– requests write off of 1970s loan
– looks for closer partnership with Islamic Development Bank
MINISTER of Finance, Winston Jordan and Minister of Public Infrastructure, David Patterson accompanied by a technical team from the Ministry of Finance, have just concluded a visit to the Middle East which was intended to attract diverse investments and forge closer banking partnerships with the Islamic Development Bank (IsDB) as part of Guyana’s preparation for its impending oil-based transformation.
Minister Jordan signed a significant loan agreement with the Islamic Development Bank (IsDB) for US$20M which will be going towards major upgrades to the Guyana Power and Light as part of its Development and Expansion Programme for 2014 to 2021 as well as a US$900,000.00 grant agreement for the Reverse Linkage Project which aims to enhance the stability and sustainability of Guyana’s rice sector. The project seeks to diversify the rice sector with the production of new varieties of rice with an increase in rice export.
The delegation also visited Kuwait with the intention of formally requesting a write-off of a decades-old loan. Minister Jordan explained to the Kuwait Times newspaper; “We had borrowed around US$10 million from Kuwait in the 1970s. It was during a time when we really needed help and Kuwait was very generous to reach out and give the money we needed. But now, the amount has grown to about US$70 million because of interest. This is the reason why we are here.” Minister Jordan also urged Kuwaiti businessmen to invest in Guyana’s growing economy and met the Deputy Chairman of Kuwait Chamber of Commerce and Industry, Mohammad Al-Saqer in this regard.
The trip was part of a broader recognition that aims to develop and diversify Guyana’s economy, partnerships with overseas investors and lending agencies. Minister Jordan, in explaining the vision of Guyana’s Green State Development Strategy, said “We will be doing a very unique experiment whereby we will be using resources from oil and hydrocarbons to project ourselves in a renewable state.”
During the visit to Kuwait, His Highness Sheikh Dr. Nasser Mohammed AL Ahmed AL-Jaber AL-Mubarak Al-Sabah, Prime Minister 2006-2011, who visited Guyana, on July 19, 2010, hosted a grand luncheon/banquet for 40 persons which included Ministers Jordan and Patterson; Donna Yearwood, Head, Debt Management, Ministry of Finance; Guyana’s Ambassador to Kuwait Professor, Dr. Shamir Ally; wife Dr. Maryann Beebe Ally, and 35 high ranking Kuwait officials, including His Excellency Khaled Suliman AL-Jarallah, Deputy Minister of Foreign Affairs, who was on the team to Guyana on July 19, 2010.
His Highness assured the ministerial delegation that Kuwait and Guyana are brothers and sisters, and thanked Guyana for its support for Kuwait’s Election at the United Nations Security Council and other international agencies and added that Kuwait is looking forward to more active participation in Guyana.
Ambassador Dr. Ally, in his quarterly briefings to His Highness, discussed among other matters, visa waivers in Kuwait and Guyana for diplomatic and government officials and a Kuwait embassy in Guyana.
Head of delegation, Winston Jordan raised Guyana’s US$10 million debt incurred in 1973 to Kuwait Investment Authority (KIA), and a special request for a waiver of the accumulated US $64 million interest, and a repayment schedule for the US $10 million loan. Both His Highness and the deputy foreign minister promised to pursue the relief to Guyana. Minister Jordan also mentioned the opportunities for Kuwait investments, for public private partnerships in agriculture, business and education.
Prior to the Kuwait visit, the team spent the past week visiting the Islamic Development Bank in Jeddah, Kingdom of Saudi Arabia (KSA) at the invitation of the IsDB President, Dr. Bandar Hajjar. The delegation was exposed to the five entities comprising the IsDB Group, the functional areas of the bank, the financial and technical support available and the process of accessing this support. Guyana has access to a US$900M resource envelope from which US$20M will support GPL’s upgrade. The Projects Department of the Ministry of Finance is currently working with other ministries and agencies to develop projects to tap into the remaining funds.
The ministers shared information on Guyana and areas of greatest interest to the country. During the welcoming formalities and exchange of courtesies, Minister Jordan presented a plaque with several samples of wood species from Guyana to the vice president for Country Programmes, Dr. Mansur Muhtar. The plaque will be prominently displayed in the bank.
Guyana became the 57th member country of the IsDB in 2016, and has set a record with the speed with which three agreements for loan and grant support have been finalised. This is due to the high level of interest the bank has in expanding its operations into Latin America and the Caribbean. Islamic banking is very different to traditional western banking in that it espouses a more ethical approach to lending which shares the risks equitably between lender and borrower.
Presentations were made by the senior management of each of the five entities that make up the group: the International Islamic Trade Finance Corporation (ITFC), the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), the Islamic Research and Training Institute (IRTI), the Islamic Corporation for Development of the Private Sector (ICD), and the Islamic solidarity Fund for Development (ISFD).
Guyana is a member of only the IsDB and the Organisation of Islamic Cooperation which is a precursor to being able to join any of the other entities in the group. The five subsidiary entities focus mainly on the private sector. Minister Jordan has invited the representatives of these entities to visit Guyana by the first quarter of 2019 to assess the appetite and capacity of the local private sector to utilise the Shariah compliant financial products and other services of the IsDB group. These include facilitating access to Islamic Capital Markets, export credit and investment insurance, political risk insurance, mobilising financial resources, promoting entrepreneurship, encouraging trade and investments between and among member countries, providing trade related capacity building, research and training inter alia.
The Guyana team noted that the focus of the IsDB group is closely aligned with those of the country – human development, achievement of the United Nations Sustainable Development Goals, narrowing the infrastructure financing gaps, creating jobs and building capacity.