Sithe Global is as good as gone and the Amaila Falls Hydropower Project

remains in limbo; but as the  recent weeks  show, the political acrimony that slammed the brakes on what could have been be the country’s single largest developmental project shows no sign of subsiding.
Whether it was in the press, at a forum at Saint Stanislaus College or during an outreach at Cotton Tree, the political rhetoric was amplified on both government and opposition fronts.
The concern now is that the conflagration which engulfed the Amaila discourse will spread to, and possibly consume, the administration’s other flagship projects, the Cheddi Jagan International Airport expansion and the Specialty Hospital. Already, the tell-tale stench of an impending showdown wafts in the political atmosphere as the Opposition rises on its haunches in response to the attorney-general’s disclosure that the Government will proceed with the construction of the Specialty Hospital in the absence of majority parliamentary approval of the funds earmarked for the project.
Business analysts would ruminate overwhelmingly on how the protracted gridlock will jangle the nerves of already jittery investors. What is almost never discussed, however, is the toll it will take on the many creditors who are bankrolling most of the country’s signature projects. The Specialty Hospital and upgrades to the international airport, for instance, are being financed through loans from the Indian and Chinese governments, respectively.
The role of friendly states and multilateral financial institutions as sources of development financing, and on concessionary terms at that, cannot be overstated. Were Guyana to take to international financial markets for debt financing, not only would the country be confronted with terms of repayment that are less favourable, but the rank political uncertainty that has come to characterise our body politic will tell on these hypersensitive markets and send our borrowing costs skyward.
Accessing concessionary financing requires a combination of diplomatic finesse and a project portfolio that is of mutually strategic interest, as these financing agreements are inked only if the economic and political interests of both lender and borrower converge.  Therefore, the unintelligence is palpable in the Opposition Leader David Granger’s statement giving short shrift to, what he says was, the US Ambassador Brent Hardt’s defence of American corporate interests. The lines of credit Guyana receives from India, China, Venezuela, etc. are not premised on some sense of sovereign philanthropy on these countries’ parts, but on their drive to, in some ways, further their respective national and corporate interests.
The bilateral loans, even as they fill Guyana’s financing needs, are often policy mechanisms, employed by the export import banks of lending nations, to finance the expansion of their companies’ operations abroad, as the funds are loaned on condition that companies from creditor countries are contracted to perform the bulk of technical works on the projects being funded.
However, the lenders might come to view financing projects here as counterproductive if, as with India’s Surendra Engineering and China’s China Harbour Engineering Corporation, which were contracted to work on the Specialty Hospital and CJIA upgrades respectively, their corporations are constantly mired in incendiary obloquies by the media and politicians. In an era of the 24-hour news cycle and a media environment increasingly interconnected by technology, criticisms and allegations travel far and wide and can taint the reputation and hurt the business prospects of these corporations in other markets.
In the eyes of creditors, the partisan stalemate also raises the spectre of that dreadful political force majeure: debt default.  As we noted in our editorial of August 15th, economic actors are presently acutely conscious of the fluid political dynamics globally, and Guyana’s creditors would not be unjustified in fearing that a new administration might bring about a declaration by this country that the debt contracted was ‘illegitimate’ and go unpaid.
As horrifyingly unimaginable as the consequences of a default would be, it would not be without precedent on this continent. In 2002, Argentina defaulted on its debts after popular revolts overthrew two consecutive presidents who were attempting to force through austerity measures to steer the country through its financial crisis. Ecuador’s Rafael Correa also deliberately steered his country towards default, saying that the debt accrued by Ecuador’s previous military regimes was “illegal”.
It takes two to tango and the government is more or less a willing partner in this dance of political brinkmanship that is playing out in the sight of very anxious development partners.
One financial analyst suggested that to have broken, or better yet,to have averted parliamentary stalemate, the project documents related to the government’s flagship ventures ought to have been tabled for approval in the National Assembly from the word go. This would have brought a level of institutional transparency which many stakeholders yearn for.
In addition, winning majority parliamentary endorsement for a project document, which contains projections of future allocations needed, creates for Opposition parliamentarians a moral obligation to approve allocations for these projects. That could be useful for a government that has had to contend with parliamentarians who approve funds for preparatory works, e.g. the access road for the Amaila Falls Hydro Project, but do not follow through with support for the remainder of the projects.