Home News Guyana signs on for US$31M more in loans from IDB
As public debt continues to climb
– external public debt stands at US$1.265B
The Government has signed two new loans with the Inter-American Development Bank (IDB), totalling US$31 million; monies that Government says will go towards areas of trade and energy.
This was revealed by Minister of State Joseph Harmon, during a recent press conference. Harmon revealed that Finance Minister Winston Jordan signed the agreements on February 11.
Part of the monies includes financing for a single window trade system which is meant to simplify transactions. Monies will also go towards improving service from the Guyana Power and Light (GPL) and other energy-related expenses.
“The loans, which were signed on the sidelines of the recently concluded Eight Annual Caribbean Governors’ Meeting of the Inter-American Development Bank, will finance the establishment of an electronic single window for trade, as well as the energy matrix diversification.”
“It is expected that the electronics single window will reduce transaction costs, data requirements, simplify trade processes through enhanced inter-agency cooperation and align Guyana with international best practices.”
According to Harmon, this will result in improved service from the various Ministries to agencies and businesses involved in the import and export of goods. When it comes to funding for energy, the Minister noted that the Department of Energy would be coordinating this.
“The energy matrix diversification and strengthening of the department of energy project to be executed by the Guyana Energy Agency and the Guyana Power and Light will realise investments in newer and more sustainable energy solutions for hinterland communities.”
According to Harmon, the funding will also “improve the reliability and stability of the Demerara Berbice interconnected system and help the department of energy to develop a regulatory framework, improve its capacity and governance of the oil and gas sector”.
The IDB is one of several external creditors to Guyana. As of 2017, Guyana had a total public debt of $344.9 billion. According to the 2017 edition of the Public Debt Annual Report, this was an increase of 4.4 per cent in one year.
Even though Guyana’s indebtedness to external creditors has increased, so has debt servicing (repayments). According to the Bank of Guyana Quarterly Report and Statistical Bulletin released last year, repayment of external debt grew by some US$24.3 million to US$85.3 million.
This is a rate of 59.1 per cent when compared to the corresponding period of 2017. This was not the case for domestic debt.
“Domestic debt service payments fell by 14.6 per cent to $726 million resulting mainly from a 23.2 per cent reduction in interest payments for treasury bills. Interest payments for the 182- and 364-day bills fell by 38.7 per cent and 17.6 per cent to G$36 million and G$358 million respectively.”
“This position resulted mainly from competitive bidding primarily amongst the commercial banks compounded with lower interest yields during the review period,” the report outlines, a telling indicator.
The report had pegged the total hike in public debt at US$19 million. It divided this debt into external and domestic. External debt increased by a 1.5 per cent hike from a December position of US$1.241 billion. The report, therefore, pegged external debt at US$1.265 billion for the quarter.
When it comes to financing GPL, Government had signed a US$20 million loan last year with the Islamic Development Bank. This money was to be used to rehabilitate 153 kilometres of the power company’s medium and low voltage networks.
Previously, there was the Power Utility Upgrade Programme (PUUP) that was initiated in 2014, costing US$64 million and intended to rehabilitate GPL systems, as power outages continued to occur.
In 2014, the IDB had approved loans totalling US$37.6 million along with non-reimbursable investment financing from the European Union to help boost the efficiency and reliability of Guyana’s power system.
The IDB had said the project would be done through electricity loss reduction measures, improvements in the operational capabilities, and strengthening the management and corporate performance of GPL.