Govt. borrows US$350M more from IDB

Jun 05, 2025 News

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…funds to expand social protection programmes

Kaieteur News – The Inter-American Development Bank (IDB) Board of Executive Directors has approved a US$350 million loan to Guyana, which it says underpins the country’s ongoing efforts to modernise and expand its social protection systems.

In approving this second and final operation in a programmatic series (the first of which was co-financed with Global Affairs Canada), the IDB said it recognises Guyana’s strong macroeconomic performance and its commitment to inclusive social reform. The loan will support the Ministry of Human Services and Social Security (MHSSS) in enhancing the efficiency and reach of its social safety net, with a focus on digital transformation, inclusion, and empowerment of vulnerable groups. Key components of the programme include:

1. Digital Transformation of Social Services: Streamlining and digitalising MHSSS processes to reduce transaction costs and improve service delivery for beneficiaries.
2. Enhanced Senior Citizens’ Pension Program: Supported over 82,000 senior citizens, expanded access to electronic payment systems.
3. Expanded Public Assistance for Persons with Disabilities: Increasing the coverage of the Public Assistance program, which has already supported more than 6,000 individuals with disabilities.
4. Growth of the Learning Lab: Scaling up training programs that equip persons with disabilities with employability skills, adaptive living techniques, and tools for improved quality of life.
5. Women’s Economic Empowerment: Expanding the Women’s Innovation and Investment Network (WIIN) Business Clinic to provide women with training in business management, legal literacy, and access to funding.
6. Support for Survivors of Gender-Based Violence: Strengthening the Survivors Advocates program and the Counter Trafficking in Persons Unit to provide comprehensive support to survivors.
7. National Action Plan Against Human Trafficking: Supporting the development of a coordinated, inter-institutional strategy to combat human trafficking.

According to the bank, these initiatives, launched in 2023, reflect a holistic approach to social protection, targeting the most disadvantaged and underserved populations in Guyana. The IDB loan features a 20-year amortisation period, a 5.5-year grace period, a one-year disbursement window, and a SOFR-based interest rate. “This operation showcases the IDB’s commitment to supporting Guyana’s social development agenda that provides opportunities for all and building a more resilient society,” the bank said. The Government of Guyana (GoG) in 2024 spent a total of US$196M to service the country’s ballooning debt, of which US$80M went towards interest. This is according to a report from Central Bank. According to the document, approximately US$79.9M was paid in interest by the country on its total stock of external and domestic debt. It is important to note that by the end of 2024, the country’s total debt stood at almost US$6B, after closing 2023 with a total public debt of US$4.5B.

Back in January 2023, the IDB had released a report cautioning Latin America and Caribbean (LAC) countries against ‘excessive’ borrowing and urged governments to bring their debts down to more prudent levels. In its report titled ‘Dealing with Debt – Less Risk for More Growth in the Latin America and the Caribbean’, the IDB disclosed at that time that debt has risen and stands at some US$5.8 trillion, which is 117 percent of the Gross Domestic Product (GDP) in the region. “Given the dangers of excessive debt, the current situation in Latin America and the Caribbean is worrisome,” the IDB said. IDB said public debt serves a critical role for countries to pursue public investment projects, implement counter-cyclical policies, and provide support to economies in the face of negative shocks. However, the IDB warned that if public debt becomes too large or is not managed with sufficient caution, interest costs may balloon, growth prospects may suffer, and in the limit, a costly debt crisis may be provoked. According to the report, governments can bring down their debt levels by improving spending efficiency, expanding the tax base, and seeking wider reforms to enhance fiscal balances and boost growth. The IDB said that there are many reasons why public debt levels should be lower than they currently are, highlighting that there are several ways to reduce that debt.

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• domestic debt, Inter-American Development Bank, social protection systems, US$350M loan

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