President Ali seeks US$2B loan from EXIM Bank

Jul 28, 2022 News

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– signs MOU targeting infrastructure, renewable energy 

Kaieteur News – Amid growing concerns about this country’s ballooning external debts President Irfaan Ali on Wednesday signed a Memorandum of Understanding with US EXIM Bank for US$2B, targeting potential funding for infrastructure, renewable energy and other areas.

And the country’s head of state who, is on a tour of the United States hailed the potential loan as a signal of the US’s commitment not only to Guyana but to CARICOM. The Head of State made this assertion following the signing of the agreement, which he dubbed as “historic.” Kaieteur News reported late last month that a Bank of Guyana (BoG) report, documenting the country’s performance in the first three months of this year, has found that the state now owes an additional US$124.4 million in debt, bringing the total to US$3.248 billion. According to the document, “the total stock of public debt, which comprises both external and domestic debt, increased by 4.0 percent or US$124.4 million to US$3,248.6 million compared to the end-December 2021 position.”

It was explained that the domestic debt stock increased to G$389.469 billion or US$1.868 million during the review period, on account of increased issuance of treasury bills for Central Government’s budgetary financing. At the end of December 2021, the total domestic debt stood at G$361.513 million or US$1.734 million. The Bank noted that domestic debt service payments decreased by 17.4 percent, as a result of lower principal repayments on treasury bills, particularly, the 182-day bill. “Total domestic principal and interest payments were G$24,004 million and G$325.2 million, respectively. Domestic debt service payments accounted for 44.8 percent of government revenue.”

Notably, during the first three months of the year, the stock of external debt decreased to US$1,383 million on account of declines in both multilateral and bilateral debt stock during the review period. This was attributed to higher debt service payments to both categories of creditors, BoG said.

Important milestone

Meanwhile, according to an Office of the President press release, the MoU represents an important milestone in US-Guyana relations since it lays the foundation for Guyana to access EXIM financing and facilities for the first time and provides for interventions at a scale that is likely to have a lasting developmental impact.

Under the agreement, the parties agreed to explore options for utilising EXIM’s standard instruments, which include direct loans and medium- and long-term guarantees, to finance US exports to Guyana for Government projects totalling US$2bn. “In this development phase of our country, we want to see greater US participation not only from the Government but from the private sector. One of the inhibitive factors has always been the ease of access to financing and the barriers to financing. This, today, is the single most important signature not only for Guyana but for the region, the United States, through one of its agencies. EXIM Bank is serious about its commitment to the CARICOM region.”

The MoU, he added, should also signal an open invitation to the private sector and the leadership of both countries to now move aggressively forward on a platform that is supported by the Government of Guyana and EXIM Bank. As such, he expressed optimism that full use will be made of this opportunity and that there is a deeper understanding, on both sides, of the level of seriousness that is attached to the relationship. This commitment, the President added, “has now been cemented in the MoU that not only outlines areas but sets an initial figure of $2bn to be allocated to the development projects and work in Guyana.

“I think we can applaud ourselves and EXIM Bank for this dynamic, futuristic, and bold move in advancing this relationship and this cause, and the areas we have identified shows the broad and multifaceted nature of the leadership of EXIM Bank.”

The MoU also identifies a number of indicative sectors in which projects may be identified. These include but are not limited to: infrastructure (including roads and bridges); energy (including renewable energy and emission reduction); telecommunications (including wireless technologies); water treatment and sanitation (including technologies and infrastructure); and agriculture.

“This is what we’re talking about, not a simple MoU, but a MoU that has the potential of unlocking all of this. The focus on energy, renewable energy, that allows us to advance on the path of goals and targets we set at COP26 and beyond. It shows our commitment on cleaner energy, advancing sustainable and resilient development.”

President Ali committed to working “aggressively” and “proactively” in pursuit of the full realisation of the MoU while ensuring that all parties emerge as “winners”. “So Madam President and Chair of EXIM Bank, Vice Chair, leadership, I want to commit to you that we are now going to aggressively, proactively and in a dynamic way pursue this MoU to the full realisation of the potential benefit it brings…for both the US and Guyana. We are not in this to win alone; we are in this to create an opportunity for each of us to be winners.” The President also invited the bank’s hierarchy, including its President and Chair Reta Jo Lewis to visit Guyana with the US private sector to meet with the Government and the local private sector in Guyana to solidify the projects.

 

 

 

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