Debt burden and debt servicing

Nov 16, 2025 Editorial, News

Commonsense says that the bigger the loan, the bigger the mortgage. It doesn’t require any financial wizardry to know that as more debt is piled on a nation’s account , the more demanding the debt service obligations. Debt service is that combination of a portion of the debt paid back, and the interest charges that apply.

Guyana finds itself in that position today, where rising debt has led to rising debt service repayments. With a nervous eye fixed on oil prices, debt servicing could be a backbreaker for this country, with the numbers bringing a chill.

In the first six months of 2025, Guyana’s borrowings rose by 13.5%. Six years ago, this nation’s debt stood at US$1.8B, and today it has increased by a multiple of more than four to US$7.7B. The arrival of oil has brought out the gambler and wild spender that were trapped inside Guyanese leaders. There has never been a loan dangled before irresponsible and calculating leaders that has not been grabbed. Borrowing facilitates spending, and spending open doors to other opportunities, few of them positive for the people who are saddled with the repayment of the accumulated billions of US dollars in loans. A glimpse of what could be in store in the future has just surfaced for Guyanese to think about.

In the first half of this year, Guyana’s debt service totaled US$110M, and of which US$44.8M represented interest payments alone. It is a whopping 40.7% of the total debt service payment sucked up by interest alone. More massive loans are in the assembly line, and they just have to be considering that a new AI-powered digital platform, and the planned Georgetown overhaul are part of the national vision. Separately, only a few weeks ago, US$1B was approved by the Islamic Development Bank and the Interamerican Development Bank Group for Guyana and Suriname. It’s likely that the hog of that US$1B loan will be for Guyana. Borrowing is easy, when the big lenders have Guyana rated as a premium borrower, due to its billions of barrels of oil. What is juicy and sweet today can quickly turn sour to the taste tomorrow, when it is time to honour the schedule of repayment, when that same debt service can become a yoke around the neck.

Billions more in US dollars are being readied to be added to this country’ stock of debt, and one can only imagine how much more the debt servicing will climb. Currently, this year’s debt service figure is likely to be approximately US$220M, with about US$90M of that for interest payment. Do the leaders of this country care that debt servicing, on an annualized basis, is closing in on a quarter of a billion US, and likely going to surpass that before much more time has elapsed? Without a doubt, Guyana’s offshore oil collateral is solid, and as repayment proof as can be, in the eyes of the bankers and other lenders willing to collect their slice of this country’s rich harvests. But it is a different state of mind that takes over the lenders when the collateral for the loans they made to Guyana starts to lose some of its value.

A barrel of oil selling at US$70 is not the same for one that sells at US$60. The jitters begin in earnest should the US$50 a barrel mark become more conspicuous, what can no longer be dismissed with a wave of the hand. Whatever the price of oil, and wherever the global economy finds itself, Guyana’s debt still has to be serviced. Demand for local exports may be less than in the past, and oil income at lower thresholds, but the debt still has to be honoured. It is healthy to be committed to taking advantage of upsides when they present themselves, and borrowing has its role to play. But only through a regime that is characterized by prudent borrowing decisions relative to amounts, and timing.

We at this paper think that the government has borrowed too much too quickly, and that could return to haunt in the worst way possible. In the first place, why is Guyana even a borrower? Let’s hope that future repaying doesn’t inflict pain.

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Debt, Debt burden, Debt servicing, Editorial

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