In 2017, the world economy achieved better-than-expected results, following the U.S. tax policy reform and notable improvements that were observed in Europe and Asia. At the same time, accommodating commodity prices and better financial conditions sustained economic expansion in the Latin American and Caribbean region. In face of this global expansion, the Guyanese economy did not meet the expected growth, due to weaker-than-anticipated performances in the mining and quarrying and construction sectors as well as sugar and livestock. These were sufficiently large to offset better-than-projected growth in the other agriculture, fishing and forestry, manufacturing, and services sectors. The real economy grew by 2.1 percent in 2017, slightly below the 3.3 percent achieved in 2016. The risks noted in the 2018 Budget Speech—unpredictable commodity prices, climate change and international financial market disruptions—remain relevant since they have the ability to derail growth projections.
Highlights Of This Report
- Guyana’s public debt remains sustainable with a moderate risk of debt distress.
- In May 2018, the National Industrial and Commercial Investments Limited (NICIL) issued a US$150 million or G$30 billion equivalent bond facility, arranged by Republic Bank Limited. The Government guaranteed bond has been issued for a five-year term with a rate of return of 4.75 percent per annum. The funds raised are to be used towards GuySuCo’s capital expenditure and general operations. This is the first type of transaction of its kind in Guyana which signals Guyana’s entry into the capital markets arena.
- There were no new external loans contracted for the first half of 2018.
- At the end of June 2018, Guyana’s stock of public debt amounted to about US$1,631.8 million, less than 1 percent decline compared to the 2017 half-year position. Of the total stock of public debt, external debt amounted to US$1,249.5 million (76.6 percent) whilst domestic debt was about US$382.1 million (23.4 percent).
- The main creditors accounting for the largest share of the external debt portfolio are: IDB (40.5 percent); China EXIM Bank (15.2 percent); and CDB ( 11.9 percent)
- The external disbursing loans represent about 20 percent of the external debt portfolio.
- The entire external debt portfolio is denominated in foreign currency with the US dollar currency being the dominant currency (73 percent) in the portfolio. This foreign currency exposure highlights Guyana’s potential vulnerabilities to solvency and liquidity risks. A depreciation in the Guyana dollar against foreign currencies, in particular, the US dollar will increase debt service payments significantly in Guyana dollar terms.
- Guyana’s public debt portfolio is not highly exposed to refinancing risk, since total short-term debt accounted for about 21 percent of the debt portfolio at end-June 2018. Notably, the domestic debt portfolio has a high level of refinancing risk since the majority (89 percent) of the portfolio consists of Treasury Bills which have a maturity of one (1) year or less.
On November 27, 2017, for the second consecutive occasion, the National Budget was presented to Parliament before the start of the fiscal year and one day earlier than the previous year, making it the earliest Budget in over four decades. The Budget for the Financial Year 2018, themed The Journey to the Good Life Continues, maintained this administration’s priority of delivering a timely budget, in order to support economic management, financial management and effective implementation of Government’s policies. By presenting Budget 2018 before the beginning of the fiscal year, Budget Agencies continued to have an improved opportunity to plan and implement their annual budgets, thereby allowing programmes that are critical to our country’s development to move forward with greater efficiency.