Govt. borrows double what it earns

Dec 16, 2021 News

By Gary Eleazar

Kaieteur News – Guyana last year collected some $230.4B in current revenues but with its total public debt figure standing at some $415.2B, it would mean the country, last year, earned as a nation half the amount it owes.

The startling revelation was laid bare in the Auditor General’s report for the fiscal year 2020, made public when the National Assembly met on Monday last. Documented in that report, the Auditor General outlined that, the total public debt stood at $415.153 billion or the equivalent of US$2B at the end of 2020. This compared with the sum of $388.5B billion or the equivalent of US$1.8B, at the end of 2019, representing an increase of $26.7B.

The Auditor General, Deodat Sharma, in his report noted that, expressed as a factor of current Revenue—$230.383B—the total public debt at the end of 2020 was 1.80 times the current earnings, with a factor of 1.61 at the end of 2019, and 1.80 at the end of 2018.
It was noted that during the years 2015 to 2020, the total public debt increased by $63.1B or by 17.92 percent as shown in the table below. Public debt in 2015 stood at some $352.1B which has since moved to the $415.2B by last year.

The country’s public debt is required to be serviced out of the Consolidated Fund and as such is subject to scrutiny by the Audit Office. The Internal Debt for government at the end of 2020 was $143.428 billion, compared with $120.096B at the end of 2019, a net increase of $23.332B, according to the Auditor General. It was noted too in the report that the External Loans Act, Chapter 74:08 of the Laws of Guyana, as amended by Order №. 31 of 1991, authorises the Government to raise loans outside of Guyana not exceeding G$400 billion.
In February 2021 however, the external debt ceiling was increased from G$400 billion to G$650 billion. The domestic debt ceiling was also increased in February 2021 to G$500 billion from G$150 billion.

According to Sharma, during the period under review—2020—the Government of Guyana entered into four new loan agreements totalling G$14.9B. However, there were no disbursements on these loans during the year 2020. The related loan agreements were all laid in the National Assembly during 2020 and 2021. These related to additional financing for the flood risk management project and amendment to the original financing agreement, COVID assistance and a small hydro power plant. Current revenues had by the national coffers are sourced from collections made by the Guyana Revenue Authority (GRA) through the payment of various taxes and fees, such as the Pay and You Earn (PAYE) contributions by taxpayers, earnings from the Value Added Tax and Customs and Excise duties among other sources.
The midyear report produced by the Ministry of Finance on its financial performance of the country for the first half of the year had pegged the country’s total stock of debt to be some US$3B. Former Minister of Finance, Winston Jordan, subsequently lamented the state of affairs saying, the country’s ballooning debt should be of concern to all Guyanese. According to Jordan, the administration’s signaled intention to borrow several billions more is based on the assumptions that oil resources will continue to earn at current world market prices at some US$80 per barrel.

Only recently, Vice President Bharrat Jagdeo, confirmed that Government was looking to access some US$1.5B in loans from China. The former Finance Minister noted that at half year, the debt stood at US$2.9B and along with the proposed loan from China, there is also another amount to the tune of some US$1.9B from the Islamic Development bank to be secured.
He drew reference, too, to the fact that only recently, Head of State President Irfaan Ali announced an intention to approach the United Arab Emirate (UAE) to tap into their ‘sovereign wealth fund’ for investments in Guyana.

Additionally, the President had announced an intention to approach the Kuwaitis with an interest in accessing their investment fund. These additional debts, to be contracted, according to Jordan, do not even include the regular borrowing from institutions like the World Bank, the Caribbean Development Bank, and the Inter-American Development Bank (IDB), among others.
The IDB currently has the largest share of Guyana’s external debt according to the government’s mid-year report on the country’s finances.

According to the information contained in the Mid-Year Report for 2021, monies received from the IDB in loans increased 10 fold, from US$5.2 million in the first half of 2020, to about US$55.5 million for the corresponding period in 2021. The report stated, about 75.2 percent of the latter amount was allocated to combating the economic and social ramifications of the pandemic. Additionally, this publication last month reported that Guyana had approached the IDB for a loan totalling US$1,817,764 to support the development and implementation of a Medium-Term Development Strategy, which will leverage on the country’s emerging oil and gas revenues.