Introduction
A controversy has emerged on whether Guyana’s external debt is sustainable. I would therefore suspend my “Politics and Guyana’s Underdevelopment” series and give a few thoughts on the Guyana external debt. I want to make it clear that this recent debate is restricted to the external public debt, which will have to be repaid in foreign exchange, namely US dollars or by bartering rice for oil with Venezuela. Finance Minister Singh noted the barter arrangement with Venezuela; however, he stopped short of telling the country the amount owed to Venezuela under PetroCaribe. The people of Guyana have the right to know this number given Venezuela’s claim on 3/5 of our territories.
The debate does not consider the domestic debt, which needs to be analysed separately. There is a monetary policy component of the domestic debt. I have written letters on this in the past. We can certainly take this issue up in a later column. The domestic public debt will be repaid in Guyana dollars; however, the external public debt must be repaid in foreign exchange. Therefore, associated with the external debt is foreign exchange risk should the Guyana dollar depreciate rapidly.
When debt is sustainable it means the country is earning enough revenues to keep servicing existing debt. In a recent Stabroek News report (Feb 11, 2013) Minister Singh was quoted as