Govt. borrowing – a black hole

Dec 08, 2021 Editorial

Kaieteur News – We wrote about this before, but because what the PPP Government is doing has many grave implications for Guyanese we share again today, with what seriously worries many. It is that the Government has embarked on a programme that is nothing less than a borrowing free-for-all. It is the best description, since binge has an element of sanity returning, when reality takes hold.
Like a drunk celebrating his good fortune, what the PPP Government is doing, through easy access to huge amounts of money, is having a grand party at the expense of the national community. It is borrowing and splurging on murky high-profile projects, almost without any restraint, while positioning itself to borrow still more to continue the good times.

This is what today’s government is doing through approaches to China, and different sources in the Middle East, among others. The Chinese are always ready to treat with a sucker that has good credit standing (Guyana so qualifies with its oil riches), while the kingdoms and sheiks of the Middle East have the deep pockets, and an eye for good prospects with rich returns.
So, it has been a billion here and a billion there, and when taken together, the billions add up to incredible amounts for this still poor nation. If those huge sums of borrowed money were in Guyana dollars, the concerns may not be so intense, but they are mainly in American dollars, which given our current exchange rate, sinks us and keeps us below rough waters for many decades ahead. Nevertheless, PPP leaders couldn’t be bothered with counting, and that is in any currency, so excited they are to be around such financial candies in the well-stocked foreign stores. It is a dream came true, and they can’t get enough to feed their debt borrowing habit, just like the serial alcoholic or drug addict.

From the perspective of those same leaders, it is free money, and they are right to a point. After all it is not leaders who are saddled with the debt and responsible for paying back, but the already strapped and bowed citizens of this country. The trick is to speak in billions and impress the population about how much is done, shining the spotlight on this or that fabulous project with so much potential, while not saying a single word, or expressing any worry, about the ballooning debt burden piled on the head of a poor society. When some get agitated and make some serious noise, then there is always a $25,000 handout to smooth ruffled feathers, and calm most of the Guyanese people down.
What no one is pointing to or saying anything about is that the much talked about oil fund held in a New York bank is as good as gone. That is, it functions as an unspoken and unwritten collateral for the billions in borrowing. In fact, future earnings are also likely to be gobbled up, once this frenzied borrowing of big billions continue unabated. For, Guyanese are now talking about and using a word that was once alien to them, and still mysterious to most of them. Today, Guyanese are speaking of trillions. Most do not have a clue of how many zeros are involved in a trillion, but they have an appreciation that a trillion means a world of money we are floating in, not as revenues coming to us, but as debt now and debt to come, which have a due date.
The fact is that reckless overspending by the PPP Government meant funds for all the enormously expensive projects had to come from somewhere since we didn’t have enough to cover what was required. As announced in a flurry involving the oil and gas sector, for infrastructure (and other things), a huge hole has been created. It gets bigger and deeper, but government leaders are neither listening nor budging. They ignore the brutal lessons of other Third World countries, whose people are poorer long after oil was first discovered.
In effect, we don’t have an oil fund safety net. We owe billions, and future revenues could be similarly swallowed up. Clearly, oil has driven Government leaders mad, and now we fear them, and for ourselves.

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