Latest update January 17th, 2025 6:30 AM
Guyana’s failure to repay loans on infrastructure projects will result in severe debt crisis – former diplomat
By Davina Bagot
Kaieteur News – With myriad multi-million dollar projects slated to shortly come on stream, a former diplomat, Professor Dr. Shamir Ally has warned that Guyana’s failure to pay back on loans borrowed to facilitate these projects can land the country in a severe debt crisis, similar to the prevailing situation in Sri Lanka.
Professor Dr. Shamir Ally
In a letter to this publication, Prof. Ally, who formerly served as Guyana’s second Ambassador to Kuwait and Guyana’s First Alternate Governor at the Islamic Development Bank, pointed out that while infrastructure development is key to a country’s progress, it is equally important for the country to manage its debts.
More importantly, he pointed to the importance of feasibility studies being conducted to ensure the viability of huge planned projects.
“Infrastructures are excellent, but too heavy emphasis on infrastructures, with poor pay backs will result in a severe debt crisis. Thorough vetted feasibilities’ studies are needed for each project,” Dr. Ally wrote.
During an outreach to Region Six, last week, the President, Dr. Irfaan Ali, and Vice President, Dr. Bharrat Jagdeo announced that a stadium and an airport will be built to serve as a “growth pole” for the Berbice area.
On the other hand, several other infrastructural projects are lined up that could cost billions, even though the returns remain questionable. For instance, the government is forging ahead with its Gas-to-Energy project, pegged at some US$1.3 billion. Even though the project has been dubbed the largest ever attempted by Guyana, analysts continue to question the possible returns from the project, in the absence of a feasibility study.
The Cheddi Jagan International Airport (CJIA) ‘renovation’ project, being funded with a loan from China has been ongoing since 2011. Additional features continue to be added to the structure while more monies are also being pumped into the structure. It was expected to be a US$150M venture; US$138M financed from the China Exim Bank and $12M from the Consolidated Fund – taxpayers’ money. However, to date more than US$160 million has already been spent on the project.
Guyana is also in the process of finalising an agreement with the Chinese for the construction, design and financing of a new Demerara Harbour Bridge (DHB).
Prof. Ally in his letter to the editor, therefore, related that Sri Lanka is a perfect example of government taking on too many costly infrastructures, such as its international airport built by China with a loan from the country to finance the project.
Another example, he said, is the Hambantota Port deal with China, as Sri Lanka was unable to repay and China received a controlling stake of the port, which is in a very strategic area, with the political and economic interests, competing for power, via location.
“Currently a political crisis is ongoing in Sri Lanka due to severe economic conditions for its citizens and their nation,” he related.
The island nation of Sri Lanka is in the midst of one of the worst economic crises it has ever seen. It has just defaulted on its foreign debts for the first time since its independence, and the country’s 22 million people are facing crippling 12-hour power cuts and an extreme scarcity of food, fuel and other essential items, such as medicines.
Even as the debt piles up, Sri Lanka is looking to the International Monetary Fund (IMF) for an immediate bail out.
Last October, Kaieteur News reported that Guyana’s outstanding stock of external debt grew by 2.6 percent to US$1,355 billion from the end of December 2020. More alarming, however, was the fact that Guyana in 2020 collected some $230.4B in current revenues but with its total public debt figure, it would mean the country merely earned as a nation half the amount it owes.
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