Despite the plethora of projects currently being executed and persons who claimed that the loan terms being pursued were a pipe dream, President Dr Irfaan Ali stated that Guyana currently has the lowest debt in the Caribbean.
The Head of State made this disclosure while addressing the Guyanese diaspora in Canada on Saturday evening where he further stated that Guyana’s combined debt to Gross Domestic Product (GDP) is not only the lowest in the Caribbean, but the percentage of non-performing loans in the local banking sector has fallen to among the lowest in the world.
“Our combined debt-to-GDP ratio is 24.6 per cent… the lowest in the Caribbean. And guess what? It is down from 39.6 per cent. I see some people who consider themselves special journalists, doing news pieces on Guyana. And you know why? Because people like us are not deemed sophisticated enough to manage the type of resources that we have. Make no mistake about it,” the President added.
“Our external debt service ratio. And this is the percentage of revenue you’re using to service external debt, which is 4.1 per cent. This is the reality. You don’t see these headlines. These headlines are not convenient. Non-performing loans in the bank sector fell from 7.8 per cent to 4.6 per cent, some of the lowest figures globally.”
President Ali also gave some insight into a key reason behind Guyana’s low debt, despite the many projects that are being driven by debt including the US$172 million loan for the new Demerara River bridge from the Bank of China, the US$150 million loan from Saudi Arabia that will finance the Wismar-Mackenzie bridge and other projects, and the US$192 million Chinese loan earmarked for phase two of the East Coast road project.
According to Ali, his Government insisted on favourable fixed-rate terms for their current array of new projects.
“We set ourselves a target in Guyana, that we are only going to borrow fixed rates at less than 3.5 per cent. And everybody said you are mad people. We won’t be able to get that. Where are you going to be able to get fixed rates at less than 3.5 per cent. Because the world today is variable rates of 5.5 and above.”
“Well guess what? Every single one of our new projects came in at a fixed rate of less than 3.5 per cent. Why? Because we have set our own agenda. We have set what we want and what we are willing to accept,” he further said.
Since taking office in August 2020, the People’s Progressive Party/Civic (PPP/C) Administration has taken a number of loans from bilateral partners around the world as well as from international agencies.
Only recently, Government signed two loan agreements totalling US$150 million with the Saudi Fund for Development (SFD) to finance the “Infrastructural Development Works for the Housing Sector Project” and the “Construction of Wismar Bridge Project.”
Another loan to the tune of US$350 million was secured from Qatar to extend the Schoonord to Crane four-lane highway all the way to Parika in Region Three (Essequibo Islands-West Demerara).
The country also has several loan agreements with the Inter-American Development Bank (IDB) to access over US$220 million in financing for enhancements along the East Bank Demerara (EBD) Highway. At a press conference last month, Vice President Bharrat Jagdeo defended these borrowings, stating that they are going towards investments that will repay these loans.
“I see a lot of people talking about our capacity to repay [quickly] …[but] when we borrow, we borrow to invest in things that matter [and] we can play it back easily – our health system, the roads, the power plants, the ports – things that are capital. We don’t borrow to eat; we borrow to build the capital stock of this country so our people can benefit. They can use that to create new industries and new jobs because that’s the foundation – the ports, the power plants, the roads, the other type of infrastructure, modern water systems, the ICT systems, better Government services around the country,” the Guyanese Head of State told the Guyanese diaspora in Canada.
“We borrow for greater security. We’re now putting in cameras around the country – a smart country programme that would be able to track criminal activities anywhere in Guyana in real-time, know who is there and stuff because the security of people is vital in the future. So, those are the things we are borrowing for but we have the capacity to repay,” the Vice President had posited.
