With Guyana expected to produce over 1.2 million barrels of oil per day from the Stabroek Block by 2027, Vice President Dr. Bharrat Jagdeo expressed confidence that Guyana will be able to clear its debt during that period.
“…We will be able to pay off with one year’s (oil) revenue, all of our debts, which is an unusual thing for our country,” he noted.
Jagdeo made these comments on the heels of highlighting Guyana’s extraordinary journey from staggering debt to financial resilience. He emphasized that the country, once burdened with a debt equivalent to nine times its economy, has made significant strides. The debt, which stood at 900 percent of Gross Domestic Product (GDP) pre-oil in 2015, has now reduced to approximately 22 percent of GDP, marking one of the lowest figures globally.
Jagdeo also pointed out that Guyana’s debt service, which previously consumed over 150 percent of revenue, has significantly dropped. Before the oil boom, it was around 10-12 percent of revenue, and now, post-oil, it hovers at approximately eight percent. This he said places Guyana in a favourable position compared to other nations in the region, where, on average, over 60 percent of revenue is used to service debt.
Further highlighting Guyana’s debt profile as one of the best globally, Jagdeo underscored the country’s strategic approach to loan structures. He said Guyana has opted for fixed-rate loans, minimizing vulnerability to unpredictable global interest rate fluctuations. With only two variable rate loans, both from multilateral institutions, the risk of debt escalation due to rising interest rates is mitigated according to Jagdeo.
“We have only two loans so far that are variable rate loans, so we don’t have to worry about globally escalating interest rates.” Jagdeo said. He added, “Our policy has been to contract fixed rate loans. So even the structure of the debt is such that it would not bring unwanted surprises in the future.”
The Vice President also asserted that as global economic uncertainties persist, Guyana stands out as a beacon of fiscal responsibility, showcasing not only a remarkable debt reduction but also a prudent approach to debt management that shields the nation from potential financial pitfalls.