With Government having moved towards obtaining a $30B loan from several commercial banks, and hinting about a US$900M loan from the Islamic Development Bank (IsDB) being up for grabs, Leader of the Opposition, Dr Bharrat Jagdeo is of the opinion that not only are they [Government] “pawning our futures” but they’re leaving Guyanese with a massive debt.
Jagdeo said during a press conference at his Office on Thursday that the issue is if the incumbent Administration borrows the US$900M on top of the $30B already being sought then “they’re leaving us, whoever gets into office and we hope it’s us in the near future… and future generations of Guyanese with a burden that will be heavy to carry… This is pawning our future. They are destroying the current opportunities of our people and livelihood.”
It was disclosed that the National Industrial and Commercial Investments Limited’s (NICIL) Special Purpose Unit (SPU) obtained $30 billion, via a syndicated bond to support the Guyana Sugar Corporation (GuySuCo) as its remaining estates.
The funding is expected to cover a four-year period and will provide capital, support infrastructure maintenance and upgrades at Albion, Blairmont and Uitvlugt. The funds are also expected to go towards developing new co-generation capacity for the estate operations and the national electric grid.
Additionally, last week, Finance Minister, Winston Jordan clarified that “Guyana has not received any loans from the Islamic Development Bank,” however “the IsDB has a resource envelope of US$900M that is potentially available from which the Government of the Cooperative Republic of Guyana can borrow.”
To this, Jagdeo posited that this Coalition Administration must come clean “Are they going to borrow the money or no? Clearly there is an intention to borrow,” he said.
He asserted that if the US$900M loan is pursued, the APNU-AFC Government would have accumulated a significant debt, which he said is equivalent to the amount of debt GuySuCo was in from to the start to end of the 23 years of PPP’s reign.
Jagdeo, an economist by profession, also expressed grave concern on behalf of his party, with regards to the $30B loan which has already been obtained.
“… the $30B that the SPU wants to raise on a bond now [they will be] pledging or pawning all the assets of NICIL…[The] interest rate is above the Grant element above which we use to borrow.The grant element that you calculate for Government loans and the grant element takes into consideration the moratorium on interest payments, the length of the loan and the nominal interest rate and I’m sure if you calculate the grant element, it falls outside of the traditional borrowing policy of the Government, but this is backed up by a set of assets that if they fail to pay the loans, we lose the entire GuySuCo, all the factories and everything else and all other holdings of NICIL will go to Republic Bank and the consortium.”
Moreover, Jagdeo asserted that at the rate the country is going, Government’s “failed approach to economics” is going have adverse impacts on the International Monetary Fund’s predictions on Guyana’s GDP.
“The IMF ratio [had said] that the GDP will go up slightly until we find oil and then it’ll come down and it will go to 59% of GDP…If the economy remains stagnant, we’re going to be defying the IMF predictions by a huge margin because the stock of debt to GDP will go up to 100% again…Even the IMF forecast didn’t expect this massive set of borrowing,” he said. (Ramona Luthi)
