Guyana borrowed US$335M from IBD in 2022

Mar 23, 2023 News

Kaieteur News – In 2022, Guyana borrowed approximately US$335 million from the Inter-American Development Bank (IDB). This was revealed in the bank’s Annual Report 2022 Financial Statements.

As required by the by-laws of the IDB, the Board of Executive Directors is required to submit the report. The Annual Report consists of a printed volume entitled, ‘The Year in Review’, containing a review of the Bank’s operations in 2022 (loans, guarantees, and grants).

According to the summary of loans approval by country, Guyana borrowed US$335 million from the IDB last year. It was stated that the aforementioned sum falls under sovereign guarantee. Stated in the report is Guyana’s credit rating with the bank which is a B-.

The loans Guyana took from the IDB were for several different projects and programmes such as: healthcare network strengthening, a programme to support climate resilient road infrastructure development, ‘Enhancing the National Quality Infrastructure for Competitiveness’ Reformulation and Additional Financing program and the program to Strengthen Public Policy and Fiscal Management in Response to the Health and Economic Crisis Caused by COVID-19.

Finance Minister, Dr. Ashni Singh announced in January 2023, that the country’s total public debt stood at US$3,654.M an increase by 16.9 percent from last year. Importantly, almost all of its recently announced public infrastructural projects government has been borrowing to finance them despite earning over US$1B in the oil account for last year.

Also in January, the IDB had released a report cautioning Latin America and Caribbean (LAC) countries against ‘excessive’ borrowing and urged governments to bring their debts down to more prudent levels.

In its report titled, ‘Dealing with Debt – Less Risk for More Growth in the Latin America and the Caribbean’ the IDB disclosed that debt has risen and stands at some US$5.8T which is 117 percent of the Gross Domestic Product (GDP) in the region. “Given the dangers of excessive debt, the current situation in Latin America and the Caribbean is worrisome,” the IDB said. IDB said public debt serves a critical role for countries to pursue public investment projects, implement counter cyclical policies, and provide support to economies in the face of negative shocks. However, the IDB warned that if public debt becomes too large or is not managed with sufficient caution, interest costs may balloon, growth prospects may suffer, and in the limit, a costly debt crisis may be provoked.

According to the report, governments can bring down their debt levels by improving spending efficiency, expanding the tax base, and seeking wider reforms to enhance fiscal balances and boost growth. The IDB said that there are many reasons why public debt levels should be lower than they currently are, highlighting that there are several ways to reduce that debt.

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crisis, Economic, Guyana, Inter-American Development Bank (IDB), The Year in Review

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