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Guyana still owes Kuwait US$27M despite US$50M write-off on US$10M loan

Apr 02, 2019 News

 

In 1975, Guyana took a loan from the State of Kuwait, through the Kuwait Investment Authority for US$10.3M. At the end of 2017, non-payments saw that US$10.3M rise to a massive US$77.5M, a significant sum for Guyana.
Yesterday, the Ministry of Finance said it has managed to get Kuwait to write off US$50M.
According to the Ministry of Finance, a Bilateral Debt Settlement Agreement was signed by Minister Winston Jordan on March 18, 2019, with the State of Kuwait, through the Kuwait Investment Authority, to cancel US$50,739,255.67 of Guyana’s debt to that country.
“This debt cancellation will reduce Guyana’s external debt and allow the country to expand its development agenda, as funds saved under this agreement would be allocated to social projects within the context of the National Budget,” according to the Ministry of Finance.
The agreement, which came after a tough negotiation process, paves the way for greater co-operation and the strengthening of cordial ties between the two countries, it was stressed.
Commenting on the agreement, Minister Jordan said that it is the result of renewed efforts by his Ministry to engage Guyana’s non-Paris Club bilateral creditors in negotiating debt relief that is acceptable and sustainable.
The remaining amount of US$26,853,585.23 will be settled through a combination of cash payments, to be made over nine years, and a debt swap arrangement, which will be worked out in due course.
Guyana’s debt to Kuwait originated from a Loan Deposit, contracted in 1975, from the Central Bank of Kuwait for Kuwaiti Dinars 3.0 million (US$10.3 million at that time), for balance of payments support to the Bank of Guyana.
The debt accumulated massive arrears over the past four decades, at high market interest rates, the Ministry said.
As at December 31, 2017, the debt to Kuwait had grown to US$77,592,840.90, comprising principal arrears of US$9,940,500 and interest arrears of US$67,652,340.90.

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