After steeply hiking the public debt ceilings in early 2021 to allow for international borrowing of up to $650 billion and domestic borrowing of up to $500 billion, the government is now reporting that Guyana’s total stock of public and publicly guaranteed (PPG) debt grew by 20.6% last year.
The figure was released by Finance Minister Dr Ashni Singh during his budget presentation on Wednesday. He said that Guyana’s PPG debt amounted to US$3,126.7 million, which amounted to 38.7% of the gross domestic product (GDP) and that the significant increase was largely due to an increase in domestic public debt.
“Mr Speaker, over the last year, our government has continued its well-established track record of prudent public debt management, despite global and domestic shocks which constrained economic activity, affected government revenue, and necessitated increased government spending to curb the social and economic ramifications. In executing Guyana’s public debt management functions, we have stuck, steadfastly, to the tried and tested strategy of contracting development financing in a manner conducive to both cost minimisation and risk mitigation,” he said.
He added that at the end of 2021, Guyana’s domestic public debt totalled US$1,731.5 million, which represented an increase of 36.4% and was driven mainly by two factors, namely an 81% increase in the stock of treasury bills to US$702.7 million and the issuance of debentures to the Bank of Guyana (BoG) in June 2021 for a total value of US$959.2 million.
Singh told the House that the increase of treasury bills is reflective of the government’s commitment to financing fiscal operations by recourse to the market instead of “perpetuating the inherited malpractice of overdraft accumulation at the Bank of Guyana (BoG).” He added that the debentures were issued primarily to securitise the inherited overdraft and have since restored a positive balance on public deposits at the BoG, along with the integrity of Guyana’s fiscal accounts.
Additionally, 2021 saw Guyana’s stock of external public debt growing by 5.5% to US$1,392.8 million which was due to positive net flows from large creditors.
2021 was the first time that the government was able to fully cover the payments under the $30 billion syndicate bond issued by the National Industrial and Commercial Investments Limited (NICIL) in 2018 with a Government guarantee. That, Singh reported, led to an increase in debt service payments which amounted to US$121.9 million.
He added that the growth of domestic debt service payments was caused by three factors that include an increase in debt service payments on debentures held by the National Insurance Scheme (NIS), servicing NICIL’s syndicate bond and the payment of interest which accrued on the debentures issued to securitise the overdraft.
The early payment on NIS’s debentures yielded interest cost savings and improved liquidity at the NIS.
External debt service payments increased by 6% in 2021, due to the commencement of principal repayments on several loans.
In 2020, Guyana’s total public and publicly guaranteed debt amounted to US$2,592.2 million. Of that sum, total public debt comprised US$2,589.8 million, while total publicly guaranteed debt comprised US$2.4 million. During last year’s budget presentation, Singh had said that 2020 was the first year that saw the expansion of debt coverage to include publicly guaranteed debt resulting in a complete picture of the country’s debt position
At the end of December 2020, the ratio of total public and publicly guaranteed debt-to-GDP was 47.4% with the total public debt 53.3% higher than at end of December 2019. That was mainly due to large overdrafts under the APNU+AFC administration.
In 2020, total public debt service payments amounted to US$92.3 million, an increase of 9.3% when compared to the preceding year. Total domestic debt service payments, in 2020, amounted to US$16.1 million which was more than twice the 2019 figure of US$6.3 million. That was due to the need for government to meet debt service obligations under the NICIL bond.
Conversely, external debt service payments shrank by 2.5% in 2020, to US$76.2 million, mainly due to the completion of repayments under a rescheduled debt to Trinidad and Tobago.
