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Debt

Mar 02, 2025 Editorial, News

Editorial…

Kaieteur News- The words are worth repeating: “All of you are in business, you know that you don’t build a business, you don’t build a country, you don’t build household wealth, by saying ‘I am not going to borrow a single dollar.”  They were from Dr. Ashni Singh, Minister with Responsibility for Finance, as delivered at the Guyana Energy Conference and Supply Chain Expo.  In trying to justify Guyana’s bingeing on debt, Singh went to the extreme, made it look that he jumped overboard fully clothed.  “Not going to borrow a single dollar” is an instance of going overboard, of employing exaggerated language in an effort to minimize concerns about oil rich Guyana, as led by his PPPC Government, borrowing billions.  Because of Guyana’s proven oil reserves, and increasing oil production levels, lenders line up to lend Guyana what it wants.  There is guaranteed money to be made here.

We hear Minister Singh and still have a few concerns.  The debt to GDP ratio is not that unhealthy at 24.3%.  But it was the government itself that has sounded more than one warning about a projected fall in oil prices.  When oil prices fall, it is unwise to compare to a deteriorating stock market, such as the Dow Jones Industrial Average.  When oil prices fall, they keep going down, and stay down for a long time.  The national economies of oil producing countries that were flying high stand as witnesses to the wreckage caused by slumping oil prices.  Unlike other commodities, when oil prices fall, the tendency is to infect other sectors and products, drag down almost everything.

Since the government itself has noted projections of oversupply and underperforming oil markets, it would be wise to keep a vigilant eye on current debt load (ratio notwithstanding) with intentions of decreasing it.  Further, it would be wiser to slow down on new borrowings.  At this point in Guyana’s development trajectory, too much is being attempted in too crowded a space, with too little to police what has been started. Why, therefore, take on more debt for more projects, when the expert capacity in hand is so meager in numbers, so lacking in the level of skills and experience?  It is senseless to plunge into more debt to get more things done, when existing ones cannot be managed as they should be.  For every dollar borrowed, Guyana’s prime objective should be to extract the fullest value from it.  The record is sketchy to unconvincing relative to this call for full value.

We at this publication take another position.  Billions of American dollars have been withdrawn from the Natural Resource Fund (NRF) since the PPPC Government has taken back the reins of power.  To withdraw such huge sums, and then to rush ahead and add more billions to the national debt must qualify as government and leadership recklessness taken to an alarming level.  The NRF shouldn’t be seen or used as a petty cashbox, but this is how it has been handled by the government, in which Minister Singh is a key presence.  Debt has its uses, but debt has been abused by the government, with ordinary Guyanese not fully knowing the trap that the PPPC Government has laid for them.

Oil prices decline, and the billions in foreign debt become a yoke around the necks of citizens.  If when so much money is flowing into Guyana’s coffers, Guyanese backs are bent from struggling to live, then their already hard existence is sure to become intolerable, when the cashflows slow down.  The government says that diversification of the economy will help to weather any storm.  We think that the government is fooling itself.  Being the compassionate government that it claims to be, a better effort should be made to stop fooling citizens.  There is some diversification in the local economy, but some of those sectors feed on oil operations and oil production going at breakneck speeds.  In other words, whatever the direction of oil demand and oil prices, that is the degree of supporting energy from the diversified businesses that the government likes to emphasize.

When there is economic slowdown, diversification’s positives diminish.  The debt load gets unmanageable.  Minister Singh knows this, but pretends ignorance.

(Debt)

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