Guyana’s debt crisis: A view of the ‘worst of times‘
Guyana and the wider world
In this and the next couple of columns to follow, I shall broadly address Guyana’s public debt situation since the eruption of the Third World Debt Crisis (TWDC) in 1982, the year in which Guyana also announced its first default on its public debt obligations. For reasons that I shall make clear later, my treatment of this subject will be considered over two separate time periods, namely, up to 2005, and from 2006 to the present.
Although the record shows that Guyana first defaulted on its debt obligations in 1982, its public debt problems originated as far back as the mid-1970s. The eventual default in 1982 was mainly because the country’s external debt obligations had become effectively unmanageable. Those external debt obligations were both multilateral and bilateral. Its domestic debt problems however were not nearly as severe.
In the years between 1980 and 2005 Guyana’s public debt-to-GDP ratio rose from well above 200 per cent in 1980 to a peak of over 600 per cent in the early 1990s. Thereafter it fell back to about 200 per cent by 2005. Indeed, in 1982 when Guyana first defaulted, its public debt-to-GDP ratio stood at 330 per cent.
The overwhelming bulk of these wild swings in the debt burden ratio, evident in this description, were attributed to changes in the external debt, and Guyana’s successes or otherwise in securing external debt relief.