‘UK’s £3B debt trap’ – Analysts warn Guyana risks sliding into a debt trap

Oct 13, 2025 News

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…as British commercial interests tighten their grip

(Kaieteur News) – The United Kingdom increased its export credit financing limit for Guyana from £2.1 billion to £3.0 billion, a move billed by both London and Georgetown as a vote of confidence in Guyana’s accelerating economic progress.

But amid the applause, commentators have here have sharply warned that Guyana must tread carefully. Failure to do so, they say, risks plunging the country into a debt trap, especially given the volatility of oil prices and the nation’s already heavy external and domestic obligations.

Kaieteur News reported last week that the announcement, made by UK Export Finance (UKEF) followed a meeting with President Irfaan Ali and his finance team. In a press release the British High Commission in Guyana said that the larger ceiling “reflects the UK’s confidence in Guyana’s economic trajectory and fiscal sustainability.” and marks a further deepening of bilateral relations between the two nations.”

For his part, President Ali, in outlining his priorities for UKEF support, said the announcement comes at a “pivotal moment” as Guyana ramps up infrastructure development and strengthens its position as a major investment destination. “The British High Commission looks forward to supporting sustainable growth and shared prosperity through this collaboration between the UK and Guyana,” the statement concluded.

The following day Finance Minister, Dr. Ashni Singh said the extra financing capacity will help Guyana accelerate infrastructure development and support priority sectors over the next five years  including major road works, power transmission, health infrastructure, and partnerships with British firms. Singh described the move as a “powerful signal of external trust” in the country’s macroeconomic management. The minister expressed gratitude on behalf of the Government of Guyana, to the UK Government for their support over the years, which he said has been instrumental in fostering collaboration between the two nations, as Guyana continues to accelerate its development and solidify its position as a leading investment hub in the Region.

Debt Climbing

Guyana’s total Public and Publicly Guaranteed (PPG) debt stood at US$5.993 billion at the end of 2024, up from about US$4.5 billion a year earlier. External PPG debt loans from multilateral, bilateral, and other foreign creditors was roughly US$2.2 billion, while domestic PPG debt reached approximately US$3.7 billion. Debt servicing costs also climbed to US$196.1 million in 2024, up from US$177.5 million the year before. Of that, US$124.9 million went to external debt service and US$71.2 million to domestic obligations. Government officials, however, frequently point to Guyana’s declining debt-to-GDP ratio, down from 47.4% in 2020 to 24.3% in 2024, as evidence that debt levels remain within prudent limits  and that the country has room to borrow for strategic projects.

A Promissory Note

Political commentator and former Gold Board Chairman GHK Lall says the British increase is “more than generosity.” “Increasing the debt limit is a way of strengthening the hand of British commercial interests in big Guyanese projects. It is a promissory note that, once taken advantage of, becomes an IOU,” Lall told Kaieteur News.

He cautioned that with oil prices projected to decline, Guyana should focus on fiscal discipline rather than “pie-in-the-sky” projects. “The more spending there is, the more likely corruption is involved,” he added. “The debt-to-GDP ratio may be healthy now, but if oil prices fall for a prolonged period, the complexion of that ratio changes. The kleptocracy and plutocracy stand to be the biggest beneficiaries.”

IDB’s Caution

The Inter-American Development Bank (IDB) warned in its 2023 flagship report Dealing with Debt: Less Risk for More Growth that public debt in Latin America and the Caribbean had risen sharply since the pandemic. It cautioned that if borrowing is not managed with “sufficient caution,” interest costs could balloon, growth prospects could suffer, and “in the limit, a costly debt crisis may be provoked.” The IDB urged governments to improve spending efficiency, strengthen institutions, and ensure borrowing is used wisely.

Reckless Borrowing

Opposition voices have echoed similar warnings. When the Government moved to raise domestic and external debt ceilings in 2023, MP Juretha Fernandes had warned that volatile oil prices could lead to unsustainable debt servicing burdens that squeeze funding for essential services. MP Ganesh Mahipaul at the time called for clear definitions of major projects before increasing debt limits, while civil society groups raised alarms about tied financing, opaque procurement, and weak oversight.

In an invited comment, Chartered Accountant Christopher Ram said the UK’s move “may appear as a gesture of confidence” but raises deeper questions about fiscal prudence, dependency, and geopolitical influence. Ram pointed out that Britain has long sought to cash in on Guyana’s oil wealth, recalling documentation in Raphael Trotman’s book about the British High Commissioner’s lobbying for TULLOW, a UK oil company that failed in its Guyana ventures. “What the British are doing is copying the Chinese model,  give their people the contracts, and they’ll provide the financing. The unspoken message: We know you have oil; our debt is therefore safe,” Ram observed.

He added that Brexit has pushed the UK to seek new trade footholds, especially in resource-rich regions like the Caribbean. “Foreign policy is inseparably tied to trade policy,” Ram said. “They lost access to a massive market after Brexit and have been seeking alternatives ever since.”

Ram warned that while the higher ceiling gives Guyana access to faster financing, the Government’s lack of a clear borrowing policy and reliance on a “misleading” debt-to-GDP ratio are troubling. “A significant portion of GDP  around 60%  does not belong to Guyana, while any debt incurred certainly does,” he said. “We are using oil as a reason for increasing our debt, both in absolute and relative terms. There is no long-term economic planning.”

He stressed that Britain’s motivation is not altruistic: “They’re calculating their benefit. There’s no reason we can’t exploit the opportunity, but we must negotiate hard. Identify what we need and what they offer. The Chinese excel in infrastructure; can the British match that?”

Borrowing to Fuel Corruption

Economist Elson Lowe agreed that while the UK is naturally seeking trade expansion, Guyana must use the funds “thoughtfully and strategically.” “We must reform procurement systems to minimise corruption,” Lowe said. “Borrowing to fuel corruption is perilous, as we will not see the expected benefits of our spending.” He cautioned that oil price volatility remains a real threat. “If oil prices fall for a prolonged period, a debt trap could result. Guyana’s ability to execute large, complex projects, like the Gas-to-Energy plant  remains doubtful,” Lowe said. While not opposing borrowing outright, Lowe stressed the need for planning and transparency: “We must borrow with a clear plan,  the expected benefit to society, the return, and the risk. Without effective governance reform, costs will continue to skyrocket and benefits to citizens will remain limited.”

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• analysts, Christopher Ram, debt trap, Elson Lowe, GHK Lall, UK

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