Gov’t borrowing to invest in Guyana’s future – Dr Jagdeo reaffirms

General Secretary of the People’s Progressive Party, Dr Bharrat Jagdeo has once again defended the government’s strategic borrowing, stressing that this is to fund sustainable investments.

Speaking at his weekly press conference, at Freedom House on Thursday, Dr Jagdeo dismantled a Kaieteur News editorial which criticised the government’s borrowing practices.

While recognising that the resources from the oil and gas sector will increase exponentially to bring greater benefits to the Guyanese, Dr Jagdeo emphasised that the country will never arrive at a point where citizens will be able to “just sit down at home and receive a check, and just stop working”.

“Not a single country in the world has gotten to that stage or will ever get to that stage,” he pointed out.

Importantly, the country has made significant strides in terms of economic growth. According to the general secretary, Guyana has evolved from a country with a Gross Domestic Product (GDP) of US$300 million, to one with a US$22 billion GDP.

“When we had a $300 million economy, we had blackout under the APNU, we had blackouts that lasted three weeks at the time. No roads to drive on… the hospitals didn’t have any drugs. People were fleeing this country in droves. There was no democracy. We didn’t have food in some areas to eat. We have come a far away from those days, but we’re not wealthy as yet as a nation,” he said.

Guyana stands as one of the fastest-growing economies in the world, estimated to grow by 34.3 per cent in 2024. Last year, the country’s economy expanded by 33 per cent.

“What are we borrowing for mainly? We’re not borrowing to eat. Most of our recurrent budget is self-financed. That is one revenue. If you look at our recurrent budget, the capital budget, we borrow mainly for capital expenditure. And all of these investments that we are making will enhance our capacity to have greater income in the future as a country, more revenue so we can get wealthier,”

These sustainable investments include cost-reduction measures, such as investments in fuel and electricity. A glaring representation of this strategy is the flagship Gas to Energy project, which is expected to slash electricity costs. Once the project becomes operational, Dr Jagdeo said that Guyanese should save an average of US$100M each year, paying over US$1 billion less in electricity costs over 10 years.

The Gas to Energy project sees natural gas produced from the Stabroek Block offshore Guyana being transported onshore.

As part of the project, a natural gas liquid (NGL) plant will be built, to separate the natural gas liquids, such as propane and butane, from the natural gas stream, and then refine them into high-value products such as cooking gas, gasoline, and other petrochemicals.

This massive investment by the government is expected to facilitate the marketing of excess natural gas.

Meanwhile, the general secretary reminded that despite raising the debt ceiling, the country’s debt-to-GDP ratio remains one of the lowest in the region.  

“Despite the borrowing over the years, our debt to GDP has come down… In the developed world, the debt-to-GDP is over 100% or near 100% in the United States of America and Europe. That is how much the government owes concerning the size of the economy – nearly 100%. In the Caribbean, it gets over 50%, and in some countries it’s over 100%. We’re 27% of GDP. That’s one of the lowest figures in the world,” the general secretary said.