Govt. gets free pass to hike debt ceiling, amend NRF withdrawal as Opposition boycotts debates

Feb 04, 2024 News

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Kaieteur News – The People’s Progressive Party (PPP) government had no difficulty in hiking the country’s debt ceiling and amending the Natural Resource Fund (NRF) Act to increase withdrawals in the National Assembly on Friday, as the Opposition Members of Parliament (MPs) boycotted the debates over security concerns in the Opposition lounge.

Following the passage of Budget 2024 at approximately 22:00 hrs (10:00 pm), the Senior Minister in the Office of the President with responsibility for Finance and Public Service, Dr. Ashni Singh took the floor to read the Fiscal Enactments Amendment Bill No. 2 of 2024 a second time, following its presentation to the House on January 26, 2024.

The Bill to increase the debt ceiling and the amount to be withdrawn from the oil account was approved in just about 20 minutes due to the empty Opposition benches, just around 10:35 pm.

Dr. Singh was reminded of the Opposition’s disruption to the National Assembly in December 2021 when the NRF Act was passed. He said it should come as no surprise that the A Partnership for National Unity/ Alliance For Change (AFC) chose to leave the House given their history of ‘frustrating and derailing progress’.

Opposition Chief Whip, Christopher Jones in an exclusive interview with Kaieteur News justified the decision to boycott the debates. He had informed the Assembly of security breaches to the Opposition’s lounge, considering the Opposition Leader’s voice being heard over Parliament’s live stream.

He told this publication, “We had listed seven Speakers for this evening’s session. The members were prepared for that so they too were in the lounge making their preparations on how they will respond, getting up their information and so by virtue when they learnt that this thing was going out, literally everything that they were discussing tonight was exposed and I could only allege that that information is with the PPP because that is the only thing that would make sense, they would want to know what we are planning to come with and so forth.”

Consequently, he said, “We feel violated, so all the Speakers refused to speak, and the other colleagues refused to stay.”

Debt Ceiling

The Fiscal Enactment Bill passed in the National Assembly has empowered government to increase the ceilings on both domestic and external debt. In a statement, the Finance Ministry noted that the updated debt ceilings will take immediate effect and will provide government with the flexibility needed to adapt the financing mix, depending on the evolving global and domestic economic situation, particularly given global uncertainties regarding interest rates.

The domestic public debt ceiling has been increased to $1.5 trillion, up from $750 billion from its last revision. Meanwhile, a new external borrowing ceiling of $1.5 trillion has been approved, after its last increase to $900 billion.

Government boasted that its effective debt management practices have contributed to a large decline in the country’s debt ratios over a sustained period.

The Ministry pointed out, “Guyana’s debt-to-GDP (gross domestic product) ratio declined from over 600 percent in 1991 to 27 percent in 2023. Additionally, in 1992 about 90 cents of every dollar of revenue earned was used to make debt service payments and today this has been significantly reduced to about 6 cents of every dollar.”

Guyana’s production of oil has drastically improved its GDP since 2019, however even with concerns from sections of society regarding the volatility of oil prices, government remains confident in its ability to service its growing debt with revenues to come from the sector.

NRF amendments

In justifying the need for amendments to the NRF withdrawal rules, the Finance Minister said, “We (in) this PPP/C are in a hurry to improve the lives of every single Guyanese family and every single Guyanese individual.”

In a press statement, the Ministry of Finance said the NRF rule, while allowing for greater financial resources to be available to support intensified public investment and accelerated delivery of social services, the amended rule, as with the existing, will ensure that as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance these national development priorities.

The revised rule will take effect from this fiscal year and will replace the conservative rule that currently exists in the act.

Under the revised proposals, a sliding scale is proposed for withdrawals from the first US$5 billion of deposits paid into the Fund in the immediately preceding fiscal year. Beyond the first US$5 billion, 90 percent of deposits in the immediately preceding fiscal year will be saved- a move that will benefit generations of Guyanese for years to come according to government.

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• ceiling, Debt, free pass, increase, NRF, Parliament

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