Damocles over the countries of the region.z

But Wolfensohn’s yeoman efforts were not in vain. Debt relief by the MFI’s through the HIPC initiative served its purpose by easing the debt burden on many countries including Guyana allowing for the utilization of resources that once went to service the foreign debt to be used for public sector investment projects particularly, in the social sector thus allowing for a more robust growth rate.

It is against this backdrop that Guyanese must pay homage to James Wolfensohn, a champion of the poor, marginalized and dispossessed in many developing countries of the world.

Yours faithfully,

Clement J. Rohee

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