The State of Kuwait has cancelled US$50.7 million in debt owed by Guyana from a loan taken in 1975, the Ministry of Finance Monday reported.
“This debt cancellation will reduce Guyana’s external debt and allow the country to expand its development agenda, as funds saved under this agreement would be allocated to social projects within the context of the National Budget,” the Ministry of Finance said in a statement.
The debt settlement agreement was signed by Minister of Finance Winston Jordan on March 18, 2019, with the State of Kuwait, through the Kuwait Investment Authority.
With the debt write-0ff, Guyana now owes Kuwait US$26.8 million and this will be settled through a combination of cash payments, to be made over nine years, and a debt swap arrangement, which will be worked out in due course.
The agreement for the cancellation of the US$50.7 million, the Finance Ministry said, came after an ardent negotiation process, and paves the way for greater co-operation and the strengthening of cordial ties between the two countries.
Minister Jordan said the debt write-off was as a result of renewed efforts by his Ministry to engage Guyana’s non-Paris club bilateral creditors in negotiating debt relief that is acceptable and sustainable.
According to the Ministry of Finance, Guyana’s debt to Kuwait originated from a Loan Deposit, contracted in 1975, from the Central Bank of Kuwait for Kuwaiti Dinars 3.0 million (US$10.3 million at that time), for balance of payments support to the Bank of Guyana.
The debt accumulated massive arrears over the past four (4) decades, at high market interest rates. As at December 31, 2017, the debt to Kuwait had grown to US$77,592,840.90, comprising principal arrears of US$9,940,500 and interest arrears of US$67,652,340.90.
Since assuming office in 2015, the Ministry of Finance said Minister Jordan has pursued debt relief from other bilateral non-Paris club creditors with whom Guyana’s debts are in arrears.