–Dr. Jagdeo defends PPP/C government’s borrowing strategy; highlights party’s strong debt management abilities
THE General Secretary of the People’s Progressive Party (PPP), Dr. Bharrat Jagdeo, on Thursday, addressed concerns regarding the government’s borrowing practices, and countered ill-informed criticisms by highlighting that Guyana’s national debt stands at a mere 12 per cent of the country’s gross domestic product (GDP).
Owing to its low debt-GDP ratio, Guyana has one of the lowest rates worldwide compared to the past when the country was highly indebted.
In his response, Dr. Jagdeo emphasised the party’s commitment to fiscal responsibility and highlighted the successful management of debt, underscoring the positive impact on the country’s financial viability and development.
He said that Guyana’s debt profile had significantly improved over the years. Referring to an affidavit by Carl Greenidge, a former Finance Minister, in the Green Mining Construction Arbitration, Dr. Jagdeo revealed that the debt-to-revenue ratio had dropped from 913 per cent to approximately 12 per cent of the country’s GDP.
This figure represents one of the lowest debt ratios globally. Moreover, only seven-eight per cent of revenue is now allocated to servicing the debt.
To reinforce the government’s prudent borrowing strategy, Jagdeo pointed out that the majority of loans acquired were fixed-rate loans, reducing concerns about potential interest rate escalations.
He also related that the country had not taken any private variable interest loans but had instead secured two variable interest loans from multilateral financial institutions known as IFIs (International Financial Institutions).
Dr. Jagdeo stressed the significance of PPP/C’s historical debt management efforts, which had transformed Guyana from a financially struggling nation to one with considerable financial viability even before the discovery of oil and gas reserves.
“…If you look at our history, you will see one thing that the PPP has done, one of our greatest successes is that we never speak enough about people, talk about the roads and water and stuff. We took a bankrupt country and restored it to financial viability, and this was even before oil and gas,” he said.
Jagdeo revealed that the debt-to-GDP ratio had declined from a staggering 913 per cent to around 45 per cent before the oil and gas era, far below the global average; this showcased the government’s commitment to responsible fiscal practices.
Dr. Jagdeo also highlighted the purpose of the government’s borrowing, stressing that investments were made in critical infrastructure, such as healthcare systems, roads, power plants, ports, and modern water systems.
The objective was to enhance the country’s capital stock and create opportunities for economic growth and job creation. Notably, borrowing was not used for consumptive purposes.
“When we borrow, we borrow to invest in things that matter. We can pay it back easily. We don’t borrow to eat; we borrow to build the capital stock of this country. So, our people can benefit, they can use that to create new industries and new jobs,” Dr. Jagdeo clarified.
He added that the borrowing was done strategically to foster economic development, create new industries, and improve the lives of the Guyanese people.
The International Monetary Fund (IMF) projects a continued economic boom for Guyana, with 37.2 per cent GDP growth expected in 2023.
According to the IMF, the country’s GDP experienced unprecedented growth in 2022, reaching a record high of 62.3 per cent, with non-oil GDP expanding by 11.5 per cent.