Dear Editor,
“Mr Speaker, I rise to present to this House the biggest Budget ever presented to any Legislature in British Guyana” (Peter d’Aguiar, 1965).
“Mr Speaker, the size of this budget is $128.9 billion, 8.1 per cent higher than last year’s budget, making it Guyana’s largest budget ever” (Ashni Singh, 2009).
Mr Peter d’Aguiar’s first budget of the Peoples National Congress/United Force coalition government was a mere $112.7 million. I have always been fascinated by the continuities and discontinuities in politics but what sent me back to my notes was the present discussion in your letter columns on Guyana’s debt. It occurred to me that this discourse may well benefit from a wider perspective.
In the same presentation, Mr d’Aguiar claimed that the “Public Debt at 31st December 1964 was $134 millions of which $29 millions were internal and $105 millions were external.” As if challenging us to discover for ourselves an unfavourable comparison, in a very matter of fact fashion, he said that the per capita debt was $211 compared to $228 in Trinidad, without indicating that, for example, the per capita incomes of Guyana and Trinidad and Tobago were US$290 and US$740, respectively. He was doing politics and could not help taking a dig at those who had gone before; thus, he informed us that “Ten years ago the per capita debt was $74”!
The national income per capita was $373M in 1954; $386M in 1957 (the year the PPP came to office after the suspension of the Constitu-tion in 1953); $390M in 1961; $351M in 1962; $383M in 1963 and $380M in 1964 (the year the PNC took power) (BG Quarterly Statistical Digest). Therefore, Mr d’Aguiar also told us that, “In the past three years the economy has stagnated.” How-ever, the numbers indicate that the stagnation had been much longer and that and given the political turmoil of the time, development was more or less impossible.
Total external debt rose from US$16.6M in 1955 to US$27M in 1957; US$60.8M in 1964; US$151.4M in 1973; US$746.6M in 1985 (the year Burnham died and Hoyte came to office); $2B in 1992 (the year the PPP/C took government). But these increases need to be put in context. As Tyrone Ferguson argued: in the first half of the 1980s Guyana, “basically stopped paying its full commitments to external creditors. In effect, then, notwithstanding the government’s stated position of principle, it was basically constrained to do what the PPP had argued for.” Arrears which stood at US$45.4M in 1980 became US$731.1M the year Burnham died. Burnham’s nationalizations and flirtation with socialism had long alienated most of his Western donors. Ironically, having previously joined him to sink Jagan, they had now left him to drown!
As early as 1967, the UN Conference on Trade and Development noted that debt had become a major problem for many poor countries, and in the 1980s and early 1990s groups such as the Debt Crisis Network and the Debt Action Coalition were making reduction efforts. Guyana’s debt had become so consuming that the 1988 Economic Recovery Programme (ERP) with the International Mone-tary Fund/World Bank recognized that, “Guyana’s continued development also depends heavily on continued access to concessionary external finance, as well as concessionary debt relief.” And the 1992 World Bank report (‘From Economic Recovery to Sustained Growth’) stated that, “Dealing with the problem of the debt has occupied a major segment of the Govern-ment’s attention…. Guyana has received two reschedulings from the Paris Club, the latest in September 1990 on Toronto terms. However… the effect has been mostly to postpone payments, rather than to reduce substantially debt service.”
The fact that the current reduction regimes were insufficient to prevent an unsustainable rise of the stock of debt of poor countries was also internationally recognized. And in September 1990, John Major, then UK Chancellor of the Exchequer, at the Commonwealth finance ministers’ meeting in Trinidad, argued for a present-value reduction of two-thirds (67 per cent) of the stock of debt, but this did not materialize until the Naples economic summit in 1994. However, even under these conditions, Highly Indebted Poor Countries (HIPCs) found it difficult to meet their external debt obligations and in 1996 the IMF and World Bank initiated what we know as the HIPC Initiative.
But as Joshua Busby (‘Bono Made Jesse Helms Cry’) claimed: “HIPC I, despite some influence by Oxfam and other development charities, was primarily a top-down affair… When James Wolfensohn took over at the World Bank in 1995, he viewed debt relief favourably, in part because he recognized that debt relief was a way to win over the advocacy community that had been bashing the Bank for the negative effects of structural adjustment and the environmental consequences of large infrastructure projects.”
As indicated, in opposition, Cheddi Jagan was a radical on the question of Third World debt in general and Guyana’s debt in particular. He believed that requiring poor people to pay back debt, most of which had been squandered by various dictators, was immoral. His essential position was that Guyana should refuse to pay, pull out of the capitalist world system and join the socialist block. However, real politics intervened once he took power. He still did not want to pay, but now there was no world socialist system and he was effectively locked into world capitalism by way of an ongoing IMF/World Bank programme. New tactics were required and what he advised should be done unilaterally when in opposition, he now sought to gain by way of negotiations.
In about 1994 Jagan proclaimed what has became known as the New Human Global Order, and threw himself wholeheartedly into, among other things, the international struggle for debt forgiveness. He promoted his proposal at every opportunity and if the conventional wisdom was that debt will be sustainable at about 20 per cent of export earnings, at the World Food Summit in 1996, Jagan proposed that it be 10 per cent of export earnings.
Busby also argued: “While the story of HIPC 1 is largely top-down, the same cannot be said for the expansion of HIPC, hereafter.” The general momentum for debt relief gathered pace. For example, in the early 1990s, Martin Dent, a professor at Keele University in the UK, conceived of Jubilee 2000 “as a kind of shorthand for the necessary remission of past, inert debt which alone could clear the ground for a new beginning.”
Many world leaders, including President Bharrat Jagdeo, became part of this general momentum which brought the Enhanced HIPC, the 2005 Gleneagles Declaration (that promised the relevant countries forgiveness of all the debts owed to IMF, World Bank and the African Development Bank), etc.
So generally, we can conclude that: (1) the public debt began (at first imperceptibly) its rise during colonial times but only became unsustainable in the Burnham era; (2) the arrears contributed much to what became the total debt; (3) the Economic Recovery Programme was premised on the fact that Guyana had to receive debt relief and the Hoyte regime did receive levels of relief; (4) recognising that the current debt regimes were insufficient, in the late 1980s and early 1990s, the international financial establishment, with prodding by some advocacy groups and individuals, (including Cheddi Jagan), introduced HIPC 1 in 1996; and (5) HIPC 1 was itself viewed as inadequate; international advocacy grew substantially and brought, among other interventions, the Enhanced HIPC and the Gleneagles Declaration, in its wake. A luta continua.
Yours faithfully,
Henry B Jeffrey
