Latest update February 12th, 2025 8:40 AM
Jan 18, 2025 Features / Columnists, The GHK Lall Column
By GHK Lall
Kaieteur News- Whenever Vice President Jagdeo tells a straight story, he gives me grounds to agree with him. To do otherwise would not be foolish, but just plain wrong. The straighter his story, the better the grounds for common understanding. The instance of the US Export Import (EXIM) bank and the interest rate it is charging Guyana for a loan relative to Wales Gas-to-Energy project stands as reference. EXIM is charging Guyana 4% for the US$527 million loan. Dr. Jagdeo calls it ‘very competitive.’ I agree with him, but with a little nudge as to how Guyana could have done better.
The interest rates for EXIM’s loans are a blend of different elements. The US 10-Year Treasury Note serves as the main driver in determining EXIM’s rates. Currently, the benchmark US 10-Year Note is around 4.6%. Thus, at 4%, it could be said that Guyana did well, got a ‘very competitive’ rate, as per Dr. Jagdeo. Again, I am with him. Where I begin to differ ever so slightly, then some more, with the much-watched vice president is how I think that Guyana could have done better. I lay this scenario before fellow citizens, as based on a mix of local realities, and the bigger power picture involving outsiders operating here.
For starters, it is no secret that the Americans are seriously concerned about the heavy Chinese presence in Guyana. Not so much Chinese people (small restaurants, one-family shops, and such), but Chinese State interests operating here in many areas, under different disguises, and with huge footprints. Second, the Americans (EXIM) knew that if the US$527 million was not approved, then the Chinese were waiting in the wings, and given Jagdeo’s uncomfortably close relationship with them, they were the number one fallback loan option. Jagdeo was purposely vague, but had hinted that Guyana has other loan options, when the EXIM loan got stuck. He didn’t have to yell that it was the Chinese, but there was that general understanding. Third, I would assert that the EXIM loan approved was for the beginning of a greater American money (lending) and other business presences in Guyana, which means less of the Chinese. Not the beginning of the end for the Chinese since they have so much already sunk in the ground here, only a lesser presence, and then who knows where else and what next. To digress briefly, I have been clear before on the Chinese: I have difficulty with all these state commies (agents) flitting around here, and looking out for Mother China. Note one piece of clarity already on the EXIM loan. Guyanese know the interest rate that they are being charged by EXIM. Try digging that out of Vice President Jagdeo relative to Guyana’s loans from China.
Fourth, because of the three prior facts of life in Guyana, and the competition between the American and Chinese powers, Guyana was in a position to drive a hard bargain with EXIM on that 4% interest rate on the US$527 million loan. Everybody around the Guyana loan application before EXIM and at the table of deliberation were well aware about what was in play. Since the Americans are so keen on ousting the Chinese from here, then that 4% interest rate had to be lower. Guyana has been held to ransom, so it is simply returning the favour.
Matters distilled to this: who wanted what more. For sure, Guyana wanted a loan and the Americans were always the frontrunner from the time of those hastily summoned meetings by secretary Antony J. Blinken and involving President Irfaan Ali and Vice President Jagdeo. Further, when an American firm CH-4 Lindsayca entered the Wales gas-to-energy picture, my conclusion was that it was just a matter of time for the EXIM loan to be approved. Guyana, knowing this, should have had its demand ready for preferential interest rate treatment. That is, somewhere between a 3-3.5% rate on the EXIM loan. I think that, all circumstances considered, this country was well-positioned to get that level. While 4% is solid, I think that Guyana rolled over too easily, when it had a chance to extract more. Since oil has been found here, no one has given Guyana any free passes. Visas don’t count.
My problem with all of this is that when Guyana fails to fix its own internal political contradictions and challenges, it invites others to fill the breach. There is a steep price for that dependency, which pols don’t pay, the Guyanese people pay. Before I go, I note that original US$646 million loan app to EXIM ended up as US$527 million approved. I am asking myself whether that US$119 million differential was a built-in surcharge for PPP coffers. Now imagine if that loan app was before the Chinese, the odds are that it may not been US$119 million less, but that same amount higher. As much as the Americans have their lousy, naked capitalist streaks, it is why it is better to do business with them. Less secrecy, more openness. As convenient.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
(Exim 4% rate)
Feb 12, 2025
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