Guyana borrows US$20M from Islamic Development Bank

Despite rising public debt
– to be spent on maintenance, engineers for GPL

Despite Guyana’s rising public debt to external creditors, Government has drawn down US$20 million from the sum allotted to them by the Islamic Development Bank (IsDB) from its US$900 million resource envelope.

This was communicated by the Finance Ministry on Saturday. The Ministry in a statement revealed that the monies will go towards the Guyana Power and Light (GPL) Utility Upgrade Programme, in a bid to bring an end to the black woes.
“The loan will facilitate the rehabilitation of 153 km of GPL’s medium voltage and low voltage network and 6941 smart meters, including the associated transformers, service lines and distribution boxes,” the Ministry stated, adding that will also facilitate “… 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 and cable connections.”
“It will also finance 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.
Guyana first became a member of the IsDB in 2017 and according to the Ministry, Finance Minister Winston Jordan will sign the loan agreement with the bank in Saudi Arabia on September 19.
“Since becoming a member of the Bank, Government has been aggressively pursuing projects that will increase Guyana’s infrastructure and optimise its productivity in the areas of agriculture, trade and competitiveness and human and rural development having committed to the diversification of Guyana’s economy in preparation for first oil in 2020,” the Ministry stated.

Debt reporting
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.
The report notes that Guyana’s four main external creditors are the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB), the State-owned Export-Import Bank of China (China EXIM Bank) and lastly, the Venezuela state owned oil company (PDVSA).
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.
According to the report, higher disbursements of money from the Export-Import Bank of China (China Exim Bank); the Inter-American Development Bank (IDB) and the Caricom Development Fund (CDF), as well as delayed debt service payments, were to be blamed.
When it comes to servicing these debts, the report stated that total public debt service amounted to US$71.7 million for 2017. This was, in fact, lower by 2.5 per cent than the projected 2017 sum of US$73.5 million.

Loans
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 envelop 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 Investment 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.