THE US$50.7M debt settlement between Kuwait and Guyana will be used to fund social projects and solidifies bilateral relations between the two countries.

The bilateral Debt Settlement Agreement was signed by Finance Minister, Winston Jordan, on March 18, 2019, with the State of Kuwait, through the Kuwait Investment Authority, to cancel US$50.7M of Guyana’s debt to that country.

According to the agreement, obtained recently by this publication, the principal amount owed is US$9,940,500 of which US$8,000,000 is to be repaid in equal annual installments over four years beginning in May 2019. The residual sum of US$1.940, 500 will be paid under a debt swap agreement.

“The total interest outstanding is US$67,652,240.90, of which 75 per cent or US$50,739,255.67 would be used for development of social projects, with the remaining 25 per cent treated, in part, by way of a debt swap arrangement and the balance repaid in cash under Article 2.6,” Article 2.5 of the agreement read.

The subsequent article, article 2.6, detailed that of that 25 per cent, US$12,180,838.48 would be covered in the debt swap arrangement while the remaining US$4,732,246.74 would be repaid in cash over five years at an interest rate of one per cent, effective from May 2024, subsequent to the repayment of the principal amount of US$8M.

The agreement, which came after an ardent negotiation process, paves the way for greater co-operation and the strengthening of bilateral ties between the two countries. Minister of Finance, Winston Jordan, had said that the debt settlement came about as a result of renewed efforts by his ministry to engage Guyana’s non-Paris Club bilateral creditors in negotiating debt relief that is acceptable and sustainable.

Guyana’s debt to Kuwait originated from a Loan Deposit, contracted in 1975, from the Central Bank of Kuwait for Kuwaiti Dinars 3M (US$10.3 million at that time), for balance of payments support to the Bank of Guyana. The debt accumulated massive arrears over the past four (4) decades, at high market interest rates. As at December 31, 2017, the debt to Kuwait had grown to US$77,592,840.90, comprising principal arrears of US$9,940,500 and interest arrears of US$67,652,340.90.