A good but incomplete start to debt relief
LONDON – A global collapse in economic activity during the COVID-19 pandemic has significantly increased the risk of debt distress in many countries, pushing the poorest ones to the brink. In response, various international organizations have unveiled a number of initiatives to forestall circumstances necessitating between responding adequately to the public-health crisis and servicing existing debts.
Most notably, the G20 has established a Debt Service Suspension Initiative (DSSI), that allows the world’s poorest countries to suspend official bilateral debt-service payments until next year. And this month, G20 leaders adopted a new common framework to address sovereigndebt restructuring needs on a case-by-case basis.
For poorer countries grappling with the pandemic, debt not only limits their fiscal space for responding to the crisis but also forecloses on future development. Faced with the sudden costs of the COVID-19 crisis, many countries that are already struggling to service existing debt have needed fresh financing, only to find that it is too difficult or expensive to borrow more. And even if they can manage to do so, the additional debt burden will hamper them for years, limiting their prospects
for growth and development.
Far from involving a few unfortunate countries on the margins, today’s sovereign-debt distress poses a potentially systemic risk. Since 2014, total sovereign debt as a share of GDP has not only risen substantially; it has also become more fragmented, owing to the use of more diverse debt instruments among a wider range of creditors.
Given these circumstances, the global financial safety net urgently needs to be broadened beyond the support currently offered by international financial institutions such as the International Monetary Fund and the World Bank. To that end, the DSSI took the first step by suspending principal and interest payments on debt falling due between May 1, 2020, and June 30, 2021 (having been extended from December 31, 2020), thereby expanding the safety net for at least 77 developing countries.
But while the DSSI offers some respite, it also merely kicks the debt-repayment can down the road, leaving the deferred payments to be repaid in full between 2022 and 2024. Debtor countries thus will have to make up the difference with larger repayments, and might even need to borrow more to service their frozen debt, in addition to any other debt taken on during the COVID-19 crisis. The 46 countries that have applied for debt suspension so far eventually will have to cover $5.3 billion of postponed payments, on top of $71.54 billion of pre-existing commitments; and any other debt contracted since the COVID-19 outbreak will be added to the burden.
Although the G20’s latest debt initiative misses the mark on many counts (particularly when it comes to
PPP/ C’s government from behind the scenes, in terms of budgeting and finance. He is also a shrewd politician and I am not taking that away from him, but he is not the leader that can transform this multiethnic society into a cohesive country where we co-exist peacefully and grow and develop together.
Since the PPP/C government has gotten back into office on 2 August, there is an obsession to prove that the APNU+AFC Coalition government was more corrupt than the previous PPP/C government, however, a quick due diligence and Google search would reveal that both the PPP/C and the APNU+AFC governments were corrupt. If every government that gets into office does what the PPP/C is doing, then as a country, we will never progress. The people of Guyana deserve more, they deserve consistency and continuity, they deserve peace and stability.
Now back to what is the ‘baby’ and what is the ‘bathwater’. In this context, the Vice President is not the ‘baby’, he is a part of the ‘baby’. The real ‘baby’ are those professional public servants who are being terminated and even disgraced. What Guyana needs is a professional public service, not a ‘fixed’ public service that can be manipulated. As Guyana expand its opportunities for investment, we need to develop a professional public sector. Investors require a stable environment and there will be no stability if the PPP/C or APNU+AFC focus on the development of one section of the population.
For every professional public servant who is laid off, the income for about four to five persons as well as, the household of that person, is reduced. Professional public servants are a part of the middle class of the society, therefore because they are busy, they employ other persons to provide services to their families. They may have a taxi driver who takes the children to school, a helper, a babysitter and probably someone who gets paid to keep their home surroundings clean. Also, they may have someone at church or in the community who they assist with transportation to school or support an elderly person.
Their mortgage payments may be affected. They may be using part of their income as capital to support an entrepreneur in the family, to increase the family income. It means that when the government terminates the services of professional public servants, they are weakening the middle class of certain groups. Also, the level of critical thinking, innovation and creativity that is required to transform Guyana and to make the public service fitfor-purpose, the government would need all the Dr. Mark Bynoes that can be found.
Additionally, the Vice President is telling this nation that the PPP/C government cannot find an ‘honest interlocutor’ in APNU+AFC with whom to engage, this is unbelievable coming from someone at his level. The PPP/C is playing political games at this critical juncture of our development. Let the government extend an invitation to the APNU+AFC and let them decide who and how they will engage.
Another point, Mr. Jagdeo and the PPP/C has rewritten Guyana’s entire history and reduced it to the events around the 2 March, 2020 elections, but at some point, we need to move on. Meanwhile, the Vice President gets a pension, a salary and benefits while the business sector is struggling to make loan payments and keep their employees and the masses are struggling to put food on their table, women and our young people are suffering. We are also in the middle of a pandemic. The PPP/C needs to stop campaigning and transition into a government and govern this country! They are playing ‘dollyhouse’ with Guyana.
There is much work to do to prepare this country for the level of governance required with this new growth trajectory. The international investment landscape has changed dramatically in recent years and international investors have become more focused on transparency in transactions.
It is therefore important at this point that the government develop a public and private sector that understand the scale and depth of international investment which the country has embarked on, and facilitate increased understanding and competence in laws and regulations, transparent procurement practices, checks and balances, develop more precise accounting rules, improve our reporting and auditing capabilities, just to name a few. We have a lot of work to do towards developing a more transparent, responsible, and reliable approach to providing goods and services.
Finally, I will end with this quote, someone once said that ‘people want change, yet they want things to remain the same’.
Yours faithfully,
Audreyanna Thomas