Govt’s actions will leave Guyana with a massive debt burden – Opposition

By Ramona Luthi

With Government having moved towards obtaining a $30 billion loan from several local commercial banks and hinting at obtaining a US$900 billion loan from the Islamic Development Bank (IsDB), Leader of the Opposition, Bharrat Jagdeo, is of the opinion that not only is the Government “pawning our futures”, but is leaving Guyanese with a massive debt.

“The issue is: If they (Govt) borrow US$900 million… Just those two — the US$900 million and the US$50 million for the Sugar Industry — that’s nearly US$1.1 billion… They’re leaving us — whoever gets into office, and we hope it’s us in the near future — with a…., they’ve killed the momentum already, and (are) leaving us and future generations of Guyanese with a burden that will be heavy to carry… This is pawning our future. They are destroying the current opportunities of our people and livelihood,” Bharrat Jagdeo said during a press conference at his Office on Thursday.
In February 2018, it was disclosed that the National Industrial and Commercial Investments Limited’s (NICIL) Special Purpose Unit (SPU) was seeking $30 billion in loans and investments to support the Guyana Sugar Corporation’s (GuySuCo’s) remaining estates. The funding is expected to cover a four-year period, and will provide capital and support infrastructure maintenance and upgrades at Albion, Blairmont and Uitvlugt estates. The funds are also expected to go towards developing new co-generation capacity for the estates’ operations and for the national electric grid.
The SPU has since secured this loan.
In addition, last week, Finance Minister Winston Jordan said, “Guyana has not received any loans from the Islamic Development Bank,” however, “the IsDB has a resource envelope of US$900 million that is potentially available, from which the Government of the Cooperative Republic of Guyana can borrow.”
To this Jagdeo posited that this coalition administration “has a failed approach to economics.” He asserted that if the US$900 million loan were pursued, the APNU-AFC Administration would have accumulated almost $US1.1billion in debt, which is equivalent to the amount of debt the Guyana Sugar Corporation was in from start to end of the 23 years of PPP reign.
On behalf of his party, Jagdeo also expressed grave concern with regard to the $30 billion loan which has already been obtained.
“…the $30 billion that the SPU wants to raise on a bond now, [they will be] pledging or pawning all the assets of NICIL…[The] interest rate is above the Grant Element above which we use to borrow. The Grant Element…you calculate for Government loans, and the Grant Element takes into consideration the moratorium on interest payments, the length of the loan, and the nominal interest rate; and I’m sure if you calculate the Grant Element, it falls outside of the traditional borrowing policy of the Government. But this is backed up by a set of assets that, if they fail to pay the loans, we lose the entire GuySuCo. All the factories and everything else, and all other holdings of NICIL will go to Republic Bank and the consortium,” Jagdeo explained.
Jagdeo also asserted that, at the rate the country is going, it’s going to have adverse impact on the International Monetary Fund’s predictions on Guyana’s GDP.
“The IMF ratio [had said] that the GDP will go up slightly until we find oil, and then it’ll come down and it will go to 59% of GDP. If the economy remains stagnant, we’re going to be defying the IMF predictions by a huge margin, because the stock of-debt-to-GDP will go up to 100% again… Even the IMF forecast didn’t expect this massive set of borrowing,” he said.