…Opposition says increase will place financial burdens on present, future generations
By Svetlana Marshall
The Government, late Thursday night, used its majority vote in the National Assembly to pass two Motions that will see the country’s domestic debt ceiling increasing from $150B to $500B, and the external loans limit moving to $650B from a low of $400B – a move the Opposition said will only place great financial burden on the present and future generations.
The Motions confirming the Public Loan (Increasing of Limit) Order No. 2 of 2021 and the External Loans (Increasing of Limit) Order No. 3 of 2021 were tabled by the Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh.
In the whereas clauses of the Motions, Minister Singh contended that since assuming office in August, 2020, the People’s Progressive Party/Civic (PPP/C) Government found that significant outstanding obligations were accumulated by the A Partnership for National Unity + Alliance For Change (APNU+AFC) Administration including a large overdraft of approximately $90B at the Bank of Guyana.
“…These obligations are not currently classified as public debt but, had they been so classified or had they otherwise been settled or resolved through the fiscal accounts, they would have resulted in breach of prevailing statutory ceiling on domestic debt, but they were instead left outstanding and unresolved at the time the last administration demitted office,” the Finance Minister submitted as a justification for the increase of the domestic debt ceiling.
In the House, he told members on both sides of the divide that it was important to regularize and resolve the outstanding obligations but said it would result in additional incurrence of fiscal deficits and additional issuance of domestic debt.
He argued that the $30B Bond secured by the National Industrial & Commercial Investments Limited (NICL), of which $17B was released to the Guyana Sugar Corporation (GuySuCo), and the billions of dollars owed to the Guyana Power and Light (GPL) and other entities are among contributing factors impacting the country’s fiscal deficit.
“As the days go by Sir, we unearthed more and more, and additional and additional, layers upon layers of debt of other liabilities, of other obligations, of other commitments undertaken by the State,” Dr. Singh said.
That aside, the Finance Minister said the PPP/C stands resolutely by its commitment to foster transformative development in the country.
Adding to his voice to the debate, PPP/C Member of Parliament, Sanjeev Datadin said in order to attract greater investment and development, it is important for the Government to create a conducive environment but such would require additional finance.
“… [The] projected foreign investment in Guyana in the next two years will be approximately US$1.29B. It is also projected that for those investments to bear fruit, the Government of Guyana has got to be able to provide services at a different level to the nation,” Datadin explained.
With Guyana said to have one of the fastest growing economies in the world, the PPP/C Parliamentarian said it is important for the Government not only to support growth in the Petroleum Sector but also in other sectors, however, he emphasized that such would require substantial amount of finance.
But the APNU+AFC Coalition, which has a total of 31 seats in the National Assembly, rejected the motions, warning that they have serious consequences for the present and future generations.
APNU+AFC Member of Parliament (MP) Shurwayne Holder rejected the claims that the David Granger led Administration had engaged in poor financial management. He said based on the World Economic Outlook’s (WEO) Macro Economic Framework, Guyana has a medium debt carrying capacity, and with a score of 3.01, the country has substantial space to absorb shocks.
Further, he said that the country’s risk and overall debt distress remained moderate under the APNU+AFC Government.
“However, while the country’s debt dynamics improved significantly, it remains vulnerable under the standardized stressed test as it is now, debt indicators remain well below their vulnerability threshold and is forecast to remain so for a projected period for the next 10 years – a period dubbed by President David Granger as the Decade of Development,” Holder said.
He added that: “The present value of our external debt to GDP ratio is projected to decline from 22 per cent to about 2 per cent as the need for external borrowing is eliminated by the accumulation of external assets. Prudent Fiscal Policies implemented by the APNU+AFC Government over the years, helped to reduce the overall public debt.”
Weighing in on the matter, APNU+AFC MP, Ganesh Mahipaul said he is concerned for present and future generations as the increases would only leave the nation in debt.
“Mr Speaker only people with children and grandchildren and people who are planning to ensure that their names are carried on will understand the dangers of this Motion, should it be passed. People who have neither a chick nor a child, a dog or a cat will not understand the magnitude of danger this motion is bringing to them,” he said.
