Govt’s economic diplomacy ‘push’ has revealed many new financial partners – VP Jagdeo

– private banks being explored as Guyana stands solid

In Government’s push for economic diplomacy globally, Guyana has attracted funding from several non-traditional financial entities, and new doors are continuously opening in fulfilling the massive developmental plans.
Speaking during his press conference on Thursday, Vice President Bharrat Jagdeo shared that Government continues to develop relations with new agencies while maintaining traditional relationships.

Vice President, Dr Bharrat Jagdeo at Thursday’s press conference

This has been credited to an aggressive agenda by President Dr Irfaan Ali.
“The President has been engaged in a major push internationally on not political diplomacy but economic diplomacy. What he has done is open up a lot of doors to financial institutions that we’ve had traditional relations with and there are other new ones appearing now and we are developing relations with them.
Deepening non-traditional agreements have primarily attracted attention from the Middle East.
He pointed to the recent signing of a US$150 million Memorandum of Understanding (MoU) with the Saudi Fund for Development to provide financing for infrastructural works. This comes at a two per cent interest and would assist Government in accelerating its housing programme.
“If you go to the markets now, a US-dollar-based loan because of the interest rate escalation could be five to six per cent now. So, it helps to still access funding through bilateral sources from these development agencies. And there are very few strings attached to these loans.”
Last month, the Ali-led Administration also signed a US$200 million agreement with the Islamic Development Bank (IsDB), aimed specifically at financing the reconstruction of the Soesdyke-Linden Highway. According to Jagdeo, they have made progress in areas in which the former APNU/AFC Government failed to.
“The Islamic Development Bank, APNU started a relationship with them which didn’t go very far. We have now a big relationship,” he commented.
Additionally, around the same period, President Ali had announced that Guyana secured a US$350 million loan from Qatar for the four-lane highway being built from Schoonord, West Bank Demerara (WBD), to Crane on the West Coast of Demerara (WCD), being extended to Parika.
“Those are several non-traditional bilateral sources. From Europe, UKEF, there are two big loans – one for the New Amsterdam Hospital and the loan for the Paediatric and Maternal Hospital; £300 million will come from UKEF,” Jagdeo explained.
The Vice President outlined that a lot of private banks are being explored, as Guyana stands in a solid position to service such debt in the future when compared to other Caribbean countries.
“We’re exploring a lot of private banks. A lot of big banks are discussing with us…The commercial ones don’t need sovereign guarantees but we’re trying to fix the interest rate on all of them. That is why I’ve said we’re in a good position.”
He added, “If you look at the Caribbean, most of their loans are variable interest loans, like how the interest rate moved from near zero to six per cent, they’re having a hard time in servicing those loans. We have only two variable-rate loans and they’re both to multilateral agencies, so that is why we’re in a solid position to service debt in the future. It takes a very small share of our total revenue.”
In the face of concerns about Guyana’s debt being driven up by the various loans that the People’s Progressive Party/Civic Government is taking, Vice President Bharrat Jagdeo had defended these borrowings earlier this month, stating that they are going towards investments that will repay these loans.
Jagdeo, who is also an economist, shared that Guyana has one of the lowest debts, largely because of the PPP/C’s historically “strong” management of the country’s debt. He reminded that when the party took office in 1992, it inherited a bankrupt country which it restored to financial viability.
Jagdeo, who served as President of Guyana from 1999 to 2011, pointed out that at that time the country’s debt was 913 per cent of Gross Domestic Product (GDP). He added that about 153 per cent of the nation’s revenue went to service debt.
“Our debt today is about maybe 12% of GDP – one of the lowest figures in the world …that is with all the borrowing and everything. And we were using about 7 to 8 per cent of revenue to service debt. So, it’s based on a capacity to service it. Our total outstanding debt will be less than one year of future revenue in the outer year. Very few countries can have that debt profile,” he was quoted saying. (G-12)