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Guyana’s current external debt reaches US$1.6B, debt strategy to address problems-Finance Minister

The Ministry of Finance

by Zena Henry

Guyana’s Finance Minister, Winston Jordan on Friday June 26 announced that the country’s foreign debt has soared to US$1.6 billion

Addressing the National Assembly at the third sitting since the convening of the 11th Parliament, the minister noted the danger of the growing debt and pledged to vigorously attack it during his tenure.

While Guyana has been the recipient of generous debt write-offs from bilateral and multilateral agencies, he said such cancellations have had spin-off implications for the country’s debt-management. These write-offs have put the country in a category, “where our soft loan component has been reordered,” he said. Jordan said in that vein, the country must pay close attention to what is borrows, how it borrows and why it borrows. “Because the mix, the blend is a bit harder now than the soft resources that we were so accustom to.”

The Minister said, “The debt has risen to US $1.6b; the external debt alone.” While he did not have the domestic debt figure at the time, he submitted that that too has, “risen appreciably.” The Minister told the House to look out for the strengthening of institutions and the legal framework for public debt and public debt management.

Under the People’s Progressive Party (PPP) Administration, they lambasted former PNC Finance Minister Carl Greenidge who they claimed was the “worst finance minister ever,” since it was under his leadership the country saw an external debt of over US $2b.

The former Finance minister had stated in his defense that between former Presidents Burnham and Jagan governments, they borrowed little over US$600M, “but by the time interest rate increases of the late 1970s took place, labour going out of the window- and the penalties for late or non-payment of debt took effect, we arrived in 1990 with a debt stock of $2.1B.”

He said that former President Bharrat Jagdeo, who was making the accusation at the time, “does not care to ever draw that distinction that it was not irresponsible government borrowing that led to the large debt.”

Greenidge had noted too that while Jagdeo was President, US$500M was written off, “but already we have borrowed in the space of eight years (2006 to 2014); the debt is a multiple of what the PPP and PNC had borrowed in the 1960s and 70s.”

“The stock of external debt is close to $2B with no significant arrears in it.” This is what we (Guyana) have borrowed, Greenidge had stated. The new Finance Minister is adamant however that a debt strategy has to be looked at quickly, “and tackled frontally lest we end up in a situation for which we were in not so long ago.”