The State of Kuwait has taken the magnanimous step of writing off US$50.7 million in debt owed by Guyana to the country since 1975, when the then Government borrowed the money for balance of payment support.
Finance Minister Winston Jordan
It is understood from the Finance Ministry that the debt write-off was the product of an agreement signed by Finance Minister Winston Jordan in the Middle East country on March 18, 2019.
According to the Finance Ministry, the monies saved through the agreement will be allocated to social projects set out in the national budgets. As such, the Ministry noted that the debt cancellation will allow an expansion of Guyana’s development agenda.
This debt write-off is only a percentage, as Guyana still owes Kuwait approximately US$26.8 million. According to the Finance Ministry, however, this money will be settled through a combination of cash payments over the course of nine years, and a debt swap arrangement, which will be worked out in due course.
It is understood that Guyana’s debt from Kuwait originated from a Loan Deposit, contracted in 1975, from the Central Bank of Kuwait for US$10.3 million at the time. Since then, however, the debt accumulated arrears over the past four decades, coupled with high market interest rates.
It was only recently that the Government of Guyana received a grant of Kuwaiti Dinars (KD) 500,000 (equivalent to GY$344 million) from the Kuwait Fund for Arab Economic Development to undertake a Technical and Economic Feasibility Study for the Redesign of the Belfield to Rosignol Road Network.
The study will be carried out by the Public Infrastructure Ministry and will aim to solve the issues of deteriorating roads, poor drainage and road safety of Belfield to Rosignol.
It is understood that the residents of more than twenty-seven villages along Belfield to Rosignol will benefit from this road project upon completion.
The redesign of the network aims to ensure enhanced capacity of the roads, strengthen trade and economic development and facilitate new and improved interactions among farming communities. It will also reduce delays and increase user satisfaction.
The Fund, one of Guyana’s developmental partners, has over the years, assisted Government to undertake feasibility studies and designs for the upgrade of road networks within the country. A similar project was undertaken in 2011 for the upgrade of the Better Hope to Belfield road network.
The Kuwait loan is not the only debt Guyana accumulated dating back from the 70s. Another creditor is the Yugoimport-SDPR, which is a State-owned entity in the South-eastern European country of Serbia.
Government has been trying to negotiate the settlement of its debt with Serbia. According to the Public Debt Annual Report of 2017, Guyana owed 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.
The report in fact states that Guyana’s total public debt has been increasing over the past few 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.
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.
But 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.
