By Isaiah Braithwaite
GEORGETOWN, Guyana, (DPI) – Government’s ability to undertake its development agenda got a boost Thursday evening with the confirmation of the increase of the Public Loans Act and the External Loans Act. The debt ceilings for both Acts were increased from $150 billion to $500 billion and from $400 billion to $650 billion respectively in the National Assembly.
The Orders to have the ceilings increased was brought by senior minister in the office of the president with responsibility for finance, Dr Ashni Singh.
Minister Singh said the move to have the ceilings increased is a result of the State having a net overdraft of over $90 billion when the PPP/C took office back in August. The minister said this amount would surpass over $100 billion if other obligations undertaken by the previous administration were taken into account. He also alluded to the over $12 billion owed to the Guyana Power and Light.
The minister pointed out that the increase in the debt ceilings will facilitate the development agenda intended to bring relief to the people of Guyana.
“Those interventions will require new borrowing. It is against that backdrop that we have moved and are now proposing to increase the ceilings that apply to both the domestic and external debt ceiling. These ceilings were last adjusted almost 30 years ago,” the minister added. “Given our government strong track record as it relates to sound and prudent fiscal and debt management. A track record which we will always jealously guard, we have ensured that we set the ceilings at levels that would ensure continued fiscal and debt sustainability, given that we work so hard to achieve fiscal and debt sustainability during our previous time in officer… we would be borrowing at a level that is affordable,” Dr Singh said.
The domestic debt ceiling was last adjusted in 1994. At that time, it was set at 200 percent of the country’s Gross Domestic Product compared to the 53 percent to which the government is now increasing it. Further, minister Singh said the revised amount in 1994 was more than six times the amount of the country’s revenue compared to the 2.19 times proposed by the government.
Additionally, the external debt ceiling was last revised in 1991 at 584 percent of the GDP compared to the less than 30 percent the government has raised it. The amount revised in 1991 was 33.83 times the revenue of the country. The current increase by the government is 2.85 times the revenue of the country.
“It gives you a sense of how seriously we take our responsibilities with ensuring that we cap the level of debt that we are contracting at a level that would remain,” the minister said.
Minister Singh told the National Assembly that the PPP/C administration has a track record of restoring broken economies. The increase in the debt ceilings will ensure the government can make the necessary investments to realise a trajectory of positive economic growth.
Meanwhile, minister of public works, Bishop Juan Edghill, told the National Assembly that development has a timeframe. He said the government needs the flexibility to undertake its developmental agenda. The minister added that the oil and gas sector will facilitate massive development and Guyana must be prepared. This includes providing better education, healthcare and the necessary infrastructure.
“We have to ensure the economic architecture is in place. Access to financing, reduced interest rates, ensuring sustainability and all of these things are necessary in order to modernise Guyana,” minister Edghill said.
He said the increase in the debt ceilings is about creating opportunities for future generations and opening up avenues for them to flourish.