Dear Editor,
LAST Thursday, the National Assembly approved increases in the debt ceilings for external and public loans to $900 billion and $750 billion from $650 billion and $500 billion, respectively.
Already, critics are condemning this strategic move by the government. However, from a strictly technical standpoint, this move is timely and justifiable.
Editor, the country is at a juncture where the future income stream from the new oil and gas sector justifies frontloading spending on the transformative projects proposed in the PPP/C’s 2020 Manifesto.

Firstly, all the traditional debt indicators suggest that it is safe for the country to take on additional debt without being exposed to abnormally high risk of default.
The country’s debt-to-GDP ratio, external debt to exports, and debt service-to-GDP ratios, which are historically low and among the world’s lowest, suggest that the risk of Guyana defaulting on additional debt is extremely low.
Since the current stream of revenue collected by the government is inadequate to finance all the transformative projects that will catalyse the country’s development, it makes perfect sense to borrow against future income.

By postponing implementation of the transformative projects, we are more likely to pay more for them in the future.
The construction and financing costs will not get lower in the future, but will increase. Indeed, the likelihood of obtaining concessional financing will diminish as the oil and gas sector expands.
This means that we will have to finance the major transformative projects using commercial loans if we undertake them in the distant future.

Thirdly, the socioeconomic benefits of these projects will be delayed if they are implemented during the medium term. Residential and commercial consumers, for instance, will be denied cheaper and more reliable electricity by 2025 if the gas-to-shore project is postponed.
The major roads, highways, and bridges that are necessary to reduce commuting time and open lands for the development of house lots will also be delayed. Thus, Guyanese will have to wait longer than they should to own homes, while enduring substantial loss of income by using the existing road-transport network to commute.

The six regional hospitals, specialised paediatric and maternal hospital, and other health sector investments to ensure that every Guyanese can access modern health care will be postponed. Similarly, our students will have to wait longer than they should to access world-class education.
Apart from immediately improving the well-being of every citizen, these projects will also make Guyana an attractive investment destination.
If we wish to provide our citizens with high-paying employment opportunities in the short, medium, and long term, then it is a no-brainer to take on additional loans to accelerate the implementation of transformative projects.

Editor, the fact that our international partners are prepared to provide us with finance for these projects means that they consider them economically feasible and our country creditworthy.
We should, therefore, take full advantage by frontloading spending on all the transformative projects the government has promised in its manifesto. In this regard, we must compliment the government for raising the debt ceiling.
Regards,
Kevin Persaud