Marriott’s loans with RBL renegotiated

Aug 15, 2017 News

Finance Minister insists rising debts manageable

Government says that management of its debts is not out of control and is within

GRA’s Commissioner-General Godfrey Statia (r) and Finance Minister Winston Jordan, yesterday.

acceptable standards.

Speaking yesterday during a review of the country’s Half Year report, Finance Minister Winston Jordan noted that for the US$53M rise in debt for the first six months, more than US$17M would have been loans for the Marriott Hotel, which is being handled by the Atlantic Hotel Inc. (AHI).

This was a wasted project that Guyanese taxpayers’ have been saddled to repay.

AHI, a company that is owned by Government, has no money to repay the loans that it took from Republic Bank Limited (RBL), forcing the administration to step in or face the loans being called in. The RBL loans were in excess of US$27M, it was reported.

Jordan said that his team has managed to renegotiate the loan for the duration of the term that saw interest payments reduced between US$3M and US$4M (up to $800M).

The Marriott project had raised eyebrows because of how the financing was structured, handing control to private investors, despite Government pumping in the majority of funds.

To further compound matters of debts, the Government of Guyana has also taken over the losses of the National Insurance Scheme (NIS) of over $5B for the CLICO investments.

NIS was unable to get back the monies it invested in that regional insurance giant, after it went belly-up in the 2000s. The funds were invested in CLICO in The Bahamas.

Last year, Jordan signed documents that will see the state-controlled NIS, via debentures, recovering the monies in 20 payments in the next 20 years.

Government says it has managed to renegotiate RBL loans for the Marriott Hotel, which has struggled to pay.

The NIS investments in CLICO had been approved early during the Bharrat Jagdeo administration. The loss of the monies for NIS had meant a major dent in revenues for that state-owned insurance entity.

Minister Jordan made it clear that it is not easy managing the economy where one should see some level of stability and sustainability.

He explained that the issue of the current debt is not whether it will rise. It will rise, he insisted.

He said that the debt situation of Guyana is whether the debt ratio is within the livable standard,

For Highly Indebted Poor Countries (HIPC), or those that recently came out, the debt should be about 60 percent of the Gross Domestic Product (GDP). The good news is that for Guyana – the figure stands between 40-50 percent. This means that Guyana is safe, according to international norms, he assured.

With regards to loans that Guyana took, the Finance Minister said that Government has managed to identify them and a true picture is emerging.

Currently, a number of loans that the previous administration took are now being reflected in the economy.

For example, an Indian loan for ferries, some US$18M, is now being reflected. Others, including the East Coast Demerara highway extension, for US$45M are also included.

Jordan was also critical of how a number of loans were handled by the previous Government of the People’s Progressive Party/Civic. He said that there were a large number of loans accessed by the previous government that were going nowhere. One, for example, dated back to 2012.

The loan was for over US$30M for the Sheriff Street expansion, but never disbursed. By activating it now, it means that the loans will be reflected in the actual debt unless they are cancelled.

Jordan believes that the Sheriff Street loan is a waste of money as there are other priorities, far more important issues for the country. He said that some works will be done on Sheriff Street, including bridges, but nothing of the madness as planned by the previous government.

The Coalition Government has come under scathing criticisms from the PPP, now in opposition, after a two-decade rule, for its management of the economy.

However, Jordan made it clear yesterday that the economy is standing its own, especially compared to other countries in the region, which are struggling to even register positive growth.

Present at the press conference yesterday at the Ministry’s boardroom, Main Street, were Commissioner-General of the Guyana Revenue, Godfrey Statia; Central Bank Governor Dr. Gobind Ganga and other ministry’s officials.