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More loans
Kaieteur News – If this is the first thing that comes out of the minds and mouths of leaders, then Guyanese are in for a long, hard time that goes beyond this generation, the next several ones. When we hear of Guyana now being in a better place to access more loans from the brightest mind in the Government (KN February 17, 2023), then there is great alarm regarding where all this bingeing on debt is going to lead.
It can only be to a bad place, like we have been before: heavily indebted, a burdened population, and government helpless and useless on how to extricate citizens from the deep hole that leaders dug for them. At the end of the day, governments, Presidents, Vice Presidents, and Ministers of Finance do not repay debt. It is the people who do, through a variety of measures, like taxes and cost cutting, that cripple them, leave them without many things.
We thought that Dr. Ashni Singh, a man of considerable learning, a minister of influential standing, would know better. All the textbooks and classrooms, the seminars and symposia, the lessons of debts and the harsh punishments that they inflict on poor populations would have given him the insights to say no. Not so much, not so close together, not so frequently, not for so many costly projects all at once, not so much without a thought to the downside of debt. More than anyone else, Guyana’s Minister of Finance, has the wisdom (or he should have) that comes from his knowledge of the debt cycle and how punishing it can be. He knows of oil market cycles and what that means in the depressed economic way that they leave countries that gamble on prices of this precious, much in demand, commodity staying high perpetually.
The debts incurred against oil revenues still have to be repaid, but now with less than was anticipated coming into the national treasury. These slumps can be prolonged, and bring much economic pain with them. Dr. Singh, a scholar of no mean repute, also ought to know that such pain is not an abstraction, but of what is real, and felt by real people.
To make matters worse, the PPPC Government is not only hunting for any opportunity that opens up to borrow more, but its leaders are also drawing down from the money deposited into the nation’s Oil Fund in a New York bank. The rainy-day money, the oil cushion for stormy times, is being depleted in the manner of a juvenile who just came into a trust fund, with massive, reckless, splurging resulting. The reality is that Guyana is borrowing, and draining its oil ‘reserve’ fund, at the same time, leaving this country exposed and vulnerable to the whims of the oil market, and its known choppiness. Other countries that are bigger and stronger, and longer in the great oil game, have been capsized before, with great national traumas occurring.
Dr. Ashni Singh, Guyana’s money man and wise finance man, knows all of this, and we have only skimmed the surface. Bingeing on debt has almost always led to brutalising of the population, when oil is used as the collateral for borrowing, and when oil markets experience a long, steep downturn. Oil prices are high today, and with China poised to add its giant weight to demand, there is the likelihood that prices are going to go higher. Already, the Saudi Arabians have sounded the warning that their spare capacity to generate more daily production is extremely thin, which could really ratchet up prices. And when oil prices go up, just about everything else go up. On the other hand, should some unforeseen development happen, then oil prices could plummet, which could leave Guyana in a bind, given its increasing debt overhang, GDP and other ratios all considered.
The irony of all this is that as millions and billions are borrowed (or withdrawn from the Oil Fund), many in Guyana are still hanging by a thread: very little of that money is reaching their hands. They have oil, they are statistically rich, they are indebted more and more, and with that they live. They remain hungry, sometimes still hopeful.
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