Guyana’s debt one of the lowest in the world – VP

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 has defended these borrowings, stating that they are going towards investments that will repay these loans.
“I see a lot of people talking about our capacity to repay fastly …[but] when we borrow, we borrow to invest in things that matter [and] we can play it back easily – our health system, the roads, the power plants, the ports – things that are capital. We don’t borrow to eat; we borrow to build the capital stock of this country so our people can benefit. They can use that to create new industries and new jobs because that’s the foundation – the ports, the power plants, the roads, the other type of infrastructure, modern water systems, the ICT systems, better Government services around the country.”
“We borrow for greater security. We’re now putting in cameras around the country – a smart country programme that would be able to track criminal activities anywhere in Guyana in real time, know who is there and stuff because security of people is vital in the future. So, those are the things we are borrowing for but we have the capacity to repay,” the Vice President posited.
He was at the time responding to questions at a press conference on Thursday about the Government’s borrowing.
Since taking office in August 2020, the PPP/C Administration has taken a number of loans from bilateral partners around the world as well as from international agencies.
Only recently, Government signed two loan agreements totalling US$150 million with the Saudi Fund for Development (SFD) to finance “Infrastructural Development Works for the Housing Sector Project” and the “Construction of Wismar Bridge Project.”
Another loan to the tune of US$350 million was secured from Qatar to extend the Schoonord to Crane four-lane highway all the way to Parika in Region Three (Essequibo Islands-West Demerara).
Guyana also obtained a €160.8 million loan from the Bank of China for the advancement of the construction of the new Demerara River Bridge. The country also has several loan agreements with the Inter-American Development Bank (IDB) to access over US$220 million in financing for enhancements along the East Bank Demerara (EBD) Highway.
However, VP Jagdeo, who is an economist, explained during Thursday’s press conference that these are low-interest borrowing.
“We have not contracted any private variable interest loans. We have two variable interest loans and they are both from the IFIs – the multilateral financial institutions. All the other loans are fixed rate loans so we don’t have to worry about interest rate escalation now,” he assured.
According to the Vice President, this is largely because of the PPP/C’s historical “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 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 stated.
According to the Vice President, not only is Guyana’s current debt one of the lowest in the world but it is lower than the United States and even most European countries whose debt is about 100 per cent of GDP.
Moreover, the Vice President highlighted that Guyana’s debt was brought down to about 45 per cent of the country’s GDP – a significant reduction from 913 per cent incurred under the then People’s National Congress/Reform (PNC/R) regime. This, he outlined, was achieved before the country found and started producing oil.
Finance Minister Dr Ashni Singh had reported in his 2023 Budget presentation that Guyana’s total public debt was some US$3.9 billion at the end of 2022 – an increase of 16.9 per cent over the previous year.
“This is one of our greatest successes that we never speak enough about. People talk about the roads and water and stuff [but] we took a bankrupt country and restore it to financial viability, and this was even before oil and gas… So, that is something that doesn’t come out,” VP Jagdeo asserted. (G8)