Guyana accumulates US$15.9M in debt to China in 6 months

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Statistics released by the Finance Ministry show that Guyana’s debt to other countries is US$450 million as of June 2019, with China, through the State-owned Export Import (Exim) Bank of China, accounting for the lion’s share as Guyana’s largest bilateral creditor.

This was revealed in the Public Debt report for 2019.

Guyana’s bilateral debt, which is money owed on a government-to-government basis, does not include the money it owes to multilateral creditors like the Inter-American Development Bank (IDB).

In fact, Guyana’s bilateral debt as of June 2019 accounted for just 35.4 per cent of all external debt. So dominant is China’s role as a money lender to Guyana that 17.8 per cent of all of Guyana’s local debt was denominated in the Chinese Yuan currency.

“The growing prominence of China, as a creditor, continues to impact the currency composition of the external debt portfolio, with 17.8 per cent being denominated in Renminbi Yuan as at end-June 2019. This signifies a 0.8 percentage point increase relative to the end-March 2019 share of 17 per cent,” the report states.

The report attributes several Chinese-funded projects in Guyana to this development, including the Cheddi Jagan Airport Extension Project, the East Coast Demerara Road Improvement Project and the National Broadband Project, all of which are funded by the Exim Bank of China.

There is good news in the report, however, as the Ministry revealed that as of May 2019, millions in debt to Guyana’s regional neighbour, Trinidad and Tobago (T&T) had been repaid. According to the report, Guyana’s debt to T&T had in fact matured, which means the principal became due.

“In May 2019, Guyana fully repaid its debt to Trinidad and Tobago, in keeping with the Paris Club Bilateral Rescheduling Agreement signed on October 6, 2005. Trinidad and Tobago, which was Guyana’s largest bilateral creditor about two decades ago, generously wrote off US$482.5 million or 90 per cent of Guyana’s debt as part of the Paris Club arrangements,” the report states.

Trinidad is also cited as one of the reasons the US dollar share of the external debt fell at the end of June 2019, as compared to the first quarter of the year. According to the report, this is because of repayments to multilateral creditors like the Caribbean Development Bank (CDB) and bilateral creditors like T&T, Kuwait, and Venezuela.

When it comes to Venezuela, Finance Minister Winston Jordan was quoted previously in sections of the media revealing that Guyana owed them US$114.7 million. He had, however, also said that owing to the political and social unrest in the neighbouring country and US sanctions, the money had to be paid into an escrow account.

“At the end of June 2019, the total stock of public debt was US$1.6 billion, a 1.5 per cent increase compared to the end-June 2018 position. This increase was mainly attributable to higher net flows.”

According to the report, these net flows “were driven by substantially higher disbursements relative to principal repayments between June 2018 and June 2019. However, the total stock of public debt decreased by less than one per cent from the end of first quarter 2019 position of US$1.6 billion.”