U.S. writes off $7B Guyana debt
By Mark Ramotar
Guyana Chronicle
June 25, 2004
THE Guyana Government is now in a position to free up a significant amount of money for key social and economic programmes following a massive US$35.6M (more than G$7B) debt write-off from the United States Government yesterday.
According to Charge d’ Affaires at the U.S. Embassy in Guyana, Ms. Betty McCutchan, this “act of generosity” by the U.S is a reward to Guyana for its ongoing commitment to encouraging economic growth and development.
“This gift from the people of the United States to the people of Guyana will allow the Government of Guyana to free up money for key social and economic programmes that would otherwise be needed to pay down this debt,” she said at a signing ceremony in the boardroom of the Finance Ministry, Georgetown.
McCutchan and Finance Minister, Mr. Sasenarine Kowlessar signed the agreement between the governments of Guyana and the U.S. pursuant to the Paris Club Agreed Minute of January 14, 2004 covering the write-off.
Under the Paris Club framework, the bilateral agreement formalised the commitment to forgive 100% of the relevant principal, which included arrears and accrued interest, of all loans owed to, guaranteed by, or insured by the United States Government through December 1, 2003. These loans include US$32.3M held by the U.S. Department of Agriculture PL-480 Food for Progress Programme; US$3.3M held by the U.S. Export-Import Bank; and US$300 held by the United States Agency for International Development (USAID).
It was noted that this figure is equivalent to almost 10% of Guyana’s national budget in 2004.
Minister Kowlessar, in brief remarks, took the opportunity to applaud and thank the U.S. Government for its continued assistance and support through the years since Guyana’s first approach to the Paris Club for debt relief.
“The Government of Guyana is heartened by the generous gesture of your government to grant a 100% cancellation of the total principal outstanding as well as the interest accrued at December 1, 2003,” he told the Charge d’ Affaires.
According to him, such goodwill would make available much needed budgetary resources to improve the delivery of social services and fight poverty, and allow Guyana to consolidate the gains made thus far towards achieving PRSP and Millennium Development goals and confront the challenges ahead with renewed vigour and confidence.
“The Government of Guyana wishes to assure your government and the international donor community that it remains fully committed to working towards alleviating poverty among its people and implementing sound economic policies that will keep Guyana on the path of sustainable development,” the Finance Minister said.
He also thanked McCutchan for the opportunity afforded the Guyana Government, allowing him to sign the agreement which “provides significant debt reduction”.
“We are happy to be able to count on your support as we journey ahead,” he said.
In responding, McCutchan noted that the event marked a culmination of the enhanced Highly Indebted Poor Country Initiative (eHIPC) process. She noted that under the eHIPC programme, Guyana undertook exercises and enacted institutional reforms in order to show its commitment to encouraging economic growth and improving the standard of living.
Some of these steps included preparing and implementing a poverty reduction strategy paper; passing procurement, investment, and small business acts; increasing health programmes; working to improve the quality of teaching in public schools; maintaining a level of macro-economic environment; reforming the civil service through audits and computerised compensation systems; and restructuring public enterprises by privatising the Guyana National Commercial Bank and shifting GUYSUCO incentives from production to profits.
McCutchan said these and other ongoing efforts are outward signs of the Government of Guyana’s commitment to increasing economic productivity in key sectors like sugar, improving the accountability and transparency of the public sector, and improving the delivery of public services such as health, education, and safe water.
In recognition of these efforts, she said the boards of the World Bank and International Monetary Fund approved Guyana’s completion point of the eHIPC process in December 2003.
Following this decision, on January 14, 2004, the U.S. and other members of the Paris Club group of creditors negotiated an agreement with the Government of Guyana, detailing the terms and conditions for the reduction of Guyana’s external debt.
These terms and conditions are contained in the Paris Club Agreed Minute, which provides for a 100% reduction of the eligible stock of debt as of December 1, 2003.
“The United States applauds the Guyanese for their hard work in implementing the necessary reforms to complete the eHIPC process and begin the difficult but necessary task of poverty reduction and economic development,” McCutchan stated.
“Especially when taken in the context of the recent signing of three new, five-year USAID development contracts and the gift of US$5M worth of wheat under the PL-480 Food for Progress programme, today’s forgiveness of US$35M in loans is a strong symbol of our continuing support and commitment as partners in Guyana’s development,” she added.