The Debt Burden
Editorial
Guyana Chronicle
November 29, 2003
GUYANA will be seeking support for its debt reduction programme during talks between President Bharrat Jagdeo and officials of the Department for International Development in London on his way to the Commonwealth Heads of Government Meeting in Nigeria.
Guyana is one of the few countries identified as a beneficiary of the Highly Indebted Poor Countries Initiative (HIPIC) Programme, and it is as a result of the tremendous strides the country has made in term of governance and prudent fiscal management following the return of democracy to the country in the October 1992 general elections.
When the PPP/Civic administration took office on October 9, 1992, the debt burden was unsustainably high - a staggering US$2.1Bln. Roughly 90 per cent of Government revenues were used up to repay the country's external debt.
Today, thanks to generous debt write-offs and re-scheduling by creditor nations and institutions, debt servicing is less than 40 per cent of revenues. This, although relatively high, represented a significant reduction in the debt burden and has the effect of releasing funds for developmental purposes that otherwise would have been used to repay debts.
The current PPP/Civic administration is credited with making vigorous efforts over the years to further reduce this burden, which has proven to be a major impediment in our efforts to improve the quality of life of the Guyanese people.
The high debt burden, to which the nation is now saddled, must, however, be placed in context. It came about mainly as a result of unrestrained borrowing by the PNC administration, both under Burnham and Hoyte.
It was not the borrowing, per se, which landed us into this quagmire but the use to which the money was put. Most of the borrowed money was spent on ill-conceived projects, many of which failed, as it were, to get off the ground. In other words, returns on investment were, at best, minimal.
The financial difficulties were further compounded by the declining performance of the national economy and high levels of inefficiencies, which rendered debt repayment all the more problematic - to a point where the country was declared in 1985 "ineligible" by the International Monetary Fund (IMF) for further financial assistance.
Guyana was the first IMF member country to be so designated.
Following the return of democracy to Guyana, there was an outpouring of goodwill by the international community to assist the country to extricate itself from the debt trap to which it became enmeshed.
Today there are hopeful signs that this and future generations will be spared this burden, thanks to the sustained efforts of the current administration to bring debt burden relief to the country.