At a recent meeting at the Caribbean Development Bank (CDB) headquarters in Barbados with its President, Guyana’s Finance Minister and Chairman of CDB Board of Governors, Dr Ashni Singh praised the CDB for its proven service and reliability as a partner for Guyana’s development as is evidenced by the country’s growth and development because of the grants and loans it made over the years. He further lauded the transformational effects of CDB projects for the systematic reduction of poverty across Guyana, particularly in its rural and remote areas.
The CDB has made many loans to Guyana over the years, but most of them have failed to achieve their development objectives as the projects were poorly executed resulting in completion delays and cost overruns as was evidenced by the Good Hope Ferry Stelling and the East Bank and East Coast Highway upgrades and others. Therefore, Minister Singh should be more specific and state which CDB loans were success stories with respect to agricultural development and have combated the ill effects of climate change in Guyana. Contrary to claims, the CDB has made no significant loan for renewable energy nor has it addressed climate change concerns to safeguard sustainable development in Guyana.
The CDB is facing difficult times as its credit rating has recently been downgraded, which means that its borrowing costs for on-lending to its member countries will be more expensive. Some of its major sources of funding – the World Bank, CIDA and USAID – are ‘drying up,’ and because of the high indebtedness of many of its members they do not have the money to increase their share capital of the Bank to provide needed funding for worthwhile projects, while investors are wary of providing funding for the Bank lest debt servicing becomes a major problem for them.
The CDB has been lax with respect to enforcing the terms and conditions of its loans, particularly as they relate to project execution and the selection of contractors and consultants, many of whom have failed to perform on CDB financed projects. Its staff has been tardy in monitoring the disbursement of funds to ensure they are made for work actually done rather than approve the borrowers’ questionable claims for reimbursements without proper certification, which often results in overpayments.
Completion deadlines are never critically reviewed. Because of this laxity many of the CDB funded projects in Guyana have a history of being poorly executed with large time and cost overruns.
I have worked at the CDB as a Project Officer and served under two distinguished Presidents, executing diverse projects in many of its member countries. During my period of employment projects were analyzed for their economic, financial and engineering viability. Contractors and consultants were reviewed for their competence, track record and financial capability. Performance bonds had to be part of all contracts with penalties applied for failure to comply where applicable.
During project execution project and other officers of the Bank reviewed the work and time progress of projects before authorizing disbursements for work done. If there were delays and cost overruns, borrowers had to submit proposals acceptable to the CDB to get the project back on track. Therefore most of the CDB projects at that time were successfully executed and completed and over the years they have contributed in no small way to the economic development of its members. The evidence is there to show.
The CDB is an important institution and plays a critical role in the social and economic development of its members, but it cannot make loans for projects and turn its back and hope that the terms and conditions of its loans will be executed as per their agreements with the respective governments. After all member governments know, they own CDB and as such they feel they could bend the lending rules to fit their own agenda, with impunity. Therefore, unless the CDB monitors its loans with greater scrutiny for compliance, it will be difficult for the expected economic development from its loans to be achieved, leaving its poor member countries without any noticeable benefit from the loans made except burdening them with a greater debt to service.