Guyana has not yet received approval for US $20m from IsDB
Dear Editor, The Ministry of Finance notes the article ‘GPL to tap US$20M loan from Islamic bank for system upgrades,’ July 7, 2018.
We would like to clarify some points for your readers:
While it is true that the Government of the Cooperative Republic of Guyana has applied to the Islamic Development Bank for US$20M to fund part of GPL’s upgrading project, which is intended to reduce power outages among other deliverables; Guyana has NOT yet received approval.
If and when the application is approved, the loan will fund that project which is one of several now being designed to access funds from the IsDB’s US$900M resource purse that has been made available to Guyana over a 4-year period. The Government is in the process of designing projects in several development sectors including agriculture, banking and finance, human development, energy, and rural development. It has NOT borrowed US$900M as some commentators have wrongly claimed.
Finally, the Ministry of Finance wishes to assure readers that the aforementioned possible loan should not “spark further questions about the debt levels that Guyana is taking on.” Guyana’s debt currently stands at 45.2% of its Gross Domestic Product (GDP). This is actually down from 46.4% in 2016 and 48.6% in 2015 and well below the 65.3% in 2010. Guyana’s debt to GDP is one of the lowest in the Caribbean - in 2016 we were the third lowest. It is well within sustainable levels for borrowing as measured by the International Monetary Fund.
Editor, financing is critical to build infrastructure that can help expand the productive base and support manufacturing. It is no secret that the high cost of power here is inimical to the manufacturing sector. Guyana’s economy cannot currently generate the resources to implement such projects; hence the need to incur debt. The Ministry of Finance has just unveiled its Public Private Partnership Framework which we hope will spur the Private Sector to help us find innovative solutions to fund the physical and social infrastructure of our country. Notwithstanding, the prospects for the economy are bright. The expanding GDP which will bring to bear more informed planning and investment decisions, is projected to rise rapidly in the near term, thereby further reducing the already manageable debt to GDP ratio.
We welcome comments on what we consider to be the ministry’s prudent management of the economy as part of a democratic and transparent process; while encouraging debate based on facts and figures. Yours faithfully, Wanita Huburn Public Relations Officer Ministry of Finance