While Guyanese authorities recently signed onto two hefty loan agreements with Qatar and Saudi Arabia totalling US$500 million, Vice President, Dr. Bharrat Jagdeo has assured that authorities still have a firm grip on its debt management reins.
The official said the country not only has one of the lowest debt-to-GDP (gross domestic product) ratios in the world but the capacity to borrow more and repay is strengthened, given the significance of its oil endowment in the ExxonMobil-operated Stabroek Block.
Speaking to the prowess of the administration in debt management, the Vice President reminded that it was his party that had taken over governance of the country when it was in a bankrupt state, back in 1992, and returned it to a thriving one. He noted that the stock of debt pre-1992 was a mindboggling 153% of revenues, adding that debt was 913% of GDP. Today, he said this has been significantly reduced to approximately 12% of GDP, “one of the lowest figures in the world,” he added, “and we are using about 7-8% of revenues to service debt.”
In addition to this record, he said Guyana has not contracted any private variable interest loan. He said, “We have two variable interest loans and they are both from the multilateral financial institutions. All the other loans are fixed rate loans so we don’t have to worry about interest rate escalation now. That is largely because of our strong management of debt.”
The Vice President also stressed that loans undertaken are for capital works which include new health systems, road networks and greater security systems. “So we don’t borrow to eat. We borrow to ensure our people can have things that allow them to create new industries and have a foundation that is strong to build on,” Dr. Jagdeo said.
According to the Bank of Guyana’s 2022 Annual Report, the total stock of government’s public and publicly guaranteed debt increased by 16.9% to US$3.66 billion and represented 24.6% of GDP. This increase was due to a 20% rise in the outstanding stock of domestic bonded debt to US$2.08 billion.
External debt it said grew by 12.9% to US$1.57 billion. The expansion reflected higher debt outstanding to multilateral creditors stemming from increased disbursements.
As for total debt service, this grew by 23.2% to US$150.2 million and represented 7.2% of government’s current revenue.
Central Bank’s report said the total external debt stock is projected to increase on account of higher disbursements from bilateral and private creditors, however, total external debt service is estimated to climb higher as well.