The National Assembly yesterday approved an increase in the domestic debt ceiling and, as of press time, was still debating a motion for a similar increase in the external debt ceiling.
Deputy Finance Minister Ashni Singh tabled “The Public Loan (Increasing of Limit) Order 2021” and “External Loans (Increasing of Limit) Order 2021” in the Assembly on January 28.
Singh told the House, meeting at the Arthur Chung Conference Center, that the two orders will allow the government to regularize the outstanding debt of the last administration while creating space to finance a solid development plan.
The Public Borrowing Ordinance increases the amount the Guyana government can borrow from national credit agencies to $500 billion from $150 billion.
Similarly, the foreign debt threshold will increase from $400 billion to $650 billion once the proposed measure is debated and passed by the Legislative Assembly.
Singh told the House that upon taking office in August 2020, the new government identified significant outstanding obligations that were accrued by the previous administration, including large overdrafts at the Bank of Guyana as well as sums due to several other entities, including Guyana Power and Light (GPL).
Also identified were “significant contingent liabilities that were incurred and have since materialized, resulting in additional calls on the public purse”
He explained that these obligations are not currently classified as public debt but, if they had been so classified or if they had been otherwise settled or resolved through the fiscal accounts, they would have caused the current domestic debt ceiling to be exceeded. .
In light of this, the current government is working to regularize and resolve these outstanding obligations as well as fund an ambitious development agenda aimed at transforming Guyana and providing a better quality of life for all Guyanese.
This development program will require new financing, including through additional domestic debt, so the Assembly was asked to confirm the order issued on January 27.
Yesterday, government parliamentarian Sanjeev Datadin, supporting the request, defended the order as a “historic move aimed at regularizing and accurately reflecting the significant responsibilities accumulated over the past five years and harnessing the carrying capacity of Guyana’s debt to finance the government’s transformation agenda”.
UNPA+AFC MP Shurwayne Holder, however, argued that the level of increase was questionable.
He claimed that once the PPPs were “installed” in power, they started borrowing from whatever creditors they could find. According to Holder, the government borrowed in its first three months more than US$180 million, a sum coincidentally similar to the revenue the oil and gas sector is expected to generate in 2020.
“It is quite evident that this government is counting its chickens before it heads into the Dutch disease that has destroyed so many countries around the world…If this is approved, we will lay the foundations for a heavy burden to bear for our children,” he concluded.