Trinidad chops $26B off Guyana debt
- bilateral debt down to $9B
Stabroek News
February 12, 2004
There is more good news on the debt front with Trinidad slashing debt owed by Guyana by a further US$130M ($26B) and the United States writing off a US$33M (G$6.6B) incurred under the PL 480 programme.
Guyana's bilateral debt now stands at US$45.2M, from US$800M in 1996, following three Paris Club initiatives, the last being a few weeks ago under Cologne Terms or the enhanced - Heavily Indebted Poor Countries Initiative (e-HIPC).
In the recent e-HIPC operation, eight of Guyana's 10 bilateral creditors - Canada, USA, the United Kingdom, Germany, France, the Nether-lands, Denmark and Japan - gave a 100% stock write off on Guyana's debt. Trinidad, Guyana's largest bilateral creditor, and Russia, agreed to switch from a debt service operation to a debt stock operation which saw Trinidad's debt slashed by 74% and Russia's debt moving down to US$200,000, leaving total outstanding bilateral debt at $45.2M (G$9B).
Guyana's debt to Trinidad stood at US$536M in 1996 but Trinidad gave Guyana comparable treatment in a 1996 stock-of-debt operation under Naples Terms which saw the debt being cut by 67% to reach US$178M. This was to be repaid over 23 years with 16 years grace at 6.6%.
However, following the HIPC initiative in 1999 (Lyons Terms), Trinidad gave Guyana further relief by reducing the interest rate payable on the debt down to 3.2%.
A team from Guyana recently lobbied the Trinidad government to switch from a debt service relief option under e-HIPC to a stock relief option and the government agreed. The Ministry of Finance and Debt Management Unit are to work out the terms of repayment of the outstanding debt. The debt to Trinidad had been contracted for oil and balance of payment support.
In the case of Russia, which joined the Paris Club in 1997, Guyana had an outstanding debt of US$8.2M (principle plus interest but excluding late interest) which was in arrears for almost 20 years. That debt was contracted for the purchase of two helicopters for the army.
Russia had agreed to a debt service relief but in 1999 switched to a debt stock operation which allowed for 70% of the debt to be written off and with the recent E-HIPC initiative, the stock operation agreed to will see this debt down to US$200,000.
Guyana's external debt following the Paris Club operations and the multilateral operations under HIPC and e-HIPC is now estimated around US$1B.
However, Guyana is experiencing difficulties with non-Paris Club creditors who are reluctant to give comparable treatment. Debt management officials are hoping to map out a comprehensive strategy to deal with the remaining debt stock, which will include debt swaps, and dealing with non-Paris Club creditors. A workshop is to be held in April in Guyana with Debt Relief International and the Centre for Economic Management in Latin America to arrive at a debt strategy for Guyana to deal with the outstanding burden.
Guyana's debt burden stood at $2.1B before the last three operations. The debt in 1988 was estimated around US$1B but to gain international creditworthiness, the country had to restructure its debt with creditors and did so under the Venice, Toronto and London terms and this saw the debt stock climbing dramatically.