– warns amendment could increase Govt’s liability risk
A recent decision made by Government to raise the current debt ceiling guarantee to $50 billion has been criticised by Opposition Leader Bharrat Jagdeo, who claimed that this move will increase the Government’s liability risk. Jagdeo said although the decision was made in Parliament, he noted that it was done sneakily.
The Opposition Leader claimed that after Speaker of the House, Dr Barton Scotland indicated that Private Members Business was done for the day, he packed up and left, only to find out later that the issue was reopened. “What they did last week in Parliament, surreptitiously, at the last hour,” he explained.
According to him, the amendment could be applicable to the loans that Government has taken. “I suspect this is to facilitate the $30 million bond and maybe the bridge across the Demerara River (New Demerara River Crossing),” he stated. But Jagdeo said he is still convinced that these are huge financial risks.
While Finance Minister Winston Jordan tried to convince the National Assembly during its last sitting that Government will do better in repaying this $30 million bond, Jagdeo argued that the People’s Progressive Party (PPP) Government managed to secure a lower interest rate for Marriott.
“In the case of Marriott’s failure to service the loan, then the Government will have to step in and service the loan. The intention was to sell that project in the first place. So once you sold that property it was the private developer’s responsibility to service the loan and not the Government,” he added.
Jagdeo, an economist, explained further that in that case, the hotel’s assets would be used to collateralise the loan. And in case where the person who owns fails to pay, the bank can levy on the property.
He said, “But he (Jordan) has now brought that into the Treasury. The loan was collateralised using the assets of the Marriott by taking the loan and bringing it to the Treasury.”
The former Head of State is suspicious that Government will do the same for the $30 million bond that they are negotiating for the Guyana Sugar Corporation (GuySuCo).
During the last sitting of the National Assembly on May 11, Government used its one seat majority to pass a motion that extends the ceiling for the State to guarantee debts, to up $50 billion, for any project upon which the Government wishes to embark upon.
While the A Partnership for National Unity/Alliance For Change (APNU/AFC) was in Opposition, it had rejected a motion to raise the debt ceiling to the required level with respect to the Amaila Falls Hydro Project and as such, the project was killed.
Jagdeo outlined that in relation to the Amaila Falls Hydro Project, the PPP Government was not guaranteeing a debt but was guaranteeing contingent liability. In other words, Government would have only become liable if the Guyana Power and Light (GPL) refused to buy the power or pay for the power bought under a Power Purchase Agreement.
Jagdeo said by providing a Government guarantee through the debt ceiling amendment, the Finance Minister has shifted the liability onto the Treasury.
His party in a press statement on the issue had said that the passage of the bill paves the way for Guyana to once again be on the road towards “financial and economic bankruptcy.”
In February 2018, it was disclosed that the National Industrial and Commercial Investments Limited’s (NICILs) Special Purpose Unit (SPU) was seeking $30 billion in loans via a syndicated bond to support GuySuCo and its remaining estates.
The funding, it was outlined, would cover a four-year period and will provide capital, support infrastructure maintenance and upgrades at Albion, Blairmount and Uitvlugt.
The monies are also expected to go towards developing new co-generation capacity for the estate operations and the national electric grid. Government has since secured this loan.
Additionally, in early April 2018, Minister Jordan said “Guyana has not received any loans from the Islamic Development Bank [IsDB]”; however he noted that “the IsDB has a resource envelope of US$900 million that is potentially available from which the Government of Guyana can borrow.”
In response, Jagdeo said that the coalition Administration was pawning the future of Guyana. He said the debt accumulated from 2015 to 2018, plus the $30 billion from Republic Bank, coupled with the US$900 million which the PPP predicts Government will borrow from the Islamic Development Bank, doubles the total debt which the PPP had left after 24 years in Government. (Samuel Sukhnandan)