Guyana’s debt to IDB alone close to US$1B without interest

Mar 24, 2023 News

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Kaieteur News – Guyana’s debt to the Inter-American Development Bank (IDB) is pegged at close to US$1 billion currently. The aforementioned sum does not include the interest the country will be paying on the loans.

A perusal of the bank’s Annual Report 2022: Financial Statements has revealed that as of December 31, 2022, Guyana owed the bank US$787 million. Adding the US$205 million in loans Guyana recently signed off on with the IBD, brings the total loans borrowed from the bank to US$992 million.

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). On Thursday Kaieteur News had reported that it was disclosed in the bank’s 2022 financial statement that Guyana borrowed US$335 million from the IDB in 2022.

According to the document, the loans Guyana borrowed from the IDB falls under the sovereign guarantee portfolio. It should be noted that prior to 2018, the document stated that Guyana borrowed US$552 million from the IDB. Stated in the report also 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.

Guyana’s Finance Minister, Dr. Ashni Singh, during his 2023 budget speech had disclosed that the country’s total public debt stood at US$3.6 billion, an increase by 16.9 percent from last year. This publication had pointed out that almost all of its recently announced public infrastructural projects government has been borrowing to finance them despite earning over US$1 billion in the oil account for last year.

Loans signed with IBD for 2023

On March 8, 2023, Guyana signed three loans with the IBD totaling US$203 million, to strengthen the country’s healthcare system, build roads and enhance infrastructure.

The IBD’s President, Ilan Goldfajn, and Guyana’s Finance Minister Dr. Singh signed the three loans during the XI Annual Consultation of Caribbean Governors that was hosted in Trinidad and Tobago.

In a press statement, the IDB said the first loan captioned: “Healthcare Network Strengthening in Guyana operation” is for a total amount of US$97 million. This loan the bank said will expand the capacity of seven hospitals in both coastal and interior communities, extend coverage of diagnostic exams and medical consultations, advance telehealth services, and increase access and efficiency of the public health system. “This project is expected to benefit over half of Guyana’s population including the Indigenous people with interventions in all 10 of the country’s regions,” the bank stated.

The second loan titled ‘Support Climate Resilient Road Infrastructure Development’ will provide US$100 million to upgrade and expand the quality of roads and utility service along the East Bank Demerara corridor. This involves financing a 25.5 kilometer two-lane roadway with modern and innovative approaches that will improve access and safety, including for vulnerable road users, the bank said.

The third loan is titled ‘Enhancing the National Quality Infrastructure for Competitiveness programme.’ Under this programme, Guyana will reformulate and access additional funding of US$8,000,000 to enhance the National Quality Infrastructure’s capacity to promote the adoption of quality standards among Guyanese Micro, Small, and Medium Enterprises (MSMEs), the bank noted. It added that in November 2016, the IDB approved US$9,000,000 to Guyana for Enhancing the National Quality Infrastructure for Economic Diversification and Trade Promotion. The Government of Guyana requested additional financing to support its priorities of a more diversified and productive base.

IDB warns against ‘excessive’ borrowing

Back 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$5.8 trillion 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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• Board of Executive Directors, Financial Statements, Guyana, Inter-American Development Bank (IDB), The Annual Report, The Year in Review

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