The Budget 2012 reveals that despite the statistical benefit which is derived from using the rebased 2006 GDP series as the denominator (because this has led to an approximately two-thirds increase in its size) the debt stock to GDP ratio for Guyana has increased from its low of 60 per cent in both 2007 and 2008 to 70 per cent in 2011. It took decades of real economic stress and distress to bring the debt to GDP ratio down from its peak levels of 2-3 times the value of GDP about 2-3 decades ago, to the low of 60 per cent in 2007 and 2008. I had cautioned readers last week about this recent increase, as the last thing Guyana can afford at this juncture is to return to the distress of the notorious ‘valley of debt.’ With a debt to GDP ratio of 70 per cent in 2011, both investors and financial markets are likely to react adversely, as they will see Guyana approaching the shadow of the valley of debt. This behaviour on their part would be typical for them, as it has occurred on myriad of other occasions around the world.
The data which I presented last week also showed most of the rise in the debt stock coming from domestic debt increases; total domestic debt has doubled in value since 2007. However, it had only