Guyana could see US$36.1M debt write-off -- if PL480 included in Clinton's 100% initiative by Gitanjali Singh Stabroek News October 17, 1999 The 100 per cent write-off of Guyana's debt to the United States could mean a relief of US$2.2 million or US$36.1 million depending on which debt to that country is eligible for write off. US President Bill Clinton recently announced a 100 per cent write-off of debts owing to the USA by countries eligible for the Heavily Indebted Poor Countries Initiative and its enhanced version, the Cologne Initiative. Guyana's previously rescheduled debt to the US to which HIPC has been applied, now stands at US$3.7 million and after the Cologne terms are applied, will be US$2.2 million. However, Guyana owes the USA US$33.9 million under the PL480 programme and a government source said it was hoped that this sum would also be eligible for the 100 per cent write-off, yielding relief of US$36.1 million rather than US$2.2 million for Guyana. It is not clear as yet whether it is only the previously rescheduled debt to the US which will benefit from this 100 per cent cancellation promised by Clinton, and the government does not expect to ascertain this finally until some time in the new year. If it is the entire stock owed to the US which is written off, this will yield a debt servicing relief of US$8.7 million over the next 20 years for Guyana. Guyana had budgeted to pay US$107 million in external debt service this year but after the application of the HIPC terms, actual debt service payment amounts to US$70 million for this year. The country's stock of debt eligible for write-offs is expected to go down to around US$500 million in net present value terms after the Cologne terms are applied. This stock does not represent the new borrowings by the PPP/Civic government which is in the vicinity of US$300 million. Cologne terms will see Guyana's debt to revenue ratio (the fiscal openness criteria under which Guyana qualified for the HIPC relief) go down to 250 per cent. That ratio is currently about 400 per cent. A well-placed government source on Friday indicated that the application of the Cologne terms would yield for Guyana another US$500 million in nominal debt servicing relief over 25 years and US$322 million in net present value terms (npv - a measure of the future market value of the debt). Guyana's stock of debt eligible for debt relief before the HIPC terms were applied stood at US$1.07 billion npv. HIPC yielded for Guyana US$256 million npv debt relief, lowering the debt stock to US$0.8 billion. Altogether, HIPC and the Cologne Initiative would relieve Guyana of US$578 million of its debt in net present value terms. Guyana expects that some time in the new year it would expect to benefit from debt relief under the Cologne Initiative. The debt relief afforded is to be spent in the social sectors as stipulated by the multilateral financial institutions. For the last seven years, the government has bemoaned the burden which the debt stock has placed on the treasury, as its payment accounted for much of the revenue collected. A © page from: Guyana: Land of Six Peoples