Guyana’s Public Financial Management Action Plan (Part II)

In our column of 6 May 2018, we emphasised the importance of procurement planning and highlighted the key factors contributing to leakages in our procurement system. We estimated such leakages to be in the order of 20 percent based on a survey we had carried out early last year. The estimate is consistent with previous assessments that we had carried out. We were at pains to point out that this should not be interpreted as the extent to which corruption exists in our procurement system, though a significant but undetermined portion may be due to corrupt behaviour.

Guyana, however, is not alone as regards procurement problems. The President and CEO of the Institute of Internal Auditors identified nine risk areas in local governance that are susceptible to graft. He considered procurement to be a key area of concern, especially infrastructure projects, and referred to an OECD note which found that for publicly funded construction projects, 10% to 30% of the investment may be lost due to mismanagement and corruption. And in a 2013 McKinsey report, the author expressed the view that due to the lack of sufficient risk management of large infrastructure projects, in excess of US$1.5 trillion may be lost globally over the next five years, not to mention the loss in GDP growth, as well as reputational and societal risks…..