…2% interest rate, 5-year grace period also included
A month after the Government would have signed a historic US$150 million in loans with Saudi Fund for Development (SFD), it turns out that favourable terms of two per cent and a payback period of 20 years were secured for Guyana.
A perusal of the loan agreements, which were seen by this publication, shows that both loans – US$50 million for the construction of the Wismar Bridge and US$100 million for infrastructural development in the housing sector – also come with a two per cent interest rate on the principal amount of the loan.
It was explained in the agreement that the loan charge and other charges will be payable semi-annually on January 30 to July 30 each year, over the duration of the 20-year maturity period. Meanwhile, a total of 30 payments from the scheduled date of the first instalment (December 7, 2028) until the final payment (December 1, 2043) are laid out in the amortisation schedule.
Each instalment amounts to $6.2 million Saudi Riyals (US$1.6 million) for the Wismar Bridge loan and $12.4 million Saudi Riyals (US$3.3 million) for the housing infrastructure loan.
There is also a five-year grace period for both loans.
Back in June 2023 and in a move that further cements the growing relationship between Guyana and the Middle East, the Dr Irfaan Ali-led Administration had signed the historic US$150 million loan with the SFD to finance the transformational infrastructural projects.
The signing of these agreements was part of the efforts undertaken by the Kingdom of Saudi Arabia, through the SFD, to support sustainable development in developing countries and Small Island Developing States (SIDS). Since its establishment in 1974, SFD has implemented more than 700 development projects and programmes in 87 countries around the world. However, the signings mark SFD’s first foray into Guyana to finance major development projects.
The signing had taken place at the Office of the President, with President Ali and a number of Cabinet Ministers in attendance. Finance Minister Dr Ashni Singh signed on behalf of the Government while Chief Executive Officer (CEO) Sultan Abdulrahman Al-Marshad signed on behalf of the SFD.
In his remarks, Al-Marshad had revealed that Guyana is the 88th country to receive money from the Fund for major projects. He had also described both the scope and the direct and indirect benefits of the loan, which will go towards the construction of over 2000 houses and the long-awaited four-lane Wismar-McKenzie Bridge in Region 10 (Upper Demerara-Berbice) that will be built parallel to the existing one.
President Ali had meanwhile lauded the Saudis for the speed with which they advanced funds for the infrastructural projects. President Ali also observed that not only was the financing provided by the Saudis, but the cost of financing is “second to none”.
“We are on a trajectory in which we are seeking also to build new relationships. To enhance and strengthen old relationships and to build new ones. We have been actively working in your geographic space. And we’re seeing tremendous results. We’re seeing that the activism is leading to meaningful outcomes. And we look forward to this continued partnership and the speed with which you operate, in helping us on this journey of modernisation,” President Ali had said.
Urging Saudi Arabia to also avail itself of private sector investment opportunities in Guyana, The President was hopeful that they could have further discussions on priority areas for funding on the next phase of development.
The President had further noted that the projects will not only bring temporary relief but also permanent benefit to citizens as it forms part of the larger infrastructure masterplan of the country and will help Guyana on its journey to modernisation.
In addition to the 2500 housing units that will be built across three different regions in Guyana, the project includes paving the main and secondary roads, establishing water, sewage and electricity networks, digging wells for each of the project areas, and the construction of social facilities serving multiple benefits. It will not only address the current housing shortage and improve living conditions but also stimulate the local economy through direct and indirect job opportunities in the housing sectors.
Meanwhile, the new Wismar/McKenzie Bridge the Government intends to build is a four-lane one that will be able to facilitate the increased volume of traffic through Region 10. The current Wismar Bridge only has a one-vehicle lane and is over 50 years old. Back in 2020, Italian engineering company Politecnica unveiled designs for a new bridge. The company had been contracted by the then Ministry of Public Infrastructure to do a feasibility study for the bridge.
