Future Govts. will be left with the option of servicing debt or the people – Opposition says

Feb 04, 2024 News

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Kaieteur News – Future governments in this country will be faced with the grim reality of choosing between servicing its debt or servicing the needs of its people.

This is according to the Shadow Minister of Finance, Juretha Fernandes. She was at the time speaking at a joint press conference hosted by the A Partnership National Unity and Alliance For Change (APNU/ AFC) on Saturday morning, where the Opposition registered its concerns over the new debt ceiling and withdrawal rules of the oil account.

On Friday evening, the government passed the Fiscal Enactments Amendment Bill No. 2 of 2024 that authorizes an increase in the country’s borrowing capacity as well as the amount that can be withdrawn from the Natural Resource Fund (NRF).

The Opposition boycotted the debates in the National Assembly, citing a security breach in the Opposition lounge.

Fernandes told journalists yesterday that the increase in withdrawals from the NRF means that there will not be resources left for the future. “It seems to me as though they intend to drain the NRF of every cent…its hard for us to comprehend the arguments that are coming out from the Finance Minister when he is saying that oh, sometime way in the future we gonna have some money left to save when they are consistently showing us every year they are also increasing the debt ceiling.”

Fernandes pointed out, “When you consistently increase the debt ceiling you are left with a choice in the future; future governments will be left with the choice as against do you service debt or do you service the people and these are the concerns we have.”

The Shadow Minister of Finance highlighted that servicing debt has taken precedence in many oil rich countries that fell prey to borrowing against oil revenues. She pointed out the danger in this principle, noting that oil revenues will not flow forever, and can be cut off by various factors, such as a spill.

Fernandes explained that Guyana will then be left to rely on its poorly performing non-oil sectors to fund development in the country. In fact, the Shadow Finance Minister said these resources may very well have to be directed to service this country’s ballooning debt rather than fund the needs of citizens.

During yesterday’s press briefing, Opposition Leader, Aubrey Norton as well as Leader of the AFC, Khemraj Ramjattan and Members of Parliament (MPs) Shurwayne Holder, Roysdale Forde SC and Ganesh Mahipaul shared their views on the increasing debt burden to citizens and the shortening of saving from the Sovereign Wealth Fund (SWF) or the NRF .

For his part, the Opposition Leader said the decision to overturn the NRF withdrawal rules have essentially abolished the fund altogether.

“If nearly every last cent that goes into a savings account can be withdrawn, it is as if there is no savings account at all. This is what the PPP is doing with a fund intended to insulate our economy from many of the ills faced by oil-rich countries,” Norton said.

He added that once in office, the APNU would reverse this practice of “plundering the fund” and replace this strategy with a “well-planned, flexible framework” that balances the nation’s development needs with its financial risks.

Norton was keen to note that oil is a highly volatile commodity which warrants strict consideration of the utilization of these resources. The Leader cautioned, “If there are minimal savings in our Natural Resource Fund and the price of oil falls, various development projects may have to be delayed, cut or otherwise reworked. This will not only result in financial losses, it will generate a climate of extreme instability in the local economy. Guyana’s economy will be in a constant state of flux, booming when the oil price is high and in a downturn whenever it is low. Businesses cannot plan in this environment, workers cannot be assured that they will be regularly employed and overall economic growth will suffer.”

Norton noted that International Financial Expert, Tom Sanzillo recently criticized Guyana’s NRF for lacking enough safeguards to prevent it from becoming a slush fund for the ruling party. The Opposition Leader said, “This negative reputation may manifest as higher interest rates the country must face for new debt, or alternatively a reluctance to lend, or lend as much, to Guyana.”

Turning his attention to the new debt ceiling, he reasoned that the PPP has failed to spend within its limits from the NRF which raises questions on its ability to manage the increasing national debt. He said, “Because there is no focus on governance reform, Guyana is expected to waste nearly as much as it borrows. This is the definition of chaos, and it is clear with each passing day we grow closer and closer to a natural resource curse.”

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• ceiling, Debt, NRF, people, service

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