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Guyana paid US$150M to service debts in 2022
…US$43.4M alone went towards interests
Kaieteur News – As the Government of Guyana (GoG) continues to incur more debts with the expectation of servicing these with future revenues from oil and gas, the country has begun paying large annual sums 0n interest payments alone.
The Bank of Guyana (BoG) 2022 Annual Report has indicated that the country paid a total of $31,444,000,000 – approximately US$150M to service its total stock of domestic and external debt, amounting to some $13,552,000,000 and $17,892,000,000, respectively.
According to the 2022 report, “The total stock of government’s public and publicly guaranteed debt increased by 16.9 percent to US$3,655 million and represented 24.6 percent of GDP (Gross Domestic Product). This increase was due to a 20 percent rise in the outstanding stock of domestic bonded debt to US$2,083 million. External debt grew by 12.9 percent to US$1,572 million.”
Table showing Guyana’s Domestic debt (Source: Bank of Guyana 2022 Annual Report)
The Central Bank also reported that the total debt service grew by 23.2 percent to US$150.2 million and represented 7.2 percent of government’s current revenue. The report explains that while Guyana paid $5.25B in external debt interest, it paid another $3.872B on its domestic debt interest. This means the country last year paid $9.122B in total interests or approximately US$43.4M.
Amid fears that Guyana may be falling into a debt trap that ensnared other oil producing states around the World, the government has been adamant that the country is on the right path. Head of State, Dr. Irfaan Ali earlier this month sought to dismiss any lingering fears by pointing out that Guyana has the lowest debt to Gross Domestic Product (GDP) ratio in the Caribbean. According to the President, even though 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.
He bragged, “Now our net international reserve has increased by 15.1 percent. And what is the reality in terms of our debt to GDP ratio? Both domestic and external today, even with the massive transformation and capital investment in Guyana, our combined debt to GDP ratio is 24.6 percent, the lowest in the Caribbean. And guess what it, is down from 39.6 percent.”
Since Guyana commenced oil production, its GDP has tripled, which according to the Minister with responsibility for Finance, has placed the country in a better place to take more loans. With the country’s increase in GDP, triggered by its oil sector, Guyana has been adding more loans with the hopes servicing its debt from the finance that would come in from its newfound wealth.
Table showing Guyana’s External debt (Source: Bank of Guyana 2022 Annual Report)
Former Auditor General, Anand Goolsarran had warned that while Guyana’s medium-term economic prospects appear very favourable due to anticipated oil revenues, government should nevertheless exercise restraint in spending, given the volatility of oil prices. Goolsarran had made the comments in his Column, published in the Stabroek News.
Debt ceiling
Nevertheless, it was announced just last week that government will be increasing the country’s debt ceiling to allow for accessing more loans to accelerate its development agenda. Guyana’s current debt ceilings stand at G$500 billion for domestic debt ceiling and G$650 billion for external borrowing ceiling. The current debt ceilings were raised by government back in January 2021. Government has since proposed raising the domestic public debt ceiling to $750 billion and the external borrowing ceiling to $900 billion. During a recent interview with News Room, the Senior Government Minister said that as the economy grows, Guyana’s capacity to borrow increases, and he noted that the government intends to use that capacity to finance an aggressive programme to modernise and transform Guyana.
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