Balancing the Boom: Guyana’s Debt Strategy in the Age of Oil
Guyana’s debt strategy is unfolding against the backdrop of a rapidly expanding oil sector, presenting opportunities and risks. The country’s economic transformation has been accompanied by a significant shift in its debt profile, with government debt standing at approximately 27% of GDP as of 2023, a notable decline from the 63.18% average recorded between 1997 and 2023. This reduction places Guyana in a relatively strong fiscal position compared to many of its Caribbean counterparts, where debt levels often exceed 70% of GDP. However, while this trend reflects improved fiscal management, it does not preclude the risks associated with a resource-dependent economy.
Guyana’s borrowing strategy, outlined in its Public Debt Policy for 2021-2024, emphasizes cost efficiency, prudent risk management, and a preference for concessional financing with favorable terms. The 2022 Annual Borrowing Plan projected GYD 110.8 billion in borrowing from domestic and external sources, with an emphasis on securing loans with low, fixed interest rates and extended maturity periods. While this approach aligns with best practices in public finance, the long-term sustainability of Guyana’s debt position will depend on how effectively borrowed funds are allocated and whether economic diversification efforts succeed in reducing dependency on oil revenues.
One of the most consequential borrowing decisions in recent years is the $527 million loan secured from the Export-Import Bank of the United States in January 2025, intended to finance a gas-to-energy project. The project aims to double the nation’s electricity generation capacity, reduce energy costs, and enhance energy security. If executed efficiently, it could deliver long-term economic benefits, including lower production costs for businesses and increased industrial activity. However, the economic viability of such projects must be assessed within the broader fiscal context, including Guyana’s capacity to service new debt obligations without compromising long-term stability.
Oil revenue management is central to Guyana’s fiscal outlook. Establishing the Natural Resource Fund and implementing fiscal responsibility legislation are steps in the right direction. Still, their effectiveness will ultimately be determined by the transparency and discipline with which they are enforced. The government’s ability to resist election-driven fiscal expansion, maintain debt ceilings, and ensure public oversight of significant investments will be critical factors in maintaining macroeconomic stability.
Global historical precedents highlight the importance of cautious debt accumulation. Norway provides an example of disciplined resource wealth management, while Venezuela serves as a cautionary tale of overreliance on commodity revenues and unsustainable borrowing. Guyana’s current trajectory suggests an awareness of these risks. Still, the long-term outcome will hinge on implementing policies prioritizing economic diversification, institutional capacity building, and transparent financial governance.
While Guyana’s present debt levels remain manageable, continued vigilance is required. The structural risks associated with resource-dependent economies and the potential for external shocks such as commodity price volatility necessitate a forward-looking fiscal strategy. Sustained economic growth, strengthened public financial management, and adherence to prudent borrowing practices will determine whether Guyana can leverage its resource wealth to achieve lasting economic stability rather than fall into the pitfalls that have ensnared other resource-rich nations.
This data indicates a significant reduction in Guyana’s debt-to-GDP ratio, particularly from 2021 onwards, reflecting the country’s economic growth and fiscal management strategies.
For a more detailed analysis and visual representation, refer to the Federal Reserve Economic Data (FRED) provided by the Federal Reserve Bank of St. Louis.
Note: All financial figures are based on data available up to February 2025. Data for 2024 to 2029 are projections.
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📧 Terrence Blackman, Ph.D.
Founder & CEO, Guyana Business Journal
