Guyana has one of the lowest debt-to-GDP ratios globally – VP

…as Govt moves to adjust debt ceiling

Vice President Bharrat Jagdeo has debunked claims that Guyana’s future generations will be burdened with debt, noting that the country has one of the lowest debts-to-Gross Domestic Product (GDP) ratios in the world.
He explained that from the 90s to now, Guyana’s capacity to carry debt has been vastly enhanced and its capability for servicing such has also grown, to the point where in 2028, a year’s revenue would be equivalent to almost the total outstanding debt.
“We’re careful in our management of debt,” Jagdeo affirmed during a press conference on Thursday.
He explained that in the 90s, Guyana’s debt was over 900 per cent of its GDP.
“…debt was nine times the size of our economy and we were using over 100 per cent of revenue to service debt, so that meant every cent we collected in revenue was going to service debt, mainly external debt.”
“Effectively, our country was bankrupt.”
He explained that it got to a stage where Guyana was declared uncreditworthy and as a last resort, Government was involved in an International Monetary Fund (IMF) programme to deal with the issue.
Fast forward to 2015, pre oil discovery, Guyana’s debt had come down to 45 per cent of its GDP. Jagdeo said this could be attributed to a combination of factors including the fact that some debts were written off, some were paid off through an aggressive programme which he himself led, and the country’s economy had expanded.
Now, Guyana’s debt is 23 per cent of GDP.
“It’s one of the lowest figures in the world. The United States debt-to-GDP ratio is nearly 100 per cent. In Europe, many countries in Europe, it’s over 100 per cent. I’m talking about developed countries of the world and ours, our total debt outstanding, domestic and foreign, is less than 25 per cent of GDP, of which the bulk of it is the domestic debt,” Jagdeo outlined.
Moreover, he shared that the country was spending just about 7-8 per cent of revenue to service the debt.
“In the 90s, it was over 100 per cent of revenue, last year, it was less than 10 per cent of revenue used to service debt…most countries in the Caribbean now are using 60 per cent of their revenues to service debt…,” he contrasted.

Borrowing
Jagdeo also emphasised that borrowing money was not necessarily a bad thing once it was used to fund projects that add to the welfare of people and the growth of productive capacity.
He used as an example the US$150 million loan with the Saudi Fund for Development (SFD), at an interest rate of two per cent, which will be used to advance Government’s housing programme and construct the long-awaited four-lane Wismar-Mackenzie Bridge in Region 10 (Upper Demerara-Berbice).
“That’s what we borrow for. We’re borrowing for the gas-to-energy project so that we can bring electricity prices down, solve the electricity problem…and the project pays back for itself over the long run so although you take the debt now, you pay back for it from the project itself. We’re borrowing for 12 hospitals that will make sure that…we can expand healthcare to our people…we borrowed for the bridge across the Demerara River, because that bridge would change the whole dynamics of these two regions which are the most populous regions…so, it is what you invest in,” Jagdeo explained.
He further explained that Budget 2023, which has a value of $781.9 billion (US$3.7 billion), is financed in part through borrowing, something which is public knowledge.
In fact, he explained that the budget is financed through non-oil revenue, revenue and by borrowing.
“We got US$2.8 billion of the US$3.7 billion in revenue. Of the US$2.8 billion, US$1 billion is oil [money], but we have a budget of US$3.7 billion so when you add US$1 billion from oil resources to the US$1.8 billion non-oil revenue, you have US$2.8 billion. When you subtract US$2.8 billion from US$3.7 billion, you’re left with US$900 million gap so that means you have to fill the gap by borrowing.
“So [we] haven’t borrowed as yet, you now have to go out and contract the loans and that is what we’re doing, but they [Opposition] knew this all along in the budget debate. Every time you sign up to a new loan, they [Opposition] make it look as it’s a new borrowing, but it’s catered for in the budgetary process if you understand it,” Jagdeo posited, noting that the same applies with the withdrawals from the Natural Resource Fund (NRF).
Interestingly too, Jagdeo disclosed, that only 27 per cent of the budget was financed by oil revenues.
Against this backdrop, Jagdeo rapped the A Partnership for National Unity/Alliance For Change (APNU/AFC) Opposition for continuing to peddle lies on the issue.
“AFC/APNU ignorance. They don’t do their job at budget time. Many of them don’t even understand what they’re debating…so the AFC talking about us burdening future generations now when we’ve dropped the servicing of our debt from over 100 per cent of revenue to under 10 per cent…and the debt from over 900 per cent of GDP to now less than 25 per cent.”

