‘Bharrat Economics’ will doom our development

Jul 09, 2023 ExxonMobil, News, Oil & Gas

---

…as country borrows six times more this year – AFC 

Kaieteur News – This year, Guyana’s national debt is set to increase by $79 billion, as the government enters into more financing agreements, with the expectation of continued success from the nascent petroleum industry.

Vice President Bharrat Jagdeo had expressed the view that while the revenue from the oil sector is “not much” presently, the government is still taking loans now for development and will pay back later when it has the “capacity to do so”.

“…So it’s a combination of spending what we have, and a judicious set of borrowing, where we know based on future capacity we can repay”, Jagdeo said.

The Alliance For Change (AFC) on Friday said that the ‘Bharrat Economics’ will doom the country’s development as the existential threat of the climate crisis will see a major shift away from the use of fossil fuels by 2030. With an already volatile market where the oil prices have been fluctuating with influence from the European war, the political party worries that the country’s prospects could be bleak with the current regime in office.

Party member, David Patterson on Friday said the group is appalled at the number of loan agreements the government has entered into for the year so far.

Just last month it was reported that government inked an agreement with the government of Saudi Arabia to the tune of US$150 million. In the month prior, the administration secured a loan from Qatar to the tune of US$350 million.

It is still also currently seeking financing from the United States Export Import Bank (EXIM) to fund the Gas-to-Energy project. Government had said it had approached the financial institution for some US$646 million to support the initiative.

By the end of last year, Guyana’s total stock of public debt increased by 16.9 percent compared to 2021. It was the Finance Minister, Dr. Ashni Singh who said during this year’s Budget presentation that the nation was US$3.654 billion in debt at the end of 2022.

Patterson, while addressing reporters at a party press conference explained that the administration has been turning to lending institutions and countries to finance projects that were never conceptualized in their Manifesto plans. He believes that there may be a sinister motive behind the debt Guyana is being burdened with, especially as the ‘Su allegations’ for bribery and corruption are to be investigated independently.

The former Minister of Public Infrastructure added that the use of the revenue is also concerning, since the projects are being awarded to ‘fly- by-night’ contractors. He referenced the whopping $346 million contract that was awarded to St8ment Investment Inc. to build a new Primary School at Bamia in Region 10, with no public records indicating any construction experience.

Patterson also flagged that contracts are now being awarded to companies that are still on the blacklist by the National Procurement and Tender Administration Board (NPTAB). He argued that even though complaints have been filed with the Public Procurement Commission, the body is yet to conduct a single investigation.

“That alone should raise flags in this country but that’s what they are doing so there is no need, no need whatsoever for us to be borrowing the money but of course they [are] borrowing to squander it away,” he contended.

Importantly, Chairperson of the AFC, Catherine Hughes said Guyanese must begin to consider the fluctuating oil prices and the fact that the leaders are borrowing more loans without understanding that the cost per barrel will be considerably lower in another few years.

She reasoned, “The fact that we are borrowing excessive amounts without understanding or knowing what the price is going to be in another two, three or 10 years, especially when you consider that the world is moving towards renewable energy and the US government, as you know, denied a loan to one of our local companies because they said their focus is renewable energy.” Hughes added that this leaves Guyanese in a very difficult position and “very worrying situation”.

Meanwhile, leader of the AFC, Khemraj Ramjattan added that Guyana must “live within its means” and use the revenue that comes in wisely. However, he said the government has embarked on a spending spree and has borrowed over US$2 billion in the last three years since taking office.

According to him this “makes nonsense of a balanced budget as it were. When you borrow, you also make the future generations start becoming indebted and they aint even born yet! That is also the repercussion of excessive borrowing but as Jagdeo indicated that one year we can pay off the debt that we owe, but…one year the oil could go down to US$36 per barrel and then what happens to our children?”

To this end, the party leader said, “That is why I do not understand ‘Bharrat Economics’ and it is going to doom our development because he is basically in charge of the government in relation to that…and of course the benefits of spending so much money loans and all of that got big corruption behind it.”

He said a number of Guyanese have recognized this and have been writing about it in the newspapers daily, while the evidence can be easily spotted through the substandard work accepted for the “big” multi-million dollar contracts.

Only on Tuesday this newspaper reported that President Irfaan Ali rebuffed the concerns over his government’s increased borrowing. The head of state was speaking in Canada at a forum when he explained that although there is chatter that Guyana is borrowing a lot, the country has made it clear that it would only borrow from institutions that are offering loans at a fixed interest rate of no more than 3.5 percent.

“Some people say we are borrowing a lot…although we are a country that is the fastest growing economy in the world, we have set ourselves an internal target in Guyana that we are only going to borrow fixed rates, less than 3.5 percent,” he explained.

The AFC also responded to the President’s statement, arguing that it does not justify the significant increase in loans.

---

• Development, doom, loans, oil, revenue

---