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Govt. to raise overall public debt ceiling
– domestic by 233.3%, external by 65%
Senior Minster responsible for Finance, Dr. Ashni Singh.
Kaieteur News – The People’s Progressive Party/Civic Government has tabled two Orders at the National Assembly in a bid to raise the country’s debt ceiling. It was Senior Minister in the Office of the President (OP) with responsibility for Finance, Dr. Ashni Singh, who tabled the two Orders at yesterday’s parliamentary proceedings.
In the Orders, it was proposed that the domestic debt ceiling be increased to $500 billion, almost three decades after the last upward revision to $150 billion in 1994. Additionally, a new external borrowing ceiling of $650 billion was proposed, three decades after its last increase to $400 billion. Both of these increases reflect a 233.3% and 65% increase, respectively.
According to a Ministry of Finance (MoF) statement, the move to increase the domestic debt ceiling was influenced by several factors, one of which it says is the existence of a large Consolidated Fund overdraft at the Bank of Guyana, accumulated over the last five years.
Government is now seeking to remedy this situation through the issuance of appropriate instruments. However, if the overdraft were to be addressed under the existing ceiling for domestic debt, a breach would result, the statement said.
It went on to say that the government would require the issuance of new domestic instruments, in future, to finance various policy initiatives, and to stimulate development of the domestic financial market.
“Meanwhile, it added, the move to increase the external debt ceiling is to accommodate the existing level of external debt contracted, plus anticipated new borrowing to fund government’s development agenda.”
“Importantly, these revisions to the external and domestic debt ceilings do not threaten Guyana’s long-term debt sustainability, given the substantial economic progress made since the early to mid-1990s, when the ceilings were last revised, and the country’s robust economic outlook,” the MoF said.
At the time of the last revision in 1991, the Ministry said, Guyana’s external debt ceiling was set at more than 1,000% of GDP. In contrast, the new proposed external debt ceiling would amount to less than 60 percent of GDP, using the latest 2020 GDP estimates.
“On the domestic side, when last revised in 1994, Guyana’s domestic debt ceiling was set at almost 200 percent of GDP. In stark contrast, the revised domestic debt ceiling would amount to less than 50 percent of GDP. The above-mentioned comparisons clearly depict that Guyana’s current debt carrying capacity could safely accommodate the proposed ceiling increases,” the Ministry concluded.
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