Finance Minister Winston Jordan and World Bank Country Director for the Caribbean, Tahseen Khan
…to provide technical assistance to oil & gas sector
The Government of Guyana has inked another loan agreement, this time with the World Bank, which will be providing funds and support for Guyana to build its framework for overseeing the oil and gas sector.
According to a statement from the Finance Ministry, the loan agreement was signed by Finance Minister Winston Jordan on Thursday with World Bank Country Director for the Caribbean, Tahseen Khan.
“Minister Jordan noted the timely nature of the loan agreement as it sought to provide much-needed technical assistance to the emerging oil and gas sector,” the statement observed, adding that the money would build human resource capacity and strengthen institutional frameworks in the oil and gas sector.
“Ms Khan said that the loan agreement will aid in building the capacity of key institutions, such as the Department of Energy, the Environmental Protection Agency and the Ministry of Finance, for prudent management of the oil revenues.”
Jordan was accompanied by Governor of the Bank of Guyana, Dr Gobind Ganga, Guyana’s Ambassador to USA Dr Riyad Insanally and Jason Fields from the Embassy of Guyana.
Last year, a total of $333.2 million in capital funds was allocated by the Government for petroleum and energy management. The 2019 Budget estimates also detailed that current expenditure.
This amount, among other things, which will go towards employment and other recurrent costs was $90.9 million. Specifically, wages and salaries were expected to cost the Treasury $20.5 million.
With little over a year to go before first oil, Government has been criticised for the slow pace of preparation. For instance, critical measures like a national oil spill strategy; a constitutional agency to regulate the sector; a national oil company, a local content policy and a Sovereign Wealth Fund are either still in the planning stages or have only been discussed.
This does not include several worrying fiscal indicators which have caused audit firm Ram and McRae to project reduced earnings from first oil for Guyana if these trends are allowed to continue.
One such trend is the Government’s fiscal deficit, a case where monies are sourced more from loans than from revenue. According to the firm in its Budget Focus, Guyana risks less money going towards the Natural Resources Fund and more going towards making up for the deficit.
When it comes to debt, it was only in February that Government announced it had signed two new loans with the Inter-American Development Bank (IDB), totalling US$31 million; monies that Government said will go towards areas of trade and energy.
This was revealed by Minister of State Joseph Harmon during a press conference. Harmon revealed that Finance Minister Jordan signed the agreements on February 11.
Part of the monies includes financing for a single window trade system which is meant to simplify transactions. Monies will also go towards improving service from the Guyana Power and Light (GPL) and other energy-related expenses.
As of 2017, Guyana had a total public debt of $344.9 billion. According to the 2017 edition of the Public Debt Annual Report, this was an increase of 4.4 per cent in one year.
Even though Guyana’s indebtedness to external creditors has increased, so has debt servicing (repayments). According to the Bank of Guyana Quarterly Report and Statistical Bulletin released last year, repayment of external debt grew by some US$24.3 million to US$85.3 million. This is a rate of 59.1 per cent when compared to the corresponding period of 2017.
