The debt-trap

Oct 16, 2025 Editorial, News

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(Kaieteur News) – The Government last week celebrated yet another increase in borrowing power, this time from the United Kingdom, which raised its export credit financing ceiling for Guyana from £2.1 billion to £3 billion.

The announcement has been billed as a vote of confidence in Guyana’s “booming economy” and a sign that global investors view the country as a rising star in the region. But beneath the applause lies a dangerous delusion. What the UK calls “confidence” may in fact be calculation and what government officials praise as “trust” could very well be a tightening chain of dependency.

The hard truth is that Guyana is borrowing on the back of oil revenues it does not control and wealth it has barely begun to see. On Monday this newspaper reported that ExxonMobil slapped Guyana with a staggering US$2.3 billion exploration bill, costs that must be recovered from oil revenues before the country can even see its fair share. To date, Guyana has earned less than US$1 billion in royalties, a fraction of what should be flowing into the national treasury. The math is damning: Exxon’s bill is more than double what this nation has received in royalties from its own oil. Yet, our government continues to boast of “fiscal space” and “borrowing room” as if the riches of Stabroek are securely in our hands.

The country’s debt continues to climb from US$4.5 billion in 2023 to nearly US$6 billion at the end of 2024, with debt servicing costs also on the rise. Vice President, Bharrat Jagdeo and his Finance Minister, Dr. Ashni Singh often tout what they called a falling debt-to-GDP ratio, now around 24 percent, as proof that Guyana is in no danger. But as chartered accountant Christopher Ram rightly noted, in our article on Monday a large share of that GDP as much as 60 percent belongs to foreign oil companies, not to Guyana. Any debt incurred, however, belongs entirely to the Guyanese people.

That’s the dangerous illusion at play: the idea that oil has made Guyana rich enough to borrow without fear. It hasn’t. What we have is an economy inflated by oil production but hollowed out by a contract so lopsided that Exxon and its partners reap the rewards while Guyana carries the risks. The UK’s gesture, then, must be viewed for what it truly is not charity, not partnership, but strategy. As Ram observed, this is “more than generosity.” It’s Britain’s way of securing a foothold in Guyana’s oil-driven economy. Like the Chinese before them, the British are offering financing tied to their own firms, the contracts, supplies, and profits will flow back to London, not Linden.

What Guyana needs now is discipline, fiscal, institutional, and political. The Inter-American Development Bank (IDB), in its own sober warning, urged countries in the region to borrow cautiously, to strengthen governance, and to ensure that every dollar of debt leads to measurable, sustainable growth. Yet Guyana’s recent borrowing spree from the UK, India, and multilateral agencies seems to rest more on political showmanship than on prudent planning.

This is not to say Guyana should never borrow. Strategic borrowing, tied to transparent and high-impact projects, can accelerate development. But borrowing blindly, on the assumption that oil will bail us out, is reckless. Especially when the oil belongs more to Exxon than to us.

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. 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. If Guyana is not careful, the story of this era will not be one of transformation but of tragedy of a rich nation that mortgaged its future for loans it could never repay, built on oil that was never truly its own.

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• debt trap, export credit financing, ExxonMobil, United Kingdom

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