Oil Boom or Debt Doom? – Guyana’s Borrowing Quadruples in Just Six Years

• Guyana entered the oil era in 2019 with US$1.8Bn in debt. Six years later, that figure skyrocketed to over US$7.7Bn, a fourfold explosion in borrowing under the current administration. At the end of 2024, Guyana’s debt stood at US$6Bn, but another US$1.7Bn was added to finance the 2025 Budget, as revealed by Vice President Bharrat Jagdeo.
• Since commencing oil production in December 2019, the country has earned just over US$7.8Bn in oil revenue, according to the latest Bank of Guyana (BoG) report on the Natural Resource Fund (NRF). Notably, almost US$4.6Bn has already been withdrawn by the government since the inception of the Fund.
• The country now finds itself paying high interest on the money it borrowed to finance its development agenda. However, the government believes in its ability to repay the debt in light of earnings from the oil sector. The Irfaan Ali-led administration has often touted the low GDP-to-debt service ratio, meaning that the country’s Gross Domestic Product (GDP) far outweighs the country’s annual repayment on loans.
• However, it should be noted that the country’s growth in GDP, while largely reflective of exports from the petroleum sector, is not the real value that the country receives from the sector. For instance, Guyana’s total crude oil exports amounted to US$17.9Bn in 2024, but Guyana only received US$2.6Bn in revenue from the sector during the same period.
• Stakeholders have frequently warned that while the country is “rich on paper”, it risks slipping into a dangerous debt crisis that many oil-producing states previously fell prey to. In 2019, the country’s debt was US$1.8Bn; according to Annual Reports from the Bank of Guyana (BoG), the nation’s debt grew by 46.7% in 2020 to US$2.6Bn. In 2021, the debt surged to US$3.1Bn, and in 2022, this trend continued with the total stock of debt climbing to US$3.7Bn.
• Experts and politicians have also warned the Guyana Government about excessive borrowing on the back of its oil revenues. Only recently, the United Kingdom increased its export credit financing limit for Guyana from £2.1Bn to £3.0Bn, a move billed by both London and Georgetown as a vote of confidence in Guyana’s accelerating economic progress. But amid the applause, commentators have sharply warned that Guyana must tread carefully. Failure to do so, they say, risks plunging the country into a debt trap, especially given the volatility of oil prices and the nation’s already heavy external and domestic obligations.

(Source: Kaieteur News)