Govt. to fork out $44B to service ballooning debt in 2024 - Jagdeo

Govt. to fork out $44B to service ballooning debt in 2024 – Jagdeo

Jan 21, 2024 News

Vice President, Bharrat Jagdeo

…as Ministry of Amerindian Affairs, Culture Youth and Sport receives $9B each

Kaieteur News – The Government of Guyana (GoG) has set aside $44 billion in this year’s budget to service its ballooning debt.

Vice President and former Finance Minister, Dr. Bharrat Jagdeo during his weekly press conference on Thursday was defending the country’s first trillion-dollar fiscal plan when he announced that portion that will be used for debt servicing.

The $44B or approximate US$220M vastly exceeds the sum allocated to various government ministries. For instance, the Ministry of Amerindian Affairs and the Ministry of Culture, Youth and Sport have each received about $9 billion to finance their development agenda.

In 2023, some US$177.3 million in revenue went towards debt service, up from US$150.2 million in 2022.

The growing payments to service the country’s debt stems from a conscious decision of policy makers that believe Guyana’s forecast of revenue from the oil and gas sector justifies its borrowing agenda.

The Vice President at his recent media engagement pointed to the expansion of the oil sector and the revenues likely to flow from this stream.

He explained, “Our future revenue, if we forecast based on oil production even for the approved projects and Whiptail which will be approved, if we only factor in production at those levels, at say current oil prices at the volume that we expect to produce from those projects, the revenue for the state in the outer years, that is maybe by 2028- 2030 we could be (receiving) US$5.7 to 6B.”

The former Head of State noted too that the country is poised to receive US$2.6 billion in oil money this year which exceeds its total external debt.

Opposition Member of Parliament (MP), Volda Lawrence has posited that while politicians bank on revenues from the oil sector to repay loans to its international creditors, Guyana could find itself in a dangerous trap, quite similar to the one that ensnared oil-producing states like Nigeria and Ghana.

“Sir, the government’s eschewing the use of the burgeoning natural resource funds, in preference to borrowing from any and all sources, on the assumption that oil prices will remain high, thus allowing easy repayment of loans taken today, is falling into the same trap as did Ghana and Nigeria, for example,” Lawrence said during the 2023 Budget Debates.

The former Health Minister warned in her presentation that any collapse in oil prices will leave the country dangerously exposed to situations like those that unfolded in Sri Lanka and Uganda. Those nations, deeply indebted are still struggling to reach debt service commitments, leaving the population without access to electricity and other key services.

allocation, budget, Debt, oil, service

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