Since getting back into power in August 2020, the People’s Progressive Party/Civic (PPP/C) has unleashed a brazen borrowing spree, piling up loans from international banks and institutions with a fervor that mocks fiscal discipline. Guyana, now basking in the glow of its oil-driven economic miracle stands as one of the world’s fastest-growing economies.
However, the PPP/C’s insatiable appetite for debt in this era of unprecedented oil wealth is not just baffling; it’s a dangerous betrayal of Guyana’s future. In this column I wish to expose the PPP/C’s reckless borrowing binge, look at its implications against the backdrop of Guyana’s oil riches, and sounds the alarm on a policy that threatens to squander a historic opportunity, shackling generations to come with crushing debt while masquerading as progress.
In reality, the PPP/C has turbocharged Guyana’s debt, treating international lenders like an open bar. Here’s a list of their borrowing blitz:
World Bank Loans:
- COVID-19 Emergency Response Project (2020–2023): Kicking off with US$7.5 million, this project got a US$6 million top-up in June 2021 to push COVID-19 vaccines and bolster healthcare. Restructured in May 2023, it’s now set to close in March 2024, a lifeline stretched thin by bureaucratic bloat.
- Secondary Education Improvement Project (January 2021): A US$13.5 million injection to juice up math education, build schools, and roll out “smart classrooms”—a flashy add-on to prior World Bank education bets.
- Strengthening Human Capital through Education Project (June 2022): A hefty US$44 million loan to expand secondary education and vocational training, supposedly to meet demands in oil, agriculture, and tech. Noble in theory, but where’s the accountability?
- Petroleum Resources Governance and Management Project: Expanded under PPP/C, this murky initiative funds technical assistance for the oil sector, including the Environmental Protection Agency and Guyana Extractives Industry Transparency Initiative (GEITI). Post-2020 loan details are conveniently vague, but it is part of the World Bank’s grip on Guyana.
- Flood Risk Management Project: Ongoing loans to upgrade drainage and curb flooding in East Demerara. Post-2020 specifics are missing, but this project pads Guyana’s multilateral debt pile.
Inter-American Development Bank (IDB):
The IDB, Guyana’s biggest multilateral creditor, held 46.7% of external debt in mid-2022. While new loans post-2020 aren’t itemized, the IDB’s fingerprints are all over infrastructure, energy, and social projects, fueling the PPP/C’s spending spree.
China’s Export-Import Bank:
China, Guyana’s top bilateral creditor, controlled 16.2% of external debt in mid-2022. Loans likely bankroll massive infrastructure, but the lack of clear post-2020 details smells of opacity—a hallmark of PPP/C governance.
Debt Ceiling Hikes and Domestic Maneuvers:
- 2021: The PPP/C doubled the external debt ceiling from G$400 billion to G$800 billion and jacked up the domestic ceiling five-fold from G$100 billion to G$500 billion. A bold opening salvo.
- 2023: Not content, they pushed the external ceiling to G$900 billion and domestic to G$750 billion, thumbing their nose at restraint.
- 2024: In a jaw-dropping escalation, external and domestic ceilings hit G$1.5 trillion each—a G$1.35 trillion leap in borrowing power, as if oil wealth were a blank check.
- Central Bank Overdraft Securitisation (June 2021): The government turned a G$200 billion (US$960 million) Central Bank overdraft into variable-rate debentures with 1- to 20-year tenors—a sleight of hand to paper over fiscal gaps.
- NICIL Loan (December 2020): A G$16.5 billion (2.1% of GDP) syndicated loan, backed by the government, was reclassified as domestic debt to prop up the failing Guyana Sugar Corporation (GuySuCo). A bailout dressed up as reform.
It is true that Guyana’s fortunes have soared since the 2015 oil discovery, with production hitting 278,000 barrels per day by 2022 and a GDP per capita (PPP) of Int$80,137 in 2024. Oil revenues, flowing into the Natural Resources Fund (NRF) and supporting the 2024 budget with a G$1 billion withdrawal, have made Guyana a global envy. So then why is the PPP/C borrowing like there’s no tomorrow? Their justification: funding transformative infrastructure, education, and health projects. But the scale of this debt binge, coupled with a veil of secrecy over fund allocation, screams mismanagement and corruption.
We have called this a borrowing orgy. We continue to argued that oil revenues should cover development without drowning the nation in debt. With 40% of the 2024 budget (G$1.146 trillion) propped up by loans, every Guyanese household is saddled with a growing debt burden, mocking the promise of oil-fueled prosperity. The PPP/C’s addiction to borrowing risks turning Guyana’s golden era into a fiscal nightmare.
The PPP/C’s debt orgy threatens Guyana’s future with far-reaching consequences:
- Debt Sustainability Crisis: Despite public-sector debt dropping from 49.5% of GDP in 2012 to 26% in 2022, thanks to oil revenues, the relentless ceiling hikes signal trouble. The IMF’s 2023 Debt Sustainability Analysis rates Guyana’s debt distress risk as moderate, but this hinges on steady oil revenues and disciplined management. A dip in global oil prices or production hiccups (both very real possibilities) could cripple debt servicing, with over 40% of debt owed to multilateral creditors like the IDB and China’s Export-Import Bank.
- Strangling Private Investment: Skyrocketing domestic borrowing, including the Central Bank securitisation and NICIL loan, risks crowding out private credit. Higher interest rates could choke off capital for businesses, stunting job growth and economic diversification in a nation desperate to move beyond oil dependency.
- Inflation and Currency Chaos: Flooding the economy with borrowed funds and oil cash risks overheating. The IMF warns of inflation and real exchange rate appreciation if spending outpaces capacity. Guyana’s liberalised forex market, in place since 1991, saw the Guyana dollar lose 17.6% of its value from 1998 to 2000. More borrowing could destabilise the currency further.
- Governance Black Hole: The PPP/C’s borrowing lacks transparency, with infrastructure projects often cloaked in secrecy. Without ironclad oversight, borrowed billions vanishes into mismanagement, eroding public trust.
- Future Generations Betrayed: Long-term loans, like the 40-year IDA financing with a 10-year grace period, saddle future governments with repayments when oil wells may run dry. This intergenerational theft is unforgivable when oil revenues could fund development debt-free.
The PPP/C’s borrowing binge is a reckless gamble that could turn Guyana’s oil bonanza into a debt disaster. While investments in education, health, and infrastructure are vital, the G$1.5 trillion debt ceilings by 2024 betray a government drunk on borrowing and blind to financial rectitude and fiscal prudence. Guyana’s oil wealth should be a launchpad for sustainable growth, not an excuse for profligacy. The time for bold, responsible leadership is now—before the nation drowns in the PPP/C’s fiscal folly.
I urge all Guyanese to unite and vote the PPP/C out of office on September 1. Let us take back our nation from the unsteady hands of that PPP/C group disguised as a government; let us make the change.
