Guyana’s External Public and Publicly Guaranteed (PPG) debt grew by 3.8 percent, from US$1,571.9 million at the end of 2022 to US$1,631.1 million at end of June 2023, according to a mid-year report published by the Ministry of Finance on Saturday.
This debt increase, according to the report, was mainly due to positive net flows (disbursements less principal repayments) from bilateral creditors such as Exim Bank of China, China CAMC Engineering Co Ltd, and UK Export Finance. At the end of June, multilateral creditors held 67.8 percent of the external PPG debt portfolio, with bilateral creditors holding 30.3 percent. The remaining 1.9 percent was held by private creditors.
The External PPG debt is anticipated to increase by a whopping 31.6 percent from its mid-year position to US$2,146.0 million at the end of 2023, on account of expected positive net flows from both multilateral and bilateral creditors, according to the mid-year report.
At the end of June 2023, Guyana’s total stock of PPG debt amounted to US$3,916.9 million, with total public debt accounting for US$3,914.5 million, and total publicly guaranteed debt for the remaining US$2.4 million. Total PPG debt increased by 7.2 percent when compared to the end-2022 figure of US$3,654.9 million.
In the first half of the year, total external disbursements amounted to US$99.9 million, representing a 290.1 percent increase when compared with the first half of 2022. This year-on- year expansion reflects higher disbursements from bilateral and multilateral creditors, which also totalled US$99.9 million in the first half of 2023, up from US$25.6 million in the first half of 2022. The relatively high level of disbursements in the first half of 2023 was mainly due to substantial inflows under loans for new projects the government commenced at the end of 2022 and the beginning of 2023. For the first half of this year, external disbursements were drawn down for the East Coast Demerara Road Project Phase 2, Guyana Paediatric and Maternal Hospital, and the Regional Hospitals Project, the report said.
At the end of June 2023, domestic PPG debt totalled US$2,285.8 million, up 9.7 percent from the end-2022 position.
This increase was driven by a 21.7 percent expansion in the stock of treasury bills to US$1,336.6 million, reflecting the issuance of new fiscal instruments in the first half of 2023.
Moreover, total PPG debt service payments amounted to US$92.3 million in the first half of 2023. This was driven by growth in both domestic and external debt service payments, the report said. A comparison of the two half-year positions, showed domestic debt service payments grew by 224.4 percent, while the growth in external debt service payments was about 16.6 percent. The increase in domestic debt service payments resulted from the commencement of the redemption of the Bank of Guyana debentures, which were issued in 2021 mainly to securitize the Consolidated Fund overdraft at the end of 2020.
Central Government expenditure
In the first half of the year, total Central Government expenditure was $287.3 billion, 56.5 percent over the 2022 half-year level, and reflected implementation of 38 percent of the budget. Total current and capital expenditures accounted for 58.9 percent and 41.1 percent of total expenditure respectively, in the first half of 2023. Non-interest current expenditure increased by $31.2 billion to $164.6 billion in the first half of 2023.
Personal emoluments amounted to $45.9 billion or 19.5 percent over the half year performance in 2022. This resulted from the 8 percent salary increase awarded to all traditional public servants, teachers, and members of the disciplined services in late 2022, and which was annualized in 2023. The increase in this category was also driven by government’s efforts to resolve salary anomalies across comparable personnel positions in the health sector and disciplined services, effected in January 2023.
A total of $43.6 billion was expended for other goods and services, representing a 13.8 percent increase when compared with 2022. This is attributed to increased expenditure in the categories of materials and supplies, maintenance of infrastructure and transport, travel, and postage.
Further, transfer payments increased by 32.5 percent to a total of $75.1 billion, with the main contributors being local and international organizations, pensions, and education grants. The increased expenditure for pensions is credited to the increase in old age pension from $28,000 to $33,000 per month, effected in January 2023; as regards education, the ‘Because We Care’ cash grant for school-aged children was adjusted upwards from $25,000 to $35,000.
Natural Resource Fund
In the first half of the year, the government had eight lifts of profit oil from the two producing FPSOs, Liza Destiny (3) and Liza Unity (5), as projected. During the period January to June 2023, the government earned US$705.2 million as revenue from its share of profit oil from two lifts that occurred in the final quarter of 2022, and seven of the eight lifts that occurred in the first six months of the year. Government also earned US$110.8 million in royalties related to 2022Q4 and 2023Q1 production and sales. In July, US$73.8 million was received as a profit oil payment for the government lift executed in June.
The cumulative balance, inclusive of interest income of US$35.6 million, at the end of June was US$1,723.5 million, after withdrawals of US$200 million each in the months of February and May.
It was anticipated that there would have been 17 lifts of profit oil from the Stabroek Block. This projection is unchanged. However, with the price of crude oil declining amid demand-side concerns and financial market disruptions that threaten a global slowdown in economic activity, the forecast for NRF deposits has been marginally downgraded. Petroleum deposits for the year are now projected to total US$1,629.3 million, compared with US$1,631.7 million projected at the beginning of the year.
The government is now projected to earn US$1,410 million from the sales of Guyana’s share of profit oil, and US$219.3 million in royalties. By year end, the NRF closing balance is expected to stand at approximately US$2 billion.
