A very pleased Finance Minister, Winston Jordon on Wednesday officially signed on to yet another loan; this time at the tune of US$20 million, from the Islamic Development Bank (IsDB) to be used for upgrading the services to be provided to the Guyana Power Light (GPL).
The loan is expected to facilitate the rehabilitation of 153km of GPL’s medium voltage and low voltage network and 6941 smart meters, including the associated transformers, service lines and distribution boxes along with the rehabilitation and extension of two 69/13.8KV substations at Kingston and Vreed-en-Hoop, including equipment switchgear, power transformers, rerouting of circuits distribution feeders
Finance Minister Winston Jordan and IsDB Vice President of Sector Operations, Mansur Muhtar, share a handshake after the signing
and cable connections.
In addition to this, the sum is expected to cover consultancy services for the preparation of designs and specifications for the sub-stations and the site supervision for the works related to the Kingston and Vreed-en-Hoop substations, as well as support the existing project management unit by financing additional specialised engineers and technicians to reinforce the existing team.
At Wednesday’s ceremony in Kuwait, the Minister informed that the upgrade works to the company is a mere component of GPL’s development and expansion programme scheduled for 2014 to 2021. According to him, “It incorporates necessary reforms and upgrades to reduce losses, and improve the quality and reliability of electricity supply and will, at the same time help to transform Guyana’s infrastructural landscape, boost our manufacturing sector and improve the quality of life of our citizens.”
While boasting of future oil revenue, Jordan pointed out that the International Monetary Fund (IMF) deemed the country’s economic prospects as “very favourable” and predicts that the GDP will develop by 29.1 per cent in 2020 – which is the first year of production. “At the same time, the IMF has commended us on our “prudence and restraint towards borrowing in anticipation of future oil revenues. As such, our public debt stood at a highly sustainable 52.2 per cent of GDP at the end-2017,” he noted.
Jordan hinted readiness for more of such collaborations as he stated “We look forward to working with the IsDB on projects in several sectors, including agriculture”.
Guyana first became a member of the IsDB in 2017. Wednesday happened to be the first time Guyana signed the loan agreement with the bank in Saudi Arabia.
Guyana’s indebtedness
The Finance Ministry’s Public Debt Annual Report for 2016 had showed that since 2015, there has been a 4.1 per cent rise in Guyana’s indebtedness to international lenders. A breakdown of the figures showed that total external debt amounted to $240 billion, a 72.6 per cent bite out of the total public debt. On the other hand, domestic debt stood at $90.6 billion, or 27.4 per cent of the total.
Last year’s End of Year Outcome report had also revealed that for that year, the stock of public debt and the public debt to Gross Domestic Product (GDP) ratio had increased. According to the report, total public debt was recorded at US$1.6 billion, exceeding the projected amount by US$8.4 million. The public debt to GDP ratio actually increased by 0.9 per cent to be recorded at 46.1 per cent.
Continuation
These outstanding loan amounts have not deterred Government from borrowing; something the parliamentary Opposition has been critical of. As recent as May of this year, it was announced that Government would be securing a US$35 million “soft loan” from a US$90 million resource offered by the World Bank.
The money, according to Minister Winston Jordan, in an interview at the time, would be to support Guyana’s balance of payment, which has recorded a growing deficit. This is illustrated by the increase from US$53.3 million in 2016 to US$69.5 million last year.
Then there is the $30 billion bond secured a few months ago by the National Industrial and Commercial Investments Limited (NICIL) and guaranteed by the Government of Guyana at a rate of 4.75 per cent. But even the reasons for the bond are clouded in confusion.
While NICIL has stated that the money will go towards the Guyana Sugar Corporation’s operating and capital expenses, Opposition Leader Bharrat Jagdeo has questioned details in a memorandum on the bond which he noted indicates the money will be for long-term projects.
