Latest update March 25th, 2023 12:57 AM
Jan 17, 2023 News
…stood at whopping US$3.6M at the end of 2022
Kaieteur News – Amid growing concerns about its excessive borrowing, Finance Minister, Dr. Ashni Singh on Monday announced that the country’s total public debt stood at US$3,654.9M an increase by 16.9 percent from last year.
Almost all of its recently announced public infrastructural projects government has been borrowing to finance them despite earning over US$1B in the oil account for last year. Delivering his budget presentation Dr. Singh sought to allay the fears of Guyanese by claiming that Government has “maintained its long-standing practice of prudent debt management.”
He argued that Guyana continues to enjoy strong debt sustainability fundamentals, “even as we expand investments in public infrastructure, social services and other initiatives geared at ensuring improved standards of living for all Guyanese. This delicate balancing act hinges on our time-honoured debt management strategy of contracting development financing and meeting debt service obligations at the lowest cost, within prudent risk parameters. “
To this end, he announced that total public and publicly guaranteed (PPG) debt amounted to US$3,654.9 million at end-2022, up 16.9 percent from end-2021, on account of growth in external and domestic debt. “Notwithstanding, the ratio of total PPG debt-to-GDP declined substantially over the past year, from 38.9 percent at end-2021 to 24.6 percent at end-2022. This outcome is testament to our judicious contracting of development financing, at a level well within Guyana’s debt carrying capacity,” Singh told the National Assembly.
He added that at the end of 2022, Guyana’s external debt totalled US$1,571.9 million, representing a 12.9 percent increase compared to end-2021, mainly as a result of positive net flows from both bilateral and multilateral creditors.
Meanwhile, domestic debt amounted to US$2,080.6 million at end-2022, up from US$1,731.5 million at end-2021. This increase is attributed to Government’s issuance of new fiscal treasury bills. Total public debt service rose from US$121.9 million in 2021 to US$150.2 million in 2022. This increase was driven primarily by domestic debt service payments, which totalled US$65 million in 2022, up from US$41.2 million in the preceding year. The growth of domestic debt service payments was, in turn, largely due to the commencement of principal repayments on debentures issued in 2021 to securitise an inherited overdraft at the Central Bank. Compared with the previous year, external debt service payments increased by 5.5 percent to US$85.2 million in 2022, mainly on account of higher principal and interest payments to multilateral creditors.
Only recently former Auditor General, Anand Goolsarran warned that while Guyana’s medium-term economic prospects appear very favourable due to anticipated oil revenues, government should nevertheless exercise restraint in Government spending, given the volatility of oil prices. Goolsarran had made the comments in his Column, published in the Stabroek News.
His counsel comes at a time when Guyana’s loans from China are set to surpass that of Sri Lanka, which stands at some 20 percent. In drawing reference to that country, the former Auditor General pointed out that Sri Lanka is now in a state of severe economic crisis after years of economic mismanagement coupled with the impacts from the COVID-19 pandemic.
In 2020, Guyana had six loans with the Export Import (EXIM) Bank of China totalling US$240.451 million. This represented 17.5 percent of the country’s external loan portfolio according to Goolsarran. To this end, the former AG wrote “Last week, the Authorities announced the signing of two loan agreements with the China (Bank) in the sums of US$192 million and US$172 million for the East Coast Demerara road expansion project and the construction of the New Demerara River Bridge respectively.
With these two loans, Guyana’s indebtedness to China is set to overtake the 20 percent incurred by Sri Lanka which is currently in a state of severe economic crisis after years of economic mismanagement combined with the COVID-19 pandemic.”
Goolsarran reminded that in December 2017, the Sri Lanka Government handed over the Hambantota Port to China which included 15,000 acres of land around it, for use for 99 years. The Port was constructed by China Harbour Engineering Company with financing from China’s Exim Bank. This development occurred after the State failed to make good on its commitment to repay the loan. Goolsarran in his Column made the point that Sri Lanka’s experience has important lessons for Guyana since the incurrence of excessive debt; both internally and externally, can adversely affect the economy. It was on this note that he warned that while the country’s prospects seem favourable due to the anticipated revenue from oil and gas, government should exercise restraint given the volatility of petroleum prices.
They are being paid while we are being played…your pain is their gain!
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