Notwithstanding Guyana’s public debt statistics, Finance Minister Winston Jordan has affirmed that more remains to be done for Guyana’s infrastructural development and thus, borrowing is a necessity.
The Minister addressed the issue of Government’s indebtedness while signing a concessionary loan agreement on Friday. This loan, US$36 million, comes from China and Jordan was adamant that loans must be taken in the absence of Guyana own financial resources.
“It has been mentioned in the press, often, about the state of borrowing or the state of debt,” Jordan said. “But in reality, Guyana has many infrastructural and other needs. These are greater than the resources that we can garner.”
“So we must borrow. The intent is we must borrow prudently and for productive
Finance Minister Winston Jordan
purposes. This is one of the projects needed in Guyana. I have had the pleasure since becoming Minister of Finance, of signing a few loans that were given from China. And these include the East Coast Demerara widening project and now the National Broadband project.”
The Finance Ministry’s Public Debt Annual Report for 2016 had showed that since 2015, there has been a 4.1 per cent rise in Guyana’s indebtedness to International lenders. A breakdown of the figures showed that total external debt amounted to $240 billion, a 72.6 per cent bite out of the total public debt. On the other hand, domestic debt stood at $90.6 billion, or 27.4 per cent of the total.
The report notes that Guyana’s four main external creditors are the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB), the State-owned Export-Import Bank of China (China EXIM Bank) and lastly, the Venezuela State-owned oil company (PDVSA).
Debt to GDP ratio
Last year’s end of year outcome report had also revealed that for that year, the stock of public debt and the public debt to Gross Domestic Product (GDP) ratio had increased. According to the report, total public debt was recorded at US$1.6 billion, exceeding the projected amount by US$8.4 million. The public debt to GDP ratio actually increased by 0.9 per cent to be recorded at 46.1 per cent.
According to the report, higher disbursements of money from the Export-Import Bank of China (China Exim Bank); the Inter-American Development Bank (IDB) and the Caricom Development Fund (CDF), as well as delayed debt service payments, were to be blamed.
When it comes to servicing these debts, the report stated that total public debt service amounted to US$71.7 million for 2017. This was, in fact, lower by 2.5 per cent than the projected 2017 sum of US$73.5 million.
More recently, the Bank of Guyana Quarterly Report and Statistical Bulletin had pegged an increase in public debt at US$19 million over a matter of months. The report 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.
At least one of the reasons behind the increase in debt is the East Coast Road expansion project. In January of last year, Guyana had received a US$45.3 million concessional loan from the China Eximbank to complete the expansion project.
Government was recently approved to get US$20 million from the sum allotted to them by the Islamic Development Bank (IsDB) in a resource envelope. This money is expected to go towards the Guyana Power and Light (GPL) Utility Upgrade Programme, in a bid to bring an end to the blackout woes.
Earlier this year, NICIL acquired a $30 billion syndicated bond at a rate of 4.75 per cent interest to spend on capitalising the Guyana Sugar Corporation’s (GuySuCo) remaining estates. The terms of the bond are five years, since it is expected that the proceeds of the land sale for GuySuCo would be used to repay the facility.
