GUYANA’S total public debt, both externally and domestically as of December 2015, stood at $317.7B, reflecting a decrease of 3.6 per cent when compared to its 2014 level, a Public Debt Report published by the Finance Ministry has said. The 2015 report was tabled in the National Assembly on Friday by Finance Minister Winston Jordan. In tabling the 54-page document, the Finance Minister said, though it was not required by law or any regulation, the Debt Report is in keeping with the A Partnership for National Unity + Alliance For Change (APNU+AFC) Government’s commitment to provide greater transparency and accountability.
According to the report, the decrease was mainly as a result of repayments of the oil debt under the Guyana-Venezuela Rice Trade Arrangement.
As at December 2015, total external debt amounted to $236B or 74.3 per cent of total public debt, while domestic debt stood at $81.7B.
It was explained that the country’s public external debt stood at US$1.143M, a decline of 6.0 per cent from its end-2014 level. “This decrease was largely due to repayments of the oil debt to Venezuela in the form of rice and paddy shipments to Venezuela. Guyana concluded two Debt Compensation Agreements with Venezuela in 2015, for a total of U.S.$88.7M. One debt-compensation agreement for U.S.$43.8M is yet to be signed,” the report further explained.
Notably at the end of 2015, there were four creditors who accounted for 76.8 per cent of the country’s external debt stock – the Inter-American Development Bank (IDB), the Caribbean Development Bank (CDB), the Export-Import Bank of China and the Government of Venezuela.
The IDB, according to the report, continues to be the dominant creditor with an average share of 36 per cent of debt. “At the end of 2015, debt outstanding to the IDB totalled U.S.$489.3M, or 42.8 per cent of total public external debt, while the CDB, Guyana’s second largest creditor, accounted for 12.6 percent of total public external debt,” the report pointed out.
Meanwhile, in the area of Public Domestic Debt, the country’s debt stock was estimated at $81.7B at the end of 2015, representing an increase of 4.2 per cent when compared to $78.4B at the end of 2014.
TREASURY BILLS
“The increase in the Public Domestic Debt stock was mainly due to the increase in issuing of Treasury bills (T-bills), causing the stock of T-bills to increase by 4.4 per cent. In 2015, the issuance of 91-day T-bills and 364-day T-bills rose by 27.0 and 8.6 respectively.”
During the period under review, 2011-2015, the “total public debt fluctuated, peaking at its highest level in 2012 at $371.3B before gradually declining to its lowest level in 2015,” the report pointed out. It was also explained that the increase in debt during 2012 was a result of disbursements from the country’s external creditors.
According to the Finance Ministry, the country continues to maintain a sustainable level of public debt as a result of Government’s ongoing effort to efficiently provide for its financing needs by minimising borrowing costs, while keeping exposures to interest rate and refinancing risks at an acceptable level.
However, Minister Jordan, in the report, pointed out that maintaining the debt at a sustainable level will not be achieved without challenges linked to an uncertain global economy.
He said for the first time in recent history, Guyana had found itself in a “precarious situation” in 2015 when most of its key agricultural commodities including rice, sugar and forestry faced headwinds.
“The slowdown in the global economy, combined with the loss of preferential markets, negatively affected demand for these produce. Even remittances, on which so many of our people depend, were a victim of the slowdown [in the] economy,” the Finance Minister explained.
The country’s excessive reliance on these sources of foreign exchange, he noted, will continue to expose the economy to volatile external developments.
“Our recent Debt Sustainability Analysis indicates that Guyana will remain vulnerable to external shocks. Commodity price fluctuations have added to the volatility of our export earnings and tax revenues, and have also affected the financial performance of state-owned agricultural enterprises,” Minister Jordan noted.
These challenges come at a time when concessional lending is becoming scarcer. As such, the country is focusing on alternative funding sources, particularly its South-South partners such as EXIM Bank of China, EXIM Bank of India, the Mexican Agency for International Cooperation and Development, and the Islamic Development Bank.
It is also maintaining close ties with multilateral agencies such as the World Bank, the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CBD).