Former Auditor General Anand Goolsarran has issued a caution to the government over it accumulation of debt.
In his accountability column in today’s Stabroek News, Goolsarran cited two recent loans from China which were announced on Friday by the Ministry of Finance.
In equivalent United States dollars, he noted that the country’s external debt was US$1.375 billion, compared with US$1.303 billion at the end of 2020. He pointed out that the Exim Bank of China accounted for six loans totalling US$240.451 million, representing 17.5 percent of the external loan portfolio. He adverted to Friday’s signing of the two loan agreements with the China in the sums of US$192 million and US$172 million for the East Coast Demerara road expansion project and the construction of the New Demerara Harbour Bridge, respectively.
With these two loans, he said that Guyana’s indebtedness to China is set to overtake the 20 percent incurred by Sri Lanka which is currently in a state of severe economic crisis after years of economic mismanagement combined with the COVID-19 pandemic. He noted that Sri Lanka is undergoing a restructuring of its debts and is in negotiation with the IMF. In December 2017, Goolsarran pointed out that the Sri Lankan government handed over to China the Hambantota Port, including 15,000 acres of land around it, for use for 99 years. The Port had been constructed by China Harbour Engineering Company with financing from China’s Exim Bank.
“The Sri Lanka experience has important lessons for Guyana since the incurrence of excessive debt, both internally and externally, can adversely affect the economy. While Guyana’s medium-term economic prospects appear very favourable due to anticipated oil revenues, the authorities should nevertheless exercise restraint in Government spending, given the volatility of oil prices. And, with global warming and climate taking their toll worldwide as well as the effects of the war between Russia and Ukraine, who knows what the future holds for the oil industry? Considering this, the Government needs to intensify efforts aimed at ensuring that the economy is sufficiently diversified. After all, in the Guyanese context, it is the performance of the non-oil economy that makes the real difference in the lives of ordinary citizens”, Goolsarran said.
