Guyana’s debt surges past US$5B – Mid-Year Report

Sep 02, 2024 News

– external debt projected to increase from U$1.9B to US$2.8B by the end of the year

Kaieteur News – Guyana’s total debt has risen sharply, exceeding US$5 billion by mid-2024, according to the Ministry of Finance’s Mid-Year Report. As of June 2024, the country’s debt stood at US$5,063.3 million, up from US$4,508.8 million at the end of December 2023.

Senior Minister within the Office of the President, Dr. Ashni Singh

The report highlights that Guyana’s public debt remains sustainable and is currently subject to a moderate risk of debt distress. The government said that it has maintained a focus on securing development financing under prudent cost and risk parameters.

“At the end of the first half of this year, Guyana’s stock of Total Public and Publicly Guaranteed (PPG) debt amounted to US$5,063.3 million, reflecting positive net flows from both external and domestic creditors,” the report states.

As of the end of June 2024, external PPG debt totaled US$1,924.2 million. The ministry stated that this increase is attributed to positive net flows from multilateral creditors such as the World Bank’s International Development Association and the Caribbean Development Bank, as well as from bilateral creditors including China, Canada, India, and UK Export Finance. These funds support various social and infrastructural projects.

Multilateral creditors hold the largest share of external PPG debt at 63.4%, followed by bilateral creditors at 35.1%, and private creditors at 1.5%.  Notably, the report states that the external PPG debt stock is projected to grow to US$2,832.3 million by the end of 2024, driven by expected continued inflows from both bilateral and multilateral sources.

It was disclosed that external disbursements reached US$196.8 million in the first half of 2024, a 94.6% increase from the same period in the previous year. This surge is largely due to increased funding from bilateral creditors, which amounted to US$157.9 million, reflecting a 127.5% rise compared to the first half of 2023. Key projects funded include a social protection initiative by Canada, the East Coast Demerara Road Improvement Project Phase 2, and the Regional Hospitals Project, financed by China, along with several projects funded by the India EXIM Bank.

Moreover, domestic PPG stood at US$3,139 million at the end of June reflecting some US$2,226.2 million in treasury bills based on the issuance of new fiscal instruments.  Total PPG debt service payments for the first half of 2024 amounted to US$85.2 million, a 7.7% decrease compared to the same period in 2023. This decline is primarily due to a 33.3% reduction in domestic debt service payments, from US$42.2 million in the first half of 2023, to US$28.2 million in the first half of 2024.

“The contraction in domestic PPG debt service payments was in turn due to the completion, in the previous year, of repayments under a government guaranteed bond issued by the National Industrial and Commercial Investments Limited (NICIL) in 2018 but transferred to the books of Central Government in 2020,” it was stated. Conversely, external PPG debt service payments increased by 13.8%, rising from US$50.1 million to US$57 million, driven by higher payments to both bilateral and multilateral creditors.

Additionally, earlier this year the government got the green light to increase the ceilings on both domestic and external debt.  The domestic public debt ceiling has been increased to $1.5 trillion, up from $750 billion from its last revision. Meanwhile, a new external borrowing ceiling of $1.5 trillion has been approved, after its last increase to $900 billion. This move was part of a broader financial strategy to increase the nation’s capacity, in order to finance its $1.146 trillion 2024 budget, including several large-scale infrastructure projects.

To access the Mid-Year Report 2024, click here: https://finance.gov.gy/wp-content/uploads/2024/08/Mid-Year-Report-2024.pdf

• Dr. Ashni Singh, International Development, multilateral, President, Project Phase 2