Latest update March 25th, 2023 12:52 AM
Mar 07, 2023 News
– says money will boost healthcare, build roads, enhance infrastructure
Kaieteur News – Guyana on Monday signed three loans with the Inter-American Development Bank (IDB) totaling US$205M to strengthen the country’s healthcare system, build roads and enhance infrastructure.
The three loans will add to Guyana’s already large external debt, which stood at US$3,654.9M at the start of this year representing an increase by 16.9 percent from last year. Incidentally, the IDB in a report released in January this year had cautioned Latin America and Caribbean (LAC) countries against ‘excessive’ borrowing and urged governments to bring their debts down to more prudent levels.
In its report titled, ‘Dealing with Debt – Less Risk for More Growth in the Latin America and the Caribbean’ the IDB disclosed that debt has risen and stands at some US$5.8T which is 117 percent of the Gross Domestic Product (GDP) in the region. “Given the dangers of excessive debt, the current situation in Latin America and the Caribbean is worrisome,” the IDB said. IDB said public debt serves a critical role for countries to pursue public investment projects, implement countercyclical policies, and provide support to economies in the face of negative shocks. However, the IDB warned that if public debt becomes too large or is not managed with sufficient caution, interest costs may balloon, growth prospects may suffer, and in the limit, a costly debt crisis may be provoked.
Meanwhile, the bank’s President, Ilan Goldfajn, and Guyana’s Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh signed the three loan projects for the country. The signing took place during the XI Annual Consultation of Caribbean Governors, being hosted in Trinidad and Tobago. In a press statement the IDB said the first loan captioned: “Healthcare Network Strengthening in Guyana operation” is for a total amount of US$97 million. This loan the bank said will expand the capacity of seven hospitals in both coastal and interior communities, extend coverage of diagnostic exams and medical consultations, advance telehealth services, and increase access and efficiency of the public health system. “This project is expected to benefit over half of Guyana’s population including the indigenous people with interventions in all 10 of the country’s regions,” the bank stated.
The second loan titled ‘Support Climate Resilient Road Infrastructure Development’ will provide US$100 million to upgrade and expand the quality of roads and utility service along the East Bank Demerara corridor. This involves financing a 25.5 kilometer two-lane roadway with modern and innovative approaches that will improve access and safety, including for vulnerable road users, the bank said. The third loan is titled ‘Enhancing the National Quality Infrastructure for Competitiveness programme.’ Under this programme Guyana will reformulate and access additional funding of US$8,000,000 to enhance the National Quality Infrastructure’s capacity to promote the adoption of quality standards among Guyanese Micro, Small, and Medium Enterprises (MSMEs), the bank noted. It added that in November 2016, the IDB approved US$9,000,000 to Guyana for Enhancing the National Quality Infrastructure for Economic Diversification and Trade Promotion. The Government of Guyana requested additional financing to support its priorities of a more diversified and productive base.
A Ministry of Finance press release stated that prior to signing Dr. Singh, on behalf of the Government of Guyana, thanked the IDB for its support to Guyana as he noted that the Bank has been providing strong support to Guyana’s development efforts, not only in recent years, but over the long-term. “The IDB has been a reliable and dependable development partner to Guyana. The strength of this partnership is evidenced not least in the three agreements that we are going to sign today, making critical investments in three areas that go to the core of the development of our Government’s agenda,” the Minister added. President of the bank while delivering remarks, stated that the bank is happy to participate in the development of Guyana. “Guyana is growing and we are very lucky to be part of this growth,” Mr. Goldfajn said, noting that the projects are in priority areas.
Former Auditor General, Anand Goolsarran recently warned that while Guyana’s medium-term economic prospects appear very favourable due to anticipated oil revenues, government should nevertheless exercise restraint in spending, given the volatility of oil prices. Goolsarran had made the comments in his Column, published in the Stabroek News. His counsel had come 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$240.451M. 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$192M and US$172 million for the East Coast Demerara road expansion project and the construction of the New Demerara River Bridge respectively.
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