By Samuel Sukhnandan
The Opposition People’s Progressive Party (PPP) has long complained about the coalition Government’s excessive borrowing, and has said repeatedly that if the David Granger-led Administration does not curb this practice, serious repercussions could result to the local economy.
This point has been further emphasised by PPP General Secretary Dr Bharrat Jagdeo when he said recently that Guyana’s debt is a major concern for his party. An economist by profession, Jagdeo has said that from all indications, the coalition does not seem to be taking seriously calls for it to lessen its borrowing.
Guyana has recently signed a US$20 million loan agreement with the Islamic Development Bank (IsDB) for the Guyana Power and Light (GPL), and another US$36.7 million loan agreement with China for the broadband expansion project. This is in addition to other sums this Government has borrowed, such as the $30 billion bond for the Guyana Sugar Corporation (GuySuCo) which observers are already contending is being misused from its intended purpose.
Asked to comment on these new loan agreements, Jagdeo said his concern is how well the Government would be able to manage debt, although he is not against Guyana borrowing from its bilateral partners, like China. However, he said, the focus must be on transparent management of the loan monies.
“My concern is how they manage our debt, so we have to look at the conditions of the loans. I know Chinese loans are very concessional, so when you look at the grant element, it tends to be very high. Once those are met and the projects are good, we will support them,” he added.
The former Guyanese Head of State has said the PPP is of the firm view that it must embrace China and the developing world as partners. According to him, the United States of America is a long vested partner of Guyana, and will remain so. “It does not have to be one at the expense of the other,” he explained.
The Opposition Leader has advised that Government should look out for Guyana’s best interest. He said, “If there is anything in those loans that is not in our best interest, then we have to address it.” He therefore believes that Government should not have any difficulty releasing the Memorandum of Understanding (MOU) signed with China.
But Minister of State, Joseph Harmon, has defended the coalition Government’s position on debt. When this newsgroup questioned the Minister recently as to whether he feels that Guyana’s debt is being properly managed, Harmon responded by saying that it is managed well by Finance Minister Winston Jordan.
“I believe that our public debt is really well managed by our Minister of Finance,” Minister Harmon posited, while noting that Minister Jordan is very prudent in the management of the country’s financial resources. “Usually, he will not step out and sign agreements and sign documents that add to our public debt without some form of action plan in how we are going to deal with it,” he stated.
Harmon also emphasised that, before a loan is taken, deliberations occur at several tiers before the green light is given. “The Minister himself does not go out on his own and sign these documents; they are the subject of deliberation before the Cabinet, and the Minister is given the mandate to proceed to sign any commitment which was made between the Government of Guyana and either a bilateral party,” he explained.
However, based on the recently released Bank of Guyana Quarterly Report and Statistical Bulletin, public debt is on the rise, and it has been revealed that external debt repayments are also on the rise.
The report pegged the hike in public debt at US$19 million. The report divided this debt into external and domestic. External debt increased by 1.5 per cent — from a December position of US$1.241 billion to US$1.265 billion currently.
“The rise in the stock of external debt was on account of higher disbursements by multilateral creditors, specifically IADB and CDB, for financing of social and economic infrastructural projects,” the report states.
Domestic debt, on the other hand, increased to $89.5 million from a December position of $88.8 million. Domestic debt, the report notes, increased because of a hike in treasury bills by 1.3 per cent. “(This) resulted mainly from a 1.5 per cent growth in the stock of the 364-day treasury bills during the first quarter,” the report adds.
Repayment of this external debt, according to the report, grew by some US$24.3 million, to US$85.3 million. This is a rate of 59.1 per cent when compared to the corresponding period of 2017. This was not the case for domestic debt.
“Domestic debt service payments fell by 14.6 per cent to $726 million, resulting mainly from a 23.2 per cent reduction in interest payments for treasury bills. Interest payments for the 182- and 364-day bills fell by 38.7 per cent and 17.6 per cent to G$36 million and G$358 million respectively.”