DURING his remarks at a regional panel discussion forum facilitated by the World Bank, Senior Finance Minister Dr. Ashni Singh on Friday called on international development partners to improve access to concessional financing for the region.

He also noted that the Caribbean has to be prepared to think outside of the box and come up with creative solutions for building resilience through sustainable development financing, especially since the region faces the challenge of being peculiarly vulnerable.

A release from the Ministry of Finance stated that despite this vulnerability, the region “does not qualify for the typical treatment that low-income countries would be treated to in terms of debt relief, and consideration for concessional development financing.”

Regional finance and international banking representatives were part of the panel discussion, which was held under the theme, ‘Building resilience through sustainable development financing in the Caribbean’.
Alluding to Guyana’s economic history, which he noted is very similar to all of the Caribbean countries, Dr. Singh reminded that three decades ago, the country underwent economic hardship and was a heavily indebted poor country with debt to GDP ratio at one time exceeding 600 per cent.

“We were spending more than 100 per cent of our revenue to service debt. We set about a task of restructuring the economy, opening and liberalising the economy, diversifying the productive sector and in particular, implementing a series of fiscal reforms aimed at restoring fiscal solvency to the country and restoring our status as a credit worthy country. We went through the whole HIPC (Heavily Indebted Poor Countries) process. This was not at all easy by no stretch of the imagination,” the finance minister recalled. He noted that in many cases it took mobilising of international advocacy to help Guyana’s case,” he was quoted as saying.

Further, he said: “When we started the HIPC process, a fiscal window for HIPC eligibility didn’t exist and if you look at our debt vulnerability indicators….the debt vulnerability indicators in those days were defined based on external sustainability or balance of payments and our balance of payments did not meet the thresholds that were specified. They didn’t indicate that we would have qualified for HIPC but our fiscal position was so bad that we simply were not in a position to service these debts even if the external accounts indicated a slightly less fragile situation,” Dr. Singh.

INDEBTEDNESS
He added that it took technical work and advocacy to convince the international community that something called the fiscal window under the HIPC debt relief initiative should be introduced in order to measure debt sustainability or unsustainability not only from the external perspective, but also from the fiscal perspective and Guyana subsequently qualified for HIPC debt relief under that fiscal window.

Against this backdrop, he noted that it is well known in the region that there is a serious problem with indebtedness and the region is not being treated with the seriousness that the matter deserves because of ‘the middle-income illusion’.

“When we speak of sustainable development financing in the Caribbean we have to put this question of debt sustainability squarely on the front of the table. We have to accept and confront the reality that the Caribbean faces this peculiar vulnerability that has to be taken into account for the purposes of mobilising financing, both through new resources and also debt relief and the World Bank is uniquely placed and uniquely endowed with the intellectual assets to articulate this case in a rigorous way,” Dr. Singh emphasised.
Additionally, the minister pointed out that a lasting solution to the fiscal challenges faced in the region will not be achieved until the region is able to achieve productive diversification.

“So, there also has to be a conversation with the World Bank and with our other development partners on how we find a lasting solution to the challenges of limited opportunities for productive diversification. Many of our economies are predominantly tourism-based economies, Guyana has the good fortune of being a resource-based economy and we have a couple others in the room. We probably have more opportunities for diversification but a serious conversation has to be had about what are the investments that are needed to achieve viable diversification of the real sector in the Caribbean,” he added.

FINANCIAL INFLOWS
Further, the finance minister alluded to Guyana’s standing forest through which he reminded that government has mobilised a source of financial inflows for the country.

“The climate services that are provided by our standing forest are now being remunerated. We just got our carbon credits certified by the ART TREES Secretariat globally and we just sold [our] first batch of carbon credits in the global market place and we have planned to continue to do this so for the first time we are using a market-based mechanism to mobilize revenue from our standing forest. This is new and it is innovative. We need to continue to think about similar innovations across the region. Here again, the World Bank is uniquely placed to support us in this regard,” the Senior Finance Minister urged the forum.

Guyana received its first payment for carbon credits under an agreement with Hess Corporation, a United States Oil Company last month with HESS making a payment of US$75 million under the agreement that will be worth a minimum of US$750 million up to 2030. Two further payments of US$37.5 million each will be made during 2023, bringing the total amount programmed in the country’s 2023 National budget to US$150 million.

The payment stemmed from government’s continued recognition of the important role that Guyana’s forests play in not only the development of the country, but in combatting climate change globally and was fostered through government’s ground-breaking Low Carbon Development Strategy (LCDS) 2030.

On December 1, 2022, the Architecture for REDD+ Transactions announced the issuance of 33.47 million TREES credit to Guyana for the five-year period from 2016 to 2020. The Architecture for REDD+ Transactions (ART) is a global initiative that seeks to incentivise the reducing of emissions from deforestation and forest degradation (REDD), as well as restore forests and protect intact ones, the release noted.