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GuySuCo unable to service on-lent loans

Nov 23, 2017 News

 

Due to the state of its financial health, the Guyana Sugar Corporation (GuySuCo) was unable to service its on-lent loans.

This is according to Finance Minister, Winston Jordan in his 2016 Public Debt Report. This document was recently laid in the National Assembly.

The Finance Minister explained that on‐lending arrangements refer to arrangements whereby a government contracts a loan – typically a concessional loan from an international financial institution – and then lends the funds to a public entity within the borrowing country. Jordan said that on-lending is a means by which the Government can support strategically important projects that aid in national development.

The economist said that the Government usually enters into an on-lending arrangement, with primary loan proceeds being earmarked to fund capital expenditure(s) for the State Owned Enterprise (SOE). Oftentimes, the capital expenditure, for which money is on-lent, has a social benefit component to it, where its execution does not solely benefit the SOE.

In 2016, there were no new on-lending loans between the Government and the SOEs.

The Finance Minister noted, however, that given the issues regarding the financial health of the Guyana Sugar Corporation, this SOE was unable to make payments of principal and interest to the Government for the loans on-lent to them.

On the other hand, the Minister said that the Guyana Power and Light (GPL) resumed servicing its debt to the Government. In 2016, GPL paid the Government $1B towards the China EXIM Bank on-lent loan.

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