NRF Annual Report
Meanwhile, Finance Minister Dr Ashni Singh on Thursday presented to the National Assembly the inaugural Natural Resource Fund (NRF) Annual Report for the fiscal year 2022, pursuant to Section 32(4) of the Natural Resource Fund Act 2021.
Minister Singh acknowledged the work done by the NRF Board, the Public Accountability and Oversight Committee and the Investment Committee, and “commended, on behalf of the Government and the people of Guyana, the sterling work that is being done by this first Board of Directors and the two respective committees in setting up for the very first time, the governance architecture for this brand new but extremely important national institution”.
The NRF Act 2021 came into operation on January 1, 2022, replacing the illegitimate NRF Act 2019 passed by the APNU/AFC caretaker administration, and represents one of the most significant steps taken to bring greater accountability and transparency in the management of Guyana’s oil resources.
At the National Assembly sitting, Dr Singh also circulated the Public Accountability and Oversight Committee Annual Report for the fiscal year 2022, pursuant to Section 6(6) of the Natural Resource Fund Act 2021.
The Finance Minister also presented Notification of Receipts to the National Assembly of all petroleum revenues paid into the NRF during the period April 1, 2023 to June 30, 2023, pursuant to Section 33 (2) of the NRF Act 2021.
According to a statement from the Finance Ministry, in 2022, a total of US$607.6 million was withdrawn from the NRF and a further US$1002.1 million is projected to be withdrawn this year.

Debt ceiling adjustment
Also on Thursday, the Government moved to adjust the debt ceilings as its development agenda accelerates.
In line with the Government’s commitment to maintaining its sterling track record of transparent and prudent debt management, the increase in the debt ceilings aims to avert the dependency on utilising the Consolidated Fund overdraft as a means of financing, which was done under the APNU/AFC Administration.
Dr Singh tabled two orders in Parliament proposing adjustments to the two ceilings. It was proposed that the domestic public debt ceiling be increased to $750 billion, up from $500 billion from its last revision. Meanwhile, a new external borrowing ceiling of $900 billion was proposed, after its last increase to $650 billion.
Given Guyana’s economic outlook, these revisions to the external and domestic public debt ceilings do not threaten Guyana’s long-term debt sustainability, the Finance Minister noted.
Noteworthy, he said, was the fact that for more than one and a half decades Guyana has maintained a robust debt sustainability position. This favourable outcome was due to the PPP/C Administration’s strong debt management abilities. He also pointed out that the Administration focuses on debt management policies and practices that hinge on a strategy that prioritises mobilising development financing at the lowest cost, within prudent risk parameters.
“Guyana’s history serves as a testimony of this Administration’s ability of achieving and maintaining sustainable debt levels. When this Government took office in 1992, Guyana was one of the world’s most heavily indebted countries, however, after several rounds of successful debt-relief initiatives coupled with the Government’s continuous efforts to strengthen the domestic economy, Guyana’s debt became sustainable in 2006. Over the last three decades, Guyana’s debt has declined from 617 per cent of GDP (more than six times the economy) at end-1991, to a remarkable 24.6 per cent (about a quarter of the economy) at end-2022. Additionally, when this Government took office in 1992, about 90 cents of every dollar of revenue earned was used to make debt service payments, today this has been significantly reduced to seven cents of every dollar,” the Finance Minister said.
Fuelled by a ramping-up of oil production and the resurgence of the non-oil economy, Guyana registered real GDP growth of 62.3 per cent in 2022, making it the fastest-growing economy in the world. This appreciable growth performance and the country’s robust economic outlook underpin Guyana’s sustainable absorption of the new debt.