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Guyana’s borrowing from IDB not in trouble—Finance Minister
Finance Minister, Winston Jordan, has said that the decision by the United States to withdraw its support from the Inter-American Development Bank’s Multilateral Investment Fund (MIF), will not adversely affect Guyana.
Finance Minister, Winston Jordan
Jordan told Kaieteur News that three other donor countries have stepped up to cushion the gap that the US pullout would’ve otherwise caused.
“In particular, Japan stepped in and together with increased pledges from Latin and Central America, MIF 3 is fully subscribed,” Jordan said.
He further declared that “Guyana’s regular borrowing from the IDB is not in trouble.”
An adverse effect of the US withdrawal was foreseen by many, including former Auditor General Anand Goolsarran. Before it was pointed out that the gap left by the United States was filled, Goolsarran had pointed out that such a situation would pave the way for an opportunity.
“For decades, we have been running a budget deficit,” Goolsarran pointed out.
He told Kaieteur News, “Every year, we rejoice at the fact that we have the biggest budget ever, but little do we realise that we are living with borrowed money, and hence beyond our means,” the former Auditor General said.
He went further to explain contents of the 2015 Auditor General’s report.
“The public debt was G$352.073B, the external portion of which amounted to US$1.143B at an exchange rate of US$1=G$203.1. At the current exchange rate, we will have to find more Guyana dollars to service our external debts.”
Given this, Goolsarran is of the view that the time has come for Guyana to introduce austerity measures aimed at securing a more balanced budget.
“As a minimum, we need to scale back on foreign borrowings. Countries such as Canada and the UK do not borrow to finance infrastructure works,” Goolsarran pointed out.
He said that while the prospects of earning oil revenues are encouraging, the country must consider such revenues, as of now, “a bird in the bush.”
Whenever they materialise, we should consider them as a bonus,” he said. In other words, Goolsarran is advising that Guyana not “put all our eggs in one basket.” He is of the view that continuing to do this will see the country suffering “the Dutch disease.”
“In short, the economy needs to be diversified and we must aim to have a balanced budget, say at the end of five years,” Goolsarran urged.
It was at a news conference last Sunday that the United States’ decision to pull its support from the fund was made known.
According to Reuters, IDB had linked the U.S. decision to a policy shift since Republican President Donald Trump took office in January.
Founded in 1959, the IDB provides loans to governments and businesses in need of funds to finance projects, both large and small scale ventures.
The IDB has boasted of being the leading source of development financing for Latin America, lending $11.3 billion and $13.8 billion in 2015 and 2014, respectively.
The international news house highlighted that Multilateral Investment Fund, or MIF, created in 1993, was instrumental in the development of microfinance and provides technical assistance to small projects aimed at providing economic opportunity to the poor.
A statement from the IDB, as quoted by Reuters, pointed out that the MIF, was actually a brainchild of former U.S. President George H.W. Bush, adding that the United States has historically been its largest donor.
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