In terms of Guyana’s debt we are in a better position than 15 months ago
September 9,2016 Source
Dear Editor,
I refer to a letter captioned, ‘Concerns are being raised about Guyana’s growing debt’, which was written by Mr Donald Ramotar, the former executive president, and which appeared in Stabroek News on Saturday, September 3.
Since demitting office following two consecutive rejections at the polls by the majority of Guyanese, Mr Ramotar has been occupying himself with writing letters to the press, all of which contain spurious allegations that are designed more to inflame than inform the populace. His latest missive follows the pattern he has established for himself.
Mr Ramotar claims that concerns were being raised in many quarters, but failed to identify a single instance of such. He then goes on to speak of “The latest report states that our debt is climbing.” Which report? Again, none has been identified. And, frankly, none exists because he tried to pass a falsehood on to the Guyanese people, hoping it would resonate.
What are the facts?
Fact 1: Since coming to office, in May 2015, the Coalition Government has contracted a total of 3 loans for a value of US$55.3 million, as follows: Farm to Access Road Project, (US$1.6M); UG Science and Technology Project Extension, (US$3.7M); and Ogle Bypass Road, (US$50M). Of that amount, only US$1.4 million has been disbursed and counted as part of the public debt. All of these loans were at the discussion stage with the PPP/C Government, prior to May 2015.
Fact 2: Between June 2015 and June 2016, the total public debt, comprising external and domestic debt, increased by less than 1 per cent, or from US$1.54 billion to US$1.55 billion. This marginal increase reflects an increase in the issuance of 91-day and 182-day Treasury bills. However, the total public debt declined from US$1.6 billion at end-December 2014 to US$1.54 billion at end-December 2015.
Fact 3: Between June 2015 and June 2016, the external debt declined in nominal terms by 2.7 per cent, or from US$1.18 billion to US$1.14 billion.
Fact 4: Between June 2015 and June 2016, total principal and interest repaid reduced from US$39.05 million to US$31.21 million, a decline of 20 per cent. This was due mainly to reduced repayments to Venezuela, after that country halted supplies of petroleum under the PetroCaribe arrangement and the Guyana-Venezuela Rice Trade Agreement.
Fact 5: The total public debt to GDP ratio at end-December 2015 was 48.6 per cent, down from 51.9 per cent at end-December 2014.
Fact 6: The total debt service to revenue ratio at June 2016 was 7.5 per cent compared to 9.3 per cent at June 2015.
As the above facts indicate, Guyana’s debt profile remains stable and sustainable; we are in a better position today than 15 months ago, when this government entered office. What the Guyanese populace should know, though, is that, at the time the PPP/C Government left office, there were 31 disbursing loans with an approved value of US$616.2 million. Of that amount, less than half or US$245.7 million, had been disbursed and, thus, formed part of the national debt. The balance of US$370.5 million will be disbursed in future. So, even if this government did not contract a single new loan in the coming years, the national debt will still increase by US$370.5 million, less any sums that would have been repaid or written-off over that period.
The rest of Mr Ramotar’s letter is replete with misrepresentations and the usual politicking and propaganda. They have been dealt with repeatedly by officials of this government and, therefore, do not need to be addressed here. Suffice it to say that this government believes in maintaining a strong macroeconomic position that is conducive to the growth of the economy and increasing its international competitiveness. In our single-minded pursuit of this objective, we will neither be side-tracked nor otherwise distracted by the diatribe of a former president.
Yours faithfully,
Winston Jordan
Minister of Finance
