Gov’t proposes domestic, external debt limit increase

-to advance development

-regularise indebtedness

-Dr. Singh

Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, today, presented to the National Assembly two orders to increase the ceiling for both domestic and external debts. Minister Singh said this is to regularise the state of public finances, which was inherited indebtedness, and to advance the Government’s developmental agenda.

The orders seek to have the limit for domestic debt increased from $150 billion to $500 billion and external debt from $400 billion to $650 billion. The orders will be debated at the next sitting of the National Assembly.

In an invited comment during a break in today’s proceedings, Minister Singh said when the Government took office, it discovered that there was an overdraft of over $90 billion at the Bank of Guyana. He noted that the overdraft does not reflect outstanding monies owed to entities such as the Guyana Power and Light.

Dr. Singh said the former Government should have financed its fiscal deficit by either domestic or external financing to avoid a massive overdraft.

“We have to regularise the overdraft that has been incurred. That necessitates an increase in the domestic debt ceiling. In addition to that, if you look at how much external debt has already been contracted but not yet disbursed… quite a lot of the space that was remaining within the external debt ceiling would be consumed.

Given the reality that we have outlined a very comprehensive programme for transforming the economy of Guyana for investing heavily in infrastructure, for investing in social services, for improving the lives of the Guyanese people which itself will necessitate the contracting of new financing on both the domestic and external side, there is space to contract additional new financing,” he said.

Additionally, the Minister said the revision of the external and domestic debt ceilings are necessary since they were last revised in 1991 and 1994 respectively. He said this was done when the country’s economy was much smaller.

In 1991, Guyana’s external debt ceiling was set at more than 1,000 per cent of the country’s gross domestic product (GDP). The proposed debt ceiling amounts to less than 60 per cent of the GDP, using the latest 2020 GDP estimates. The domestic ceiling in 1994 was set at almost 200 per cent of the GDP. The revised debt ceiling amounts to less than 50 per cent of the GDP.

The Minister said as the size of the economy grows, its capacity to contract debt increases. However, he said, this must be done cautiously and Government had already taken this into consideration before raising the ceiling so that it would not hinder sustainable growth.