Guyana estimated to save between 20 and 33 per cent on debt payments
Guyana is listed among 16 countries to benefit significantly under the Cologne Debt Initiative, approved by the Group of Eight (G8) industrial powers last Friday. According to a Reuters report, Guyana can expect to save between 20 and 33 per cent on debt service payments with the new initiative. Guyana has already benefited from a US$253M debt relief package under the Heavily Indebted Poor Countries Initiative (HIPC) and can therefore at a maximum, expect a further $126M in further relief under the initiative. However, Jubilee 2000, [please note: link provided by LOSP web site] the world-wide movement to cancel the international debt of poor countries by the new millennium, though noting that the Cologne Initiative was welcome, felt it was not enough to make the livelihood of people in these poor countries better. The movement, which stepped up pressure this last year on the debt question, noted that $25B of the $70B approved by the Cologne Initiative formed the fund of the HIPC initiative launched in 1996. According to the Reuters report, the movement took offence at the calculations that the 41 poorest countries listed under HIPC only owed US$130B when short term and private debt took the sum to $206B. The movement also wants Haiti, Gambia, Nigeria and the Philippines included on the list. Their inclusion will take the debt outstanding to $370B owed by 52 countries. Guyana, Burkina Faso, Bolivia, Chad, Honduras, Mali and the Ivory Coast are listed as the seven countries to save between 20 and 33 per cent on debt servicing. Laos, Zambia, and Rawanda will see their debt service payments fall by 50 per cent to 75 per cent, while Ethiopia, Mozambique, Malawi, Mauritania, Uganda and Guinea-Bissau's bill will be cut between a third and a half. However, 11 countries, Jubilee 2000 says, would get no significant reduction including Togo, Senegal, Cameroon, Benin, Congo, Guinea, Madagascar, Nicaragua, Niger, Sierra Leone and Tanzania. Guyana is among seven of the 12 countries reviewed for HIPC benefit and has qualified. The others are Bolivia, Burkina Faso, Cote d'Ivoire, Mali, Mozambique and Uganda. Forty-one countries are ranked as the world's poorest with high debt burdens, for the G7. However, Guyana is the only country to have benefited under the fiscal openness criteria of a very open economy with a high debt burden for the HIPC Initiative, and the Cologne Initiative is an improvement on this. HIPC's main aim is to bring the debt burden of very poor countries to sustainable levels, subject to satisfactory policy performance under structural adjustment programmes. However, while debt relief under this new initiative is being welcomed, its flaws are already being pointed out. According to a report on the Business Wire, the World Gold Council wants the initiative reconsidered as the proposed sale of 10 million ounces of the IMF's gold to help fund the initiative will further depress gold prices. The council argues that this will inadvertently damage the economic development of many of the countries which the initiative targets and which are gold producers. Guyana is among the list of countries cited as gold producers. Guyana's public debt in net present value terms was $1.15B before the HIPC relief was applied, and a possible 33 per cent reduction could take the stock down to US$.771B. Multilateral debt accounts for US$624M of Guyana's debt stock, bilateral debt for $407M, other debt for $119M and short-term debt for $59M. (Gitanjali Singh) 
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