Public Debt report
– debt to foreigners account for 74.3% of total debt
Guyana’s total public debt has been increasing over the last three years; going from $317.7 billion in 2015 to $344.9 billion in 2017. Of this amount, almost 75 per cent is owed to foreigners.
This is according to the Public Debt Annual Report of 2017, recently released by the Finance Ministry and made available to Parliament. According to the report, in one-year Guyana saw a 4.4 per cent spike in its debt. At the end of 2016, the total public debt was $330.6 billion. This included $240 billion in external debt and $90.5 billion in domestic debt. As of 2017, external debt was $256.1 billion, while domestic debt dropped to $88.8 billion.
While Government has tried to implement debt relief measures, there have been challenges. Government has been trying to negotiate the settlement of its debt with the South-eastern European country of Serbia, through its State entity Yugoimport-SDPR. According to the report, Guyana owes Serbia US$1.3 million, including US$745,359 as penalty interest and US$587,719 as the principal arrears. This loan was contracted since 1976.
“However, Yugoimport-SDPR and Guyana were unable to reach a mutually acceptable position on the debt settlement,” the Finance Ministry explained in the report. “We intend to make every effort to continue pursuing a debt settlement agreement with Yugoimport-SDPR.”
“Currently, Guyana does not service its debt to Yugoimport-SDPR and any other Non-Paris club creditors that are in arrears, owing to the requirement imposed by the Paris club as a condition for debt relief.”
Other non-Paris club members Government continues to engage include Libya, Kuwait, Argentina and the United Arab Emirates. This, according to the report, is being done under the Heavily Indebted Poor Countries (HIPC) Initiative.
Guyana had signed a debt relief agreement under the HIPC initiative back in 2005 under the then People’s Progressive Party Administration, with the Organisation Petroleum Exporting Countries (OPEC) Fund for International Development.
Indebtedness vs servicing
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 earlier this 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 GY$36 million and GY$358 million respectively,” the report stated.
“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 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.
“The rise in the stock of external debt was on account of higher disbursements by multilateral creditors, specifically, IADB and CDB for financing of social and economic infrastructural projects,” the report states.
Domestic debt, on the other hand, increased to $89.5 million, from a December position of $88.8 million. Domestic debt, the report notes, increased because of a hike in treasury bills by 1.3 per cent.
“(This) resulted mainly from a 1.5 per cent growth in the stock of the 364-day treasury bills during the first quarter,” the report had added.