Against a background of rising concerns expressed internationally and domestically about poor, developing countries in general, and Guyana in particular, taking on debt burdens they might be unable to service, the Government of Guyana entered into two agreements with China within the ambit of the latter’s “Belt and Road Initiative”. The Government incredibly increased our debt burden without spelling out the terms of two loans that were also signed off at the same time. The Department of Public Information (DPI) merely informed the Guyanese public of the names of the two agreements: “the “Framework Agreement Provision of a Concessional Loan between the Government of the Co-operative Republic of Guyana and the Government of the People’s Republic of China”, and “The Agreement on Economic and Technical Cooperation between the Government of the Co-operative Republic of Guyana and Government of the People’s Republic of China”.
On the specific project for which the loans were accepted, the DPI announced baldly: “Minister Greenidge noted the Framework Agreement will see the implementation of the Guyana National Broadband Project. This project will see the upgrading of the network to enable an equitable delivery of service in the education, health, security, business and other sectors.” And that, “The economic agreement will fund several projects, including the Public Service College.”
Not even the quanta of the loans were mentioned by the DPI, much less the terms of repayment. This was quite strange, since the first metric was revealed to the press by the Chairman of the National Data Management Authority (NDMA), Floyd Levi, in regard to the funding secured for the ICT sector. The “Guyana National Broadband Project”, he noted, “costs some US$37.6 million.” The economic and technical cooperation agreement amounted to US$14 million, and is to fund several projects, including a “Public Service College”.
Prior to signing the nebulous loan agreements, the DPI announced that Foreign Affairs Ministers Greenidge and Wang Yi (China), “held bilateral talks to advance the Belt and Road Initiative (B&RI), a Memorandum of Understanding (MoU) on cooperation which was signed two months ago.” Minister Greenidge, as is his wont of recent, waxed enthusiastically about the B&RI: “We are committed to utilising this new framework of the Belt and Road Initiative, as well as existing bilateral mechanisms, to channel support to critical sectors; namely infrastructure, agriculture, renewable energy, health and ICT inter alia, in order to bring direct benefits to our citizens.”
It should be noted, however, that in its initial foray into the B&RI, the PNC-led Government is blithely ignoring the advice of the IMF: “Low-income countries need to proceed prudently on taking up new debt, focusing more on attracting foreign direct investment and boosting tax revenues at home. Their investment plans should focus on projects with credibly high rates of return, and their debt reporting needs to improve, to allow them accurately to track the evolution of their debt situations.”
As the IMF advises, the FDI “should focus on projects with credibly high rates of return”, as, for instance, China’s investments to the developed economies, which are mostly to acquire firms with significant technologies, such as in electronics, automotive, and robotics. In Guyana, one would suppose that rather than investing in a new Public Service College when the Bertrand Collins College has not even settled in, the Government could have attempted to diversify at least one of the shuttered sugar estates into food cash crops, to create employment for Guyanese as well as generate foreign exchange by exporting to our newly friendly Caribbean neighbours.
On the IMF caution of “debt reporting”, as noted, the Government has not even reported the interest rate on the loan. Not an auspicious start to borrowing from China in its B&RI. Recently, the Center for Global Development analysed debt to China incurred by nations participating in the current B&RI. They predicted that eight nations would find themselves vulnerable to above-average debt: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan.
We hope Guyana does not join the list.
