‘PPP borrowing spree chaining our children’s necks to debt’

Oct 31, 2022 News

…AFC warns as total debt to increase 8% by year-end

Kaieteur News – The People’s Progressive Party (PPP) Government has embarked on a massive borrowing spree to fund a number of projects in recent days, taking the country’s total stock of public debt to a whopping US$3.2 billion at the end of June this year, according to the Ministry of Finance’s Mid-Year Report.

This borrowing trend however has become worrying to Opposition party, the Alliance For Change (AFC). On Friday when the political group held its weekly press conference, Chairperson Catherine Hughes addressed the issue, arguing that the frequent loans are chaining future generations to debt which may leave Guyana impoverished. According to her, “We are most concerned about the extent to which we have been borrowing, especially since we know we have been blessed with a Natural Resource Fund that a couple of weeks ago again had a billion (US) dollars in it so we are concerned. We are in fact putting a ball and chain around the necks of the next generation of young Guyanese.”

AFC Chairperson, Catherine Hughes

Hughes went on to detail that at the Parliamentary level, Opposition members are not given an opportunity to scrutinise the sums being taken out by the government as various Committees have not been meeting as they should. “The checks and balances that we should have in our country at the Parliamentary level and also at the organisational level, organisations that have responsibility for the particular sectors we know those are not working,” she argued.

Hughes, the former Telecommunications Minister under the APNU/AFC Coalition government warned that while the consequences of the ‘borrowing spree’ may not be immediate, the economy may be left in a state where people are unable to feed their children, which may even lead to higher levels of crime and violence. Added to that, she explained, “The consequences could be further down the line in terms of when it comes to repayment. If we don’t manage our oil resource funds properly (or) effectively, we may not see the results now but we could as I said before see the results further down the line when the country and the people have to struggle to repay these loans. It is a major major challenge.” The Vice Chairman of the AFC, Ricky Ramsaroop also weighed in on the subject, noting, “It’s really unfair to put that tab on our future children and grandchildren to come.”

At the end of June 2022, Guyana’s total stock of public and publicly guaranteed (PPG) debt rose by 3.9 percent when compared with the end-December 2021 figure of US$3,126.7 million, reaching US$3,248.8 million at the end of June.

It must be noted that the government plans to expand this debt as signalled in its Mid-Year Report. According to that document, “The end-2022 total PPG debt stock is projected at US$3,520.5 million, an 8.4 percent increase relative to the mid-2022 position, driven by anticipated expansions in both domestic and external debt.”

In September this year, Kaieteur News reported that the bulk of Guyana’s external debt was owed to China. This information is encompassed in the Bank of Guyana’s First Quarter Report. The report explained China Exim Bank accounts for 39.5 percent of the country’s total external debt. Additionally, debt repayment to the China Exim Bank accounted for 82 percent of debt repayments to bilateral creditors. In the first three months of the year, US$10.6 million alone was paid to the Chinese lending institution, up by 1.4 percent. The increase, according to the Central Bank, was as a result of higher principal repayments during the review period.

Trailing the China Exim Bank is the Inter-American Development Bank (IADB). According to Guyana’s first quarter report, loans to the IADB account for some 32.6 percent of the country’s total external debt service. Meanwhile, it was also noted that debt repayments to the Caribbean Development Bank (CDB) rose by 4.6 percent to US$3.0 million during the first quarter of 2022.