–as Senior Finance Minister presents several contracted loan agreements to the National Assembly
THIS PPP/C Government recognises that responsible borrowing is an important tool for financing public sector investment, and with the aim of advancing its transformative development agenda, it on Thursday, through Senior Minister in the Office of the President with Responsibility for Finance and the Public Service Dr. Ashni Singh, presented several contracted external loan agreements to the National Assembly.
Successive PPP/C governments have demonstrated effective debt management practices, which have contributed to a large decline in the country’s debt ratios over a sustained period. Guyana’s debt-to-GDP ratio declined from over 600 per cent in 1991 to 27 per cent in 2023.
Additionally, in 1992, about 90 cents of every dollar of revenue earned was used to make debt-service payments, and, today, this has been significantly reduced to about six cents of every dollar.
Noteworthy, the IMF 2023 Article IV Report for Guyana indicated that the risk of (overall and external) debt distress remains moderate, with debt dynamics improving significantly with incoming oil revenues.
All external debt indicators remain well below the relevant indicative vulnerability thresholds under the baseline scenario, which incorporates the long-term effects of oil production.
The IMF, in its Article IV Report, also commended the authorities’ commitment on maintaining debt sustainability and a balanced growth path through moderating fiscal impulses over the medium-term, while continuing to address development need.
The loan agreements tabled include:
Financing garnered through the Inter-American Development Bank (IDB)
• On December 8, 2023, the Government contracted a loan from the IDB for US$30 million to finance the execution of a policy-based reform programme to support Human Services in Guyana.
Under this loan, the Government is implementing the following measures:
(a) Digital transformation of the Ministry of Human Services and Social Security
(b) Strengthening the Senior Citizen´s Pension Program
(c) Empowering persons living with disabilities
(d) Supporting gender empowerment
This agreement is in line with the government’s agenda to improve the delivery of services to our pensioners and the wellbeing of persons with disabilities.
Loan from the International Development Association (IDA)
• The government signed a Financing Agreement on December 15, 2023 between the Cooperative Republic of Guyana and the International Development Association (IDA) for an amount equivalent to US$35 million (SDR26.7 million) to support the Enhancing Policies for Human Capital Accumulation Development Policy Financing Program. The Program is primarily to support a reform program to:
(1) Recover learning and schooling losses and increase access to quality education for all, and
(2) Build a more responsive education system offering improved opportunities for all in the new economy
Loan from Canada intermediated through the IDB
• On December 22, 2023, the Governments of Guyana and Canada, signed a sovereign loan agreement for CAN$120 million with His Majesty the King in Right of Canada, as represented by the Minister of International Development, acting through the Department of Foreign Affairs, Trade and Development (Global Affairs Canada), and done through the Sovereign Loans Programme for an amount of CAD $120 million to support the Budget of Guyana, including supporting Guyana’s social protection priorities in combating human trafficking, gender-based violence, women’s economic empowerment and enhancement of the safety net for vulnerable populations.
The sovereign loan programme which is intermediated through the Inter-American Development Bank (IDB), makes a substantial contribution to efforts already being made by the Government of Guyana through its Ministry of Human Services and Social Security. The loan programme also features a climate-resilient debt clause to access funds in the event that Guyana experiences a climate incident, a natural disaster, a pandemic or an epidemic.
Supplemental Loan Agreement and Account Supervision Agreement with the Bank of China
• On December 29, 2023, a Supplemental Agreement between the Government and the Bank of China Ltd was signed. This Agreement amended and restated certain terms and conditions of the Original Facility Agreement dated December 30, 2022, for an amount equivalent to Euros 160.85 million, to partially finance the New Demerara River Bridge (NDRB) Project.
Earlier in 2022 (May), the Government of Guyana had kick started the major project through the signing of a US$260 million contract for the major new Bridge as part of its plans to expand and modernize Guyana’s transport infrastructure, and significantly reduce the traffic woes on the East Bank of Demerara.
The project, which was long in the making by the PPP/C Administration, was awarded to the Joint Venture of China Railway Construction Corporation (International) Limited, China Railway Construction (Caribbean) Co. Ltd and China Railway Construction Bridge Engineering Bureau Group Co. Ltd.
The hybrid designed bridge which is currently under construction will feature a modern four-lane structure (two carriageways), cycle lane, with a 2.65 kilometres length, driving surface of about 23.6 meters or 77.8 feet and will have a lifespan of some 100 years.
The Demerara Harbour Bridge is also a vital linkage for the transport of agricultural goods from Regions Two and Three into Region Four and beyond. Therefore, easier and more efficient transport links will support agricultural development and food security for Guyanese.
Loan from UniCredit Bank Austria AG- Swedish Export Credit Agency (EKN)
• The government signed a Swedish Export Credit Agency (EKN)-Covered Facility Agreement on January 12, 2024, with the UniCredit Bank Austria AG, as the Original Lender, and the UniCredit Bank Austria AG, as the Agent and Arranger, for an amount of EUR 135 million. The purpose of this loan is to finance the design and build of, and the delivery of medical equipment to, a New Hospital Campus in New Amsterdam, Guyana.
With this new hospital campus, government aims to accelerate modern healthcare in New Amsterdam through improvement in health equity, an increase in access to quality healthcare and an increase in life expectancy of the population of Region Six.
The project includes a new 230 bed hospital that will replace the existing regional facility including training facilities and two wings within the site, provided as core and shell buildings for one psychiatric shelter and one teaching facility.
“The PPP/C Government remains committed to fulfilling our promise of a brighter and better future for all Guyanese and will maintain its track record of transparent and prudent debt management,” the Finance Ministry said.
