The Government of Guyana is touting its effective debt management practices as being responsible for the large decline in the country’s debt ratios over a sustained period. With its history of “prudent” debt management of the country’s economy post 1992, coupled with its developmental policies, it has been continuing this trend of stewardship, a Ministry of Finance release stated recently.
It noted, however, the government’s acknowledgment that new financing was still required as the country’s economy expands, but as new loans are contracted, the administration remains “steadfast” in maintaining its fiscal responsibility. It was pointed out that Guyana’s debt-to-GDP ratio declined from over 600 percent in 1991 to 27 percent in 2023. Additionally, in 1992, about 90 cents of every dollar of revenue earned was used to make debt service payments and today this has been significantly reduced to about 6 cents of every dollar.
The release referenced the International Monetary Fund’s (IMF) 2023 Article IV Report for Guyana which indicated that the risk of (overall and external) debt distress remained moderate, with debt dynamics improving significantly with incoming oil revenues.
All external debt indicators, it noted, remain well below the relevant indicative vulnerability thresholds under the baseline scenario, which incorporates the long-term effects of oil production.
The IMF, in its report, also commended the authorities for maintaining debt sustainability and a balanced growth path through moderating fiscal impulses over the medium term, while continuing to address development needs.
The release explained that as the government continues to borrow externally in a responsible manner, loan agreements from time to time would require adjustments or improvements that would allow for the government to reduce its risks and improve its benefits from the financing arrangements.
