‘A gross lie’ …Ministry of Finance knocks KN article on debts

The Ministry of Finance has repudiated a Kaieteur News article which claimed that the subject minister, Winston Jordan had left the country in a US$ 1.3B debt.

In a release the ministry said it read with alarm the KN’s article ‘Winston Jordan leaves Guyana in US1.3B debt for 2019,’ July 3rd, 2020. Not only is the strident headline a gross lie, but the rest of the article struggled to maintain the lie. “It is therefore, our duty to ensure that the readers of this article are provided with a factual explanation for Guyana’s external debt.
See below the full statement by the ministry

1. US$1.3 billion represents an accumulation of debt over a number of years, and not an amount incurred in a single calendar year as the headline implies.
2. The external public debt at the end of December 2019 amounted to US$1.31 billion, a marginal 5.8 percent increase from the March 2015 balance of US$1.23 billion.
3. This increase is partly attributable to disbursements from loans signed before May 2015 under the previous administration, and inherited by the current one.
4. Notably, at May 31, 2015, shortly after the change of government, the undisbursed balance on loans contracted under the previous administration amounted to US$138.6 million. Since then, subsequent disbursements to facilitate the execution of development projects have contributed significantly to the 5.8 percent growth in external public debt, over the period spanning 2015 to 2019.
5. Furthermore, the evolution of external public debt should be viewed in the context of Guyana’s wider macroeconomic performance, in order to more accurately gauge our debt sustainability position. In this context, it is instructive to note that, while external debt has increased, the external debt-to-GDP ratio declined over the period 2015 to 2019, with the ratio for 2015 representing the peak of the 5-year series presented (See Table 1 Below). This indicates a strengthened debt sustainability position over the last 5 years. Additionally, while the steep decline of the debt-to-GDP ratio from 2018 to 2019 was in part attributable to a GDP rebasing exercise by the Bureau of Statistics, it should be noted that external public debt also declined, by 1.3 percent, from US$1.32 billion at the end of 2018, to US$1.31 billion at the end of 2019.
   Table 1

In conclusion, the statistical evidence suggests that Guyana’s external debt was managed in a prudent and sustainable manner during the last half-decade. This claim is buttressed by the International Monetary Fund’s Debt Sustainability Analysis Report for 2018, which classified Guyana as having a sustainable debt, while being at moderate risk of debt distress. Given our favourable macroeconomic outlook, the strong current debt sustainability position is expected to improve further over the medium to long term, assuming a continuation of the ensuing prudent debt management practices and policies.

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