Guyana’s government is considering a return to the international bond market after more than two decades as part of a drive to consolidate economic growth.
Finance minister Winston Jordan said he was also looking to open its most emblematic state-owned enterprise to private participation, adding that his team was reviewing options for a bond possibly in 2016.
“This is a possibility, but it would depend on the conditions our treasury people find,” he said.
Guyana defaulted on its commitments in 1982, in the middle of an emerging markets debt crisis. It issued a small bond in 1994 for just $4m. Winston said a bond would depend on the country’s financing needs for 2016-2017.
He said the financing right now was secured, but that would not preclude a bond option. The government forecasts GDP this year at just above 3% and slightly better for 2016.
The government is also working through a serious problem with the Guyana Sugar Corporation, one of five large state-owned enterprises. The company has been haemorrhaging money for years and its deficit is now estimated at $500m, despite heavy subsidies. It is Guyana’s largest employer.
Guyana President David Granger’s administration is reviewing options for a large number of sugar plantations that are losing money, which could include privatisation.
“Nothing is off the table. There is interest in the private sector, which is definitively an option, but we have to decide if it is partial, full or a kind of partnership,” said Jordan.
GOLDEN PROMISE
While the country attempts to work through financing issues, it is getting a boost from new extractive projects that will increase revenue. Canada’s Guyana Goldfields opened its first gold mine in the country in August. It will produce an average of 194,000 ounces/year for the coming two decades.
Gold is among the top exports — what Guyana calls its six sisters — that also includes bauxite, diamonds, rice, sugar and timber. The government is patiently waiting to add oil that that list.
Exxon Mobile announced last May that it had discovered big oil and gas reserves off Guyana’s coast. Reserves could be worth more than $40bn, or 10 times Guyana’s GDP.
“This is definitely a game changer, but we still have to wait and see. The current price of oil