Minister Jordan working diligently to clear Guyana’s intl debt backlog

By Paul McAdam

DPI, Guyana, Friday, May 17, 2019

Imagine taking a loan for US$10M and decades later owing US$80M. This is but one example of what the Coalition Government has had to deal with since taking office.  Finance Minister Winston Jordan, cited this example, when asked about Guyana’s debt and the efforts to service the country’s creditors.

He said that the government inherited a number of loans that had been taken under previous administrations. Many of these had no or very little disbursement the minister explained.

“We had owed about US$160M to ‘Non-Parris Club’ creditors. They were Kuwait, the United Arab Emirate, Libya, Serbia and Argentina, and we were paying,” he revealed.

The non-payments were as a result of an inability to conclude agreements that were consistent with the ‘Parris Club Minutes’ which advised that borrowers should seek terms “no less favourable”, the minister explained.

Since taking office, the minister has restarted negotiations with creditors. The Kuwait debt was contracted in the 1970s and ballooned to almost US$80M, mostly due to accrued interest. In March, a debt reduction service agreement was signed with the Middle Eastern kingdom and Guyana has begun servicing that debt.

Minister Jordan explained that every time a disbursement is taken from a loan, it is added to the debt.

“I may take a US$50M loan today but it doesn’t add to the debt yet, until it starts disbursing. If I take US$2M from the loan, that is added to the debt. It has to be repaid,” Minister Jordan said.

This is compounded by new loans being taken, the minister noted.

“When those start disbursing, it will add to the debt,” the Finance Minister said.

With the aforementioned debts owed to the ‘Non-Parris Club’ creditors, and agreements for debt reduction, the minister explained that debt serving will increase as payments are made towards clearing what is owed. He added that even the government has not taken any new loans, the debt owed would still increase, hence, “people need try and understand and not be scared of the Opposition.”

Unlike what occurred previously, the Coalition Government is making all matters of debt and finance transparent. The Debt Report, instituted by the Finance Ministry and laid annually before the National Assembly is one tool, Minister Jordan said. A monthly Debt Digest is now on the Finance Ministry’s website, for the public to peruse.

“You will know precisely how much is owed by Guyana,” he declared.

Guyana has had US$50M of its Kuwait debt written off and a US$12M (G$62M) debt swap means the latter amount is no longer in this country’s ‘debt stock’. The debt balance remaining is being paid via an agreement made.

“It has to be paid, otherwise the whole agreement collapses…where before you weren’t paying Kuwait, now we have to pay in accordance with the new agreement,” he said.

Unless there is 100% debt write off, the debt has to be serviced.

Comparatively, Minister Jordan said that Barbados is trying to achieve 60% of its debt to GDP by 2034. Guyana’s debt is below 50% and “below the global standard for countries like us, at our stage of development.”