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Guyana’s debt remains sustainable, says report


Guyana’s debt remains sustainable, says report

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GEORGETOWN – As of June 30, 2015, Guyana’s total public debt amounted to US$1.6 billion of which external debt quantified US$1.2 billion, and domestic debt, US$0.4 billion.

This is a according to the Mid-Year Report 2015 compiled by the Ministry of Finance, which stated that the country’s debt during the first half of 2015 remained sustainable. The report defined this as meaning that the country retained its ability to repay its debt without changing its fiscal policy.

External debt decreased marginally by 0.5 per cent, compared with the same period in 2014. The report accredits this decrease in the external debt stock from the signing of the Fifth Debt Compensation Agreement with Venezuela in September 2014, which saw US$69 million of the oil debt effectively compensated, equivalent to the rice and paddy shipped by Guyana to Venezuela under the Guyana-Venezuela Rice Trade Agreement.

The first six months saw principal and interest payment amounting to US$50.96 million, of which Central Government payments totalled US$45.8 million. Compared to the previous year, the report noted that these amounts were lowered by 36 per cent and 38 per cent respectively.

Central Government’s debt service includes payments made to Venezuela in the form of rice paddy that was shipped to that country under the PetroCaribe arrangement. The report noted that the significant decline in these payments in the first half of this year was due to the level of rice and paddy exported to Venezuela, compared with the first half of 2014.

Over the period July 1, 2014 to June 30, 2015, actual external disbursement totalled US$137.5 million with Venezuela accounting for 54 per cent and the Inter-American Development Bank (IDB), 22 per cent of this total.

Meanwhile, Guyana’s debt stock reduced by 13.1 per cent reaching $75.8 billion at the end of June 2015, as compared to $87.3 billion at the end of June 2014.

According to the report, this decline was primarily due to the redemption of the treasury bills at the Bank of Guyana (BOG). Notably, the stock of treasury bills amounted to $71.6 billion, a decrease of 13.7 per cent from the end of June 2014 amount of $83.0 billion.

At mid-year 2015, the actual domestic debt service payment totalled $820.9 million, an increase by 30.7 per cent compared with $628.3 million made during the first half of 2014.

According to the report, this increase reflects higher payments by the BOG for the redemption of treasury bills in the first half of 2015. In addition, over the past three years, the six- month treasury bill rate increased significantly, moving 39 basis points from 1.20 per cent at June 2013 to 1.59 per cent at June 2014, and a further 30 basis points to 1.89 per cent at June 2015. (GINA)