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‘Guyana in better position to take more loans’- Finance Minister
By Davina Bagot
Kaieteur News – Finance Minister, Dr. Ashni Singh on Wednesday told investors at the International Energy Conference that Guyana’s Gross Domestic Product (GDP) has tripled in the last three years, placing the country in a greater position to take more loans.
Dr. Singh said Guyana has been able to prudently manage and reduce the debt to GDP ratio over the past 30 years. He explained, “Those of you who have been following Guyana for long enough, would know that there was a period just about maybe 30 years ago when Guyana’s public debt to GDP exceeded six times the size of the economy. In 1991/ 1992 the public debt to GDP ratio exceeded 600%…we have been able over the years to bring public debt down and today Guyana’s public debt to GDP ratio stands at 24.6 percent.”
The Finance Minister paused his presentation as he received a resounding applause for the progress the country made in lowering its debt to GDP rate down. He however went straight into his point that this means Guyana is now in a better position to take more loans. “I didn’t put a chart up with international comparators but if you, I mean many of you are familiar with these numbers around the World. You will no doubt recognise that the debt to GDP ratio of 24.6% in fact places Guyana ahead of almost every economy, certainly in this hemisphere and puts us in a position where we actually have fairly significant head room to borrow,” he shared.
The minister was keen to point out however, that the government recognises the importance of carefully managing the debt and are therefore selective and careful of new loans contracted. These loans he said must reach the criteria of investment into strategic options with competitive payback terms.
He said, “We are extremely mindful of the complicated and difficult times that Guyana was once in and how important it is now to avoid a return to that period and so notwithstanding the emphasis on investment and infrastructure, etecera…we are doing all of this in a context where we maintain a truly disciplined fiscal stance.”
Earlier on in his presentation, the Finance Minister offered an overview of the Guyana economy, boasting that the country’s GDP has tripled in size over the past three years.
Finance Minister, Dr. Ashni Singh
He explained, “We have been able to achieve world-beating real economic growth and expansion and not only in a single year- you have heard that last year we were the fastest growing economy in the world with over 62% in growth- not only last year but in fact starting from 2020.”
He pointed out that this growth was as a result of the nation commencing oil production in December 2019. This upward trend, Dr. Singh projects, will remain favourable in 2023 and extend to the next three to four years. This year, GDP is expected to grow by 25.1%, this sustained growth is expected to overlap throughout 2024 to 2027 with over 25% increase expected.
Dr. Singh said that while oil and gas will be the main driver of this growth, the non-oil sector too is expected to record growth. While presenting the 2023 Budget, the Finance Minister pointed out that at the end of 2022, the country’s public debt increased by 16%, now standing at US$3,654.9M. This year, the country’s public debt is expected to further increase as several loans are already lined up to finance large infrastructure projects. For instance, the new Demerara Harbour Bridge is being funded through a loan from China to the tune of US$172 million.
Government has also signaled its intent to approach the United States Export Import (EXIM) Bank to finance a Natural Gas Liquids (NGL) facility and the 300 megawatt power plant that forms part of the Gas-to-Energy (GTE) project. They are looking to borrow another US$646 million in this regard.
This year, Guyana will also be tasked with an additional US$1 billion debt to ExxonMobil for its investment in the natural gas pipeline- the third aspect of the GTE project. These are just a few of the projects being financed through loans. It must be noted that there are other road projects, health and education initiatives being funded through loans this year.
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