With Guyana staring down the barrel of a deficit in its Balance of Payments, the Government has revealed its intentions to secure a US$35 million “soft loan” out of its US$90 million resource envelop with the World Bank.
Finance Minister Winston Jordan speaking with the media on Wednesday
According to Finance Minister Winston Jordan in an interview with the media on Wednesday, the money will go towards “support purposes” for the balance of payment, which has grown progressively worse over the past few years.
“They’re potentially going to make a loan of US$20 million available to us, of which US$1.7 million we can advance over the next couple of months. And they’ll be looking to capacity building, providing technical and legal assistance in critical areas that we have.”
“The petroleum commission, the department of energy, new laws as it relates petroleum taxation, governing PSAs (Production Sharing Agreements) and giving us bodies to put on the ground,” he said, adding that “on the other hand we’re expected to get, over the next two, three months, a $35 million soft loan for balance of payment support purposes… in the context of the US$90 million.”
Balance of Payments is statistical data on a country’s fiscal transactions, including imports and exports. To therefore record a deficit, Guyana would have had to spend more on imports, among other things, that it derived from exports.
According to the 2017 macro-economic report, Guyana’s overall balance of payment in the 2017 fiscal year showed a deficit of US$69.5 million. This is a hike when compared to US$53.3 million the previous year. And a breakdown of the figures shows stunning disparities.
On the one hand, the current account shows a deficit of US$287.4 million for the year 2017. But in the previous fiscal year, the report notes, this was just US$12.4 million. The report admits that this is because of a negative balance on the merchandise trade account.
“The further weakening was due to the negative balance on the merchandise trade account. Merchandise exports were slightly lower than projected, mainly on account of lower export earnings of gold and other exports in the last two months of the year,” the report states.
Oil and gas
According to Jordan, the bank’s support for the Balance of Payment is still under discussion. Meanwhile, Jordan also spoke about the support being provided by the World Bank specifically in the areas of oil and gas and education.
“We’ve been discussing projects, specifically relating to oil and gas sector. They’re actual reengagement in Guyana on a longer term, because what we’re doing right now is a two-year programme. But they’re discussing a five year for the emerging oil and gas.
“They’re also into education. As you know, they have two projects, actually three in education. Cause one has just finished, the University of Guyana. So we have one to build two secondary schools. And they’re into flood risk. So those are some of the areas that we’re being looking at down the road, all in the context of the green state development strategy. We discussed a lot on that.”
According to Jordan, work on the two schools has started and the project is currently on going. He also noted that the President was invited, at his pleasure, to visit the World Bank to make a presentation on Guyana’s Green State Development Strategy.
