India writes off US$500,000 owed by Guyana
Stabroek News
June 6, 2003
Guyana stands to benefit from an estimated US$512,358 debt write-off by the Indian government which will cover a 24 million rupee line of credit extended in 1989 for the purchase of goods.
The write-off is not expected to cover the commercial debt standing at US$191,000 and which matured some 20 years ago at interest rates of nine per cent per annum. This debt was contracted in the late 1970s for the purchase of Tata buses.
The write-off is part of the Indian government’s development approach initiative which targets debt relief to seven Heavily Indebted Poor Countries (HIPC) namely Guyana, Mozambique, Tanzania, Zambia, Nicaragua, Ghana and Uganda.
The government-to-government debt was a line of credit extended by the State Bank of India at five per cent per annum and was to be repaid by 2005. The government is up to date on its obligations on this debt. However, the commercial debt was a short-term debt and is in arrears.
A report on the Indian web site, Sify News, yesterday indicated that the government is writing off US$20.3M to these seven countries, equivalent to 954.4 million rupees. The decision is yet to be formally communicated to the Government of Guyana.
India’s Finance Minister, Jaswant Singh, in his budget speech earlier this year, announced an India Development Initiative which puts in place a mechanism for India to pre-pay bilateral debt worth nearly 75 billion rupees which is owed to 14 countries. India has also taken a decision to stop accepting aid from several countries and not to grant new lines of credit to developing countries with close ties. Further release of funds to such countries, the report said, would be met through the India Development Initiative. India had earlier decided to retire high cost foreign currency loans, which total three billion dollars from the World Bank and the Asian Development Bank.
On the debt write-off for the seven countries, including Guyana, the report noted that these countries were saddled with low growth and per capita income; huge debts which jeopardise growth potential; exports of mainly primary commodities; unfavourable terms of trade as well as some of them facing foreign exchange crises and high volatility in their exchange rates.
