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40% of budget to be funded by loans – VP Jagdeo
Kaieteur News – This year’s Budget – some 46.6% greater than last year’s fiscal plan- is to be financed 40% in part by loans.
Vice President, Bharrat Jagdeo
This is according to Vice President Bharrat Jagdeo. He made this disclosure during a press conference hosted at the Office of the President on Thursday.
Jagdeo said, “About 60 odd percent of the budget is financed from revenue which is significant because we have seen a significant growth in revenue, and the rest through debt.”
Be that as it may the Vice President said Guyana is not worsening its global debt profile. He said he has repeatedly explained that the country’s debt to Gross Domestic Product (GDP) ratio is among the lowest in the Region.
Moreover, he pointed out that only US$1.8B of the US$4.5B is external debt.
In justifying the government’s position to borrow more, he explained, “In 1990, our gross domestic product was approximately US$300M and we owed US$2.1B external debt at that time…we have a US$22B economy today and our debt is US$1.8B. It’s lower, external debt is lower than the debt in the 90s when our economy was 60 odd times smaller…”
Consequently, the VP said, “In spite of our borrowing over this period, our stock of debt to the external world is less than in 1990 when APNU was in office.”
Meanwhile, he said the US$2.7B domestic debt was incurred due to the issuance of Treasury Bills, among others.
On Monday, the senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh presented this year’s Budget to the National Assembly.
The fiscal plan is set at $1.146 Trillion and is themed, “Staying the Course: Building Prosperity for All.”
Notably, this year’s budget represents a 46.6 percent increase over 2023’s budget which was $789.1B.
To meet this astronomical spending plan, Minister Singh revealed that government will be approaching the National Assembly for an increase in the domestic and external debt ceilings. He said this will provide the flexibility needed to optimise on the financing mix while at the same time safeguarding debt sustainability.
The Minister also revealed that in 2023, the country plunged 23% deeper in debt, now owing US$4.5 billion. He said, “At the end of 2023, total Public and Publicly Guaranteed (PPG) debt stood at US$4,508.8 million, up 23.4 percent from the position at the end of 2022, on account of new external and domestic borrowing.”
At the end of 2022, the country’s debt stood at US$3,654.9 million. According to the Minister, Guyana’s external debt amounted to US$1,775.5 million at the end of 2023, up 13 percent from the position at the end of 2022.
Meanwhile, domestic debt reached US$2,733.4 million at the end of 2023, up from the US$2,083 million at the end of 2022. This increase was attributed to the Government’s issuance of new Treasury Bills.
Dr. Singh highlighted that the country’s debt service also increased in 2023. Some US$177.3 million in revenue went towards debt service last year, up from US$150.2 million in 2022. This increase was driven by both domestic and external debt service payments.
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