Jordan rejects claims that Gov’t involved in burdensome borrowing

Bibi Khatoon

Minister of Finance, Winston Jordan has rejected claims that the APNU+AFC Government is borrowing from international banks at a rate that will plunge Guyana into a huge debt.

Following the Government’s revelation that it will be borrowing $30B for the Guyana Sugar Corporation (GuySuCo), Opposition Leader, Bharrat Jagdeo criticized the move.

In a statement and at a subsequent press conference, Jagdeo said borrowing “haphazardly…. will not solve the economic malaise that we face, but lead to pawning the wellbeing of current and future generations of Guyanese.”

However, at a press conference on Friday, Minister Jordan told the media that the majority of the loans were inherited from the People’s Progressive Party’s (PPP) Government.

He said his Government has only borrowed under US$100 million since its assumption to office.

The East Coast four-lane highway, the Ogle bypass road, and the North West ferry amounting to US$110M, the Minister said were loans the government inherited from the former PPP government.

Jagdeo also alleged that the US$30B syndicated bond is being borrowed at much lower interest rates, but Jordan said the loan is capped at an interest rate of 4.75% which is reasonable.

“This is nothing unusual, GuySuCo is not a poverty reduction project, GuySuCo will be deemed to be a business transaction and I do not know where, if the needs for GuySuCo is US$30B, that you can borrow at 1%,” Jordan said.

Also present at the conference was Head of the Special Purposes Unit (SPU) set up to divest the resources of the three closed sugar estates, Colvin Heath-London. The SPU head said the local and regional financial sector is involved in the loan to spread the risk.

He explained that the bond will be given in two tranches; a GY$15B tranche to shore up GuySuCo’s operations and to do internal developments and modification, and a US dollar tranche to facilitate capital projects which would be implemented in GuySuCo in the near future.

Heath-London also disclosed that within the first 12 months of the borrowing, the government is not required to make any repayment.

The banking fraternity has given the project a three-year period to begin seeing some progress.

After the explanation was provided, Minister Jordan went further to provide the figures for borrowing for the past two Governments, to emphasise his point.

He pointed out that between 1964 and 1992 –a period governed by the People’s National Congress (PNC), borrowing by that government totalled USS$2.4 billion compared to US$2.6 billion borrowed by the PPP from 1992-2015.

The Minster said despite the sum borrowed, the coalition Government is still spending to fix the projects done by the PPP.

Guyana recorded a Government debt equivalent to 53.40 percent of the country’s Gross Domestic Product in 2017. Government Debt to GDP in Guyana averaged 88.48 percent from 1997 until 2017, reaching an all-time high of 135.70 percent in 1998 and a record low of 47.90 percent in 2015.