Guyana borrows another US$90M from IDB for education sector

Oct 19, 2023 News

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Kaieteur News – Amid rising debts, the Guyana Government has borrowed another US$90M from the Inter-American Development Bank (IDB), which it said will contribute to human capital development in this country.

The loan approved by the IDB’s Board of Executive Directors is designed to expand access to safe and improved learning environments and enhance educational services for vulnerable students in Guyana, the IDB said in a press release.  The bank said this is the first individual operation of a conditional credit line for investment projects (CCLIP) valued at US$150 million. This first project supports the foundation for transforming Guyana’s education sector by improving the quality of the service and addressing regional differences in the delivery of education in the country.

In particular, the loan approved seeks to modernise the physical infrastructure of Guyana’s schools, a key driver for improving attendance rates, motivating teachers, and elevating learning outcomes, the IDB said. This operation includes the construction of six new primary schools and upgrade of 19 schools in Hinterlands regions (1, 7, 8 and 9) by improving physical and digital facilities to meet 21st-century standards. This includes providing essential services, such as electricity, water, connectivity and digital devices.

According to the IDB, recognising the critical role of quality teaching in developing 21st-century skills, and the main determinant for student learning and skill development, the programme places emphasis on the continuous professional development of teachers to improve their teaching of 21st-century-skills and child-centered pedagogies.

In addition, the programme will strengthen the Ministry of Education’s capacity to deliver improved educational services to vulnerable students and those with special education needs and disabilities (SEND). This includes developing a language policy that will guide interventions for indigenous students in the future and an inclusive education policy. The project will benefit 8,809 primary education students and their respective communities through its interventions. The newly constructed schools will provide 2,610 new primary education spaces. At least 7,341 students and 352 teachers from grades 2-6 will receive digital devices to support their teaching and learning. The US$90 million IDB loan has a grace period of 5,5 years, an amortization period of 25 years, and an interest rate based on SOFR.

Back in March this year, this newspaper reported that Guyana’s debt to the Inter-American Development Bank (IDB) was 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. 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.

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, Dr. Ashni Singh, education, Finance Minister, Inter-American Development Bank

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