Dear Editor,
If there is one thing the PPP has been outstanding at it is debt relief. But the PPP has never really delivered clear cut evidence of how much it has borrowed and how much it has obtained in debt relief since 1992. The secrecy over its borrowings since 1992 has been especially worrisome. Even when it made admissions the numbers failed to add up. The PPP inherited a US$2.1 billion debt in 1992. The PPP claims the total debt is US$1.368 billion as of the end of 2009. In a Saturday, March 17, 2007 Stabroek News article titled “IDB approves US$487M debt relief “ President Jagdeo reportedly stated that from 1992 to September 2006 the PPP had borrowed some US$900 million.
The article states the President reported Guyana’s debt at just under US$1 billion at the time. I assume the President was speaking about external debt only. At the end of 2006, the external public debt was US$920 million and domestic debt was US$365 million for a total debt load of US$1.285 billion. If the President is to be believed, then some roughly US$300 – US$350 million in Guyana’s total debt at the end of 2006 was the leftover debt from the PNC.
However, many have doubts about the President’s claim about the amount borrowed. A simple accounting of the major debt relief measures received by Guyana shows that Guyana likely already had the entire PNC debt written off probably since the early to mid-2000s.
Here are some of the major debt write-offs the PPP received since 1992. Up to 1999 the PPP has received some US$263 million in forgiveness directly from Brazil, Canada, the Netherlands, United Kingdom and United States. The World Bank enabled the clearing of US$85 million using a US$11 million grant. In May 1996, some US$550 million was forgiven by the Paris Club.
The IDB wrote off US$467 million on January 1, 2007. At least US$440 million in total debt has been forgiven under the HIPC. These figures add up to US$1.805 billion in debt relief that the PPP has obtained since 1992. But there have been other deals. Any debt currently held is likely created entirely afresh by the PPP. This does not even account for debt relief for PPP-created debts incurred since 1992, which is estimated between US$300 million to US$500 million. Today, the total debt is around US$1.5 billion and counting. Assuming relief for PPP borrowed debt of US$300 million since 1992 it is likely the PPP has borrowed anew some US$1.8 billion in the past 18 years. Plus, the PPP has borrowed this money in a favourable era of debt forgiveness, low interest rates, favourable borrowing terms and low debt service payments.
The PPP is heading down the same road as the decrepit PNC but is getting there faster. At this rate and given the trend to bigger budgets, the PPP will likely borrow at least US$3.5 billion in 28 years.
In terms of debt relief and new borrowing, the PPP has overseen the turnover of almost US$4 billion in its 18-year rule. A saving of US$2.1 billion and new debt borrowed afresh by the PPP to the tune of about US$1.8 billion. Undoubtedly, this saving and borrowing has not produced corresponding benefits to the nation. This begs the question: where has this money gone? Particularly considering this nation is already one of the highest taxed nations on the face of the earth which will collect some US$500 million from its citizens in 2010. Particularly considering this nation has collected some of the highest per capita remittances from overseas. In 2010, Guyana should borrow some US$150 million, collect US$500 million in taxes and benefit from US$500 million in remittances. Not even counting the effects of the drug economy which flourishes in Guyana and the benefits of the US$2.1 billion write-off of PNC debts, have you seen the benefit of this money in your everyday life?
Yours faithfully,
Michael Maxwell
