Russia to write off debt owed by Guyana
April 2, 2012 By
Finance Minister Dr Ashni Singh
Guyana is expected to benefit from the long promised debt relief from the Federative Republic of Russia as announced by Finance Minister Dr Ashni Singh during his presentation of the 2012 National Budget on Friday.
The debt write-off will represent 100 per cent of Guyana’s outstanding debt to the Russian Federation to the tune of US$0.3 million.
“Pursuant to the decision taken by the Russian Federation in 2006, to grant additional debt relief to eligible debtor countries, we have advanced negotiations to the stage where Guyana is expected to sign a debt cancellation agreement later this year,” Dr Singh said. The Russian Federation has restated its interest in providing debt relief to Guyana for the remaining portion owed by government under the Highly-Indebted Poor Countries (HPIC) Agreement.
Russian Charge de Affaires, Dr Sergey Tarasov, in an invited comment told Guyana Times that the debt amounts to US$227,000.
He confirmed that the Russian government is finalising the technical aspect of the promised debt write-off to Guyana. Dr Tarasov disclosed that once the transaction is completed, the remaining debt totalling just over US$200,000 will be converted to be used on social projects locally. He pointed out that Russia has already written off 99.8 per cent of Guyana’s debt, and so it is just a matter of the country’s experiencing debt forgiveness in its entirety.
“Russia has already written off a huge amount of Guyana’s debt and so it’s just the remaining portion which is not a significant sum; really, so Russia has no problem with that, it’s just the technical aspect that has to be finalised,” Dr Tarasov stated.
According to Dr Singh, progress has been made in debt negotiations with Guyana’s bilateral creditors, not only in relation to the Russian Federation, but also with Venezuela.
The Guyana government and Venezuela have agreed on the procedure for the cancellation of a significant portion of Guyana’s oil debt in compensation for rice and paddy exports. Dr Singh explained that the debt compensation agreement will result in the cancellation of Guyana’s oil debt to Venezuela, equivalent to the value of rice shipped, which amounted to US$143.4 million at the end of 2011. This will contribute to an overall reduction of Guyana’s debt stock at the end of 2012.
At the end of 2011, Guyana’s external debt stock grew by 16 per cent to US$1.2 billion, primarily due to new disbursements of project loans. On the debt service front, principal repayments to a number of external creditors increased in 2011, contributing to the overall increase in debt service payments, and amounting to US$40 million by year-end.
The finance minister said that government continues to advocate strongly for Paris Club comparable debt relief treatment from bilateral non-Paris Club and commercial creditors through diplomatic and other efforts.
He stated that on the domestic side, Guyana’s domestic debt stock increased moderately by 2.2 per cent to US$728 million at the end of 2011 as a result of what Dr Singh termed “government’s continued diligence and sound practice in managing the domestic debt”. Dr Singh further mentioned that the repayment of the debentures that matured in 2010, led to a 43.5 per cent reduction in domestic debt service.
“Maintaining debt sustainability while financing critical economic and social development needs are twin objectives that will require continued access to concessional financing. It is therefore imperative that we actively seek the support of both our traditional and non-traditional development partners in this regard,” Dr Singh said.