Amidst strong condemnation from the Opposition, government on Thursday approved massive hikes in the external and domestic debt ceilings—the second time in 30 months.
After heated debate from both sides of the House, government used its majority to increase the current limit on external loans from $650,000,000,000 to $900,000,000,000 and domestic debt from $500,000,000,000 to $750,000,000,000.
But the increases did not sit well with the main APNU+AFC Opposition which vehemently argued that with the revenues being garnered from Guyana’s new and burgeoning oil and gas sector, massive borrowing cannot be justified.
APNU+AFC MP Juretha Fernandes in her presentation submitted that the PPP/C government was not increasing the debt ceiling because they had exhausted spending on what she termed people-centred policies. Fernandes opined that the government was instead increasing the debt ceiling, while failing to do what she said were the most basic things such as increasing wages and salaries.
According to her, government “continues to misuse the country’s resources; as they simultaneously continue to add a debt burden on the shoulders of current and future generations.”
In her passionate address, Fernandes submitted that the “severity of such a burden will be felt hardest when it comes to the working class.”
The MP said it was important for citizens to understand the rationale being used for increasing the debt ceiling, stating the belief to be that “the more money Guyana has, the more Guyana should borrow.”
Fernandes opined that “what is even more sad, is that the PPP is borrowing against projected oil revenues.”
Against this background, she said that the oil revenues garnered for the second quarter of this year, amounted to US$438.9 million. Even in the face of this figure, Fernandes said it must be taken into consideration that between March 6th and June 6th loans were presented to the House which totalled in excess of US$717 million.
Fernandes said that when it comes to those various loans, it is evident that for the mentioned one-month period government would have “racked up more than double of the second quarter’s revenue garnered from oil.”
She said that the 2023 budget is being carried by oil revenues, and that adding debt-burden to the oil revenue is “reckless.”
Citing a Bank of Guyana first-quarter report for 2023, Fernandes underscored the increase of public debt by 2.3%; noting the Bank’s report that the total stock of debt and publicly guaranteed debt, comprising both external and domestic debt, increased by 2.3% to US$3.7 billion compared to the December 2022 period.
She said that according to the report, domestic debt stock increased to US$2.1 billion during the review period also; on account of increased issuance of Bills for central government’s budgetary financing.
On this point, Fernandes sought to drive home the point to the Speaker that the country’s budget was already being carried by the oil and gas sector, while emphasising, “we cannot add debt to that also.
She said that Central Bank has also reported that the stock of external debt increased to US$1.5 billion on account of an increase in multilateral debt stock during the review period also.
Baffling
In the face of these facts, she said it was quite baffling as to how the PPP is able to present the Motion for increases to the National Assembly, as though there is no harm in what they are doing.
Fernandes made it clear that the Opposition’s position was not that there is no place for borrowing, but said that when the facts are presented, “it will be reckless for the PPP to continue the borrowing.”
Meanwhile, in her contribution to the debate, APNU+AFC MP and shadow Minister of Foreign Affairs Amanza Walton-Desir said that the government has “no blueprint” to develop the country, but rather to “fleece the national patrimony; enrich their friends, their family and favourite, bankrupt our institutions [and] undermine our institutions and then put us in further debt to do it.”
Walton-Desir said that while the government continues with its lavish borrowing, it has no capacity or plan to properly execute works.
After three years in power, she said that the people of Guyana have nothing to celebrate under the PPP/C; adding that while it touts “the visible development,” the question has to be asked, “what about the development of our people?”
On this point she said that interactions at the grassroot level reveals that the “average Guyanese is of a broken spirit,” ‘with strained and anxious faces’ from what she intimated to be the hardships of the economy.
Background
In February of 2021, the government pushed through an increase in the external debt ceiling from $400b to $650b and the domestic debt ceiling from $150b to $500b. It means that in the span of 30 months, Guyana’s external debt ceiling has more than doubled and its domestic ceiling has been increased five-fold.
The debt ceiling motions were proposed on Thursday by Senior Minister within the Office of the President with responsibility for Finance Dr. Ashni Singh, during the 66th sitting of the twelfth parliament and was later passed with Government’s majority.
According to the Senior Finance Minister, the economy over the past two years has grown in “real terms” at an average of more than 40% per annum; while adding that the growth projection for the next three to four years is no less than 25% per annum.
He said that at the same time, Government has “ensured that this real growth in the Guyanese economy is resilient, particularly from the perspective of ensuring that it is based on a diversified productive sector.”
He said that Government has made efforts to ensure a strong, dynamic and growing non-oil economy with significant investments in infrastructure aimed at ensuring first and foremost that sectors such as agriculture grow rapidly.
In so doing he said, “we [would] realize our long-recognized, long-heralded but as yet unrealized potential to be the bread basket of the Caribbean.”
Singh in his presentation on Thursday, commending the Motions to the House, said that as one’s asset base and earning capacity increases, then one’s capacity to contract and carry debt, also increases.
A statement from the Ministry of Finance on Thursday evening added that in line with the government’s commitment to maintaining its track record of transparent and prudent debt management, the increase in the debt ceilings aims to avert the dependency on utilising the Consolidated Fund overdraft as a means of financing, which was done under the APNU+AFC administration.
