Guyana signs two major loans in one week, then begs Kuwait for US$70M debt write off

By Kaieteur News

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Finance Minister Winston Jordan (left) stands next to Public Infrastructure Minister, David Patterson during a reception held at Crowne Plaza Hotel in Farwaniya, Kuwait (Photo: Kuwait Times)

(KAIETEUR NEWS) – In the same week that Guyana signed on to two multimillion dollar loan agreements with China and the Islamic Development Bank (IsDB), Minister of Finance, Winston Jordan and Public Infrastructure Minister, David Patterson travelled to Kuwait where they appealed for debt relief.

Reports from Kuwait media indicate that the two Ministers were seeking the possible writing-off of debt borrowed from Kuwait around 40 years ago. According to the Kuwait Times, Guyana had borrowed US$10M from Kuwait in the 1970s.

“It was during a time when we really needed help and Kuwait was very generous to reach out and give the money we needed. However now, the amount has grown to about $70 million because of interest. This is the reason why we are here,” the Kuwait Times quoted Jordan.

Before he arrived in Kuwait, Jordan and the Islamic Development Bank’s (IsDB), Vice President of Sector Operations, Mansur Muhtar, signed a US$20M loan in Jeddah, Saudi Arabia to support improvements in the power supply through the Guyana Power and Light Incorporated (GPL Inc.).

Then on Saturday, Minister of Foreign Affairs, Carl Greenidge signed two loan agreements at to the tune of US $51M with Chinese State Councillor and Foreign Minister Wang Yi who was on a two day official state visit to Guyana.

The Chinese loan is to support the national broadband project and several others including the construction of a Public Service College.

The International Monetary Fund (IMF) has projected Guyana’s debt levels to rise in 2018-19 due to the expansionary fiscal policy.

Guyana’s total public debt service payments rose by 25.6 percent, from US$35.3 million, for the first half of 2017, to US$44.3M for the first half of 2018, primarily as result of increased payments to external creditors.

The first half of 2018 shows a heavier reliance on financing from multilateral creditors as compared to the previous year. Notably, the Inter-American Development Bank recorded the highest share of external disbursements at 35 percent or US$9.5 million.”

Further to this, the Ministry of Finance has pointed out that the debt to Guyana’s bilateral non-Paris Club and commercial creditors continued to accumulate arrears on external debt service payments.

At the end of June 2018, the external arrears increased, by 2.3 percent or US$3.6 million, from US$161.3 million at the end of June 2017, to US$165.0 million.

Recognizing the growing burden of this debt on the country’s portfolio, Jordan said that the Government has been vigorously engaging these creditors in debt negotiations in an effort to settle debts.

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