Guyana signs US$89M loan pact with Canada

Feb 26, 2024 News

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– funds aimed at supporting victims of human trafficking; strengthening pensions system

Kaieteur News – The Guyana Government on Sunday entered into a sovereign loan agreement with Canada for CAD120 million or US$89 million to improve social services in Guyana.

The agreement was signed by Finance Minister, Dr. Ashni Singh on behalf of Guyana at the official residence of the High Commission of Canada in Bel Air Gardens, Georgetown. Canada’s visiting Minister of International Development, Ahmed Hussen received a warm welcome from the Finance Minister who said he is looking forward to further collaborations with the country, even in the form of a second loan.

Minister Hussen in his remarks explained that the 10-year sovereign loan, to boost Guyana’s social services sector, will support the vulnerable population and help this nation achieve the United Nations Sustainable Development Goals (UN SGDs).

“Through this sovereign loan, our goal is to support Guyana in generating beneficial, social, economic and environmental outcomes for the good of all your citizens, particularly the most vulnerable,” Hussen said.

To this end, the Canadian politician shared, “This loan is tailored towards the needs of Guyana. It will focus on our mutual priorities and interests. It’s about protecting the most vulnerable populations; it’s about making sure that as we grow our economies, we promote gender empowerment and we fight gender-based violence. It’s about empowering people with disabilities and enabling them to participate fully in the economy and in the society of Guyana. It is about supporting victims of human trafficking; it’s about strengthening the pensions system…it’s about making sure that as Guyana delivers its social services and strengthens its social safety net, we also improve the delivery of that social safety net.”

He added that Guyana, like other Caribbean nations, is vulnerable to natural disasters. The loan however includes a climate resilient debt clause which would be triggered in the event of a climate incident, a natural disaster, pandemic or epidemic.

Minister Hussen was also keen to highlight in his remarks that Guyana is Canada’s largest trade partner in the Caribbean. He also lauded the country, sharing his belief that Guyana is well positioned to become the success story of the decade.

“This country stands on a threshold of a new era with the potential to really become the success story of this decade around the world, not just in this region. Your country sits as the fastest growing economy in the world, a significant player in the global energy market and a regional player in food security and addressing climate change,” Hussen posited.

Meanwhile, Minister Singh described the loan as an outstanding example of collaboration and cooperation. He explained that the loan is being intermediated through the Inter-American Development Bank (IDB) of which Guyana and Canada are both proud members.

Dr. Singh highlighted that Guyana has a longstanding relationship with Canada, given that the foundation for Guyana’s bauxite industry was laid by a Canadian company about a century ago. He also noted that Omai, another Canadian company was Guyana’s first large-scale gold mining company; but the partnership with Canada extended beyond the extraction of minerals, with further business relations now possible through the Canada Guyana Chamber of Commerce.

The Finance Minister said that the relationship between the two states has now entered a new phase, rooted in economic and commercial ties.
Guyana is now the third country to have concluded a sovereign loan programme with Canada. The country stands behind Ukraine and Jordan, meaning, Guyana is the first country in the western hemisphere that has concluded a sovereign loan programme with Canada.

Dr. Singh said that the government is ever mindful, and has retained at the highest level of priorities, the objective of ensuring that the most vulnerable citizens experience a visible and tangible improvements in their circumstance, including in the delivery of social services, which will be bolstered with the new loan.

To this end, he told the Canadian Minister that he looks forward to a second loan with the country. “Of course, we look forward to many other occasions, whether it be a second sovereign loan programme, not to put you on the spot, or put you under pressure, but we look forward to several other manifestations, however they might come of this very, very special and highly treasured relationship that exists between Canada and Guyana,” the Minister related.

This year, Guyana’s public debt is expected to grow by US$2.2 billion. In 2023, the country plunged 23% deeper in debt and ended the year owing some US$4.5 billion.

The country’s national Budget for 20224 is set at $1.146 trillion with a whopping 40% being financed through loans.
Government has however consistently defended its ability to contract and repay loans, given the growth in Guyana’s Gross Domestic Product (GDP). The administration argues that Guyana now boasts the lowest debt to GDP ratio in the region.

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• Canada, Debt, GDP, loan, social services

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