Gov’t incurs additional $16.6B in debt since 2015 

Between March 2015 and the end of the last fiscal year, the Government incurred an additional $16.6B in external public debt.

In its 2019 end-of-year report, the Ministry of Finance revealed that Guyana’s external public debt stood at US$1.31B – 4.7 per cent below the earlier projected amount of US$1.37B.

According to the report, this difference was mainly due to a US$50M debt reduction granted by Kuwait, after the finalisation and signing of a bilateral debt settlement agreement in March 2019.

However, the Ministry noted in a statement on Friday that this US$1.31B represents an accumulation of debt over a number of years and not an amount incurred in a single calendar year.

But the Ministry did acknowledge that there was a “marginal increase” in external public debt from US$1.23B in 2015 when the APNU+AFC government took over management of the country.

This represents an increase of US$80M or GY$16.6B.

“This increase is partly attributable to disbursements from loans signed before May 2015 under the previous administration, and inherited by the current one,” the Ministry said in defense of the increase.

It went further to add that as at May 31, 2015, shortly after the change of government, the undisbursed balance on loans contracted under the previous government amounted to US$138.6 million.

Since then, the Ministry said that subsequent disbursements to facilitate the execution of development projects have contributed significantly to the 5.8 per cent growth in external public debt between 2015 and 2019.

The Ministry went on to add that this debt must be viewed in the context of Guyana’s wider macroeconomic performance in order to more accurately gauge Guyana’s debt sustainability position.

But even though the country’s external public debt grew between the four-year period, the Ministry was keen to point out that domestic debt declined between the period.

“…it is instructive to note that, while external debt has increased, the external debt-to-GDP ratio declined over the period 2015 to 2019, with the ratio for 2015 representing the peak of the 5-year series presented,” the Finance Ministry said in its statement.

The country’s domestic public debt at the end of 2019 stood at US$383M which is 7.1 per cent below the projected amount of US$412M.

This variance, it was noted, was as a result of the principal repayments on some fiscal T-bills, which matured but were not reissued.

It was noted that the share of domestic public debt was 22.7 per cent of the total public debt stock, as at the end of 2019, 0.4 percentage points below the Budget 2019 projection.

“This indicates a strengthened debt sustainability position over the last five years,” the Ministry said, adding that the steep decline of the debt-to-GDP ratio from 2018 to 2019 was in part attributable to a GDP rebasing exercise by the Guyana Bureau of Statistics.

The institution boasted of its “prudent and sustainable” management of the country’s debt, citing an International Monetary Fund’s (IMF) Debt Sustainability Analysis Report which, in 2018, classified Guyana as having a sustainable debt, while being at moderate risk of debt distress.

“Given our favourable macroeconomic outlook, the strong current debt sustainability position is expected to improve further over the medium to long term, assuming a continuation of the ensuing prudent debt management practices and policies,” the statement concluded.