Big hike in domestic debt ceiling approved
The National Assembly yesterday approved an increase of the domestic debt ceiling and up to press time was still debating a motion for a similar increase of the external debt ceiling.
Minister with responsibility for Finance Ashni Singh on January 28 tabled in the Assembly “The Public Loan (Increasing of Limit) Order 2021” and the “External Loans (Increasing of Limit) Order 2021”.
Singh told the House, meeting at the Arthur Chung Conference Centre, that the two orders will allow the government to regularize the outstanding debt of the last administration while creating space to finance a robust development plan.
The Public Loan Order increases the amount that the Guyana Government can borrow from domestic lending agencies to $500 billion dollars from $150 billion.
Similarly the external debt threshold will increase from $400 billion to $650 billion once the proposed measure is debated and passed by the Legislature.
Singh told the House that upon assuming office in August 2020, the new Government identified significant outstanding obligations that were accumulated by the previous administration including large overdrafts at the Bank of Guyana as well as sums owed to several other entities including the Guyana Power and Light (GPL).
Also identified were “significant contingent liabilities that were contracted and that have since materialized resulting in additional calls on the public purse”
He explained that these obligations are not currently classified as public debt but, had they been so classified or had they otherwise been settled or resolved through the fiscal accounts, they would have resulted in a breach of current ceiling on domestic debt.
In light of this the current government is moving to regularize and resolve these outstanding obligations as well as finance an ambitious programme of development aimed at transforming Guyana and delivering improved quality of life to all Guyanese.
This programme of development will require new financing including through additional domestic debt therefore the Assembly was asked to confirm the Order issued on January 27.
Government parliamentarian Sanjeev Datadin in supporting the request yesterday defended the Order as a “landmark move to regularize and accurately reflect significant liabilities accumulated over the past five years and to harness Guyana’s debt carrying capacity to finance government’s transformative agenda.”
APNU+AFC MP Shurwayne Holder however argued that the level of increase was questionable.
He contended that from the time the PPP were “installed” in office they began borrowing from every creditor they could find. According to Holder, government has in its first three months borrowed more than US$180 million, a sum coincidentally similar to the revenue the Oil and Gas sector is predicted to generate in 2020.
“It is quite evident that this government is counting their chickens before it is hatched heading for the Dutch disease that destroyed so many countries around the globe…If this is approved we will be laying the foundation for a great burden for our children to carry,” he concluded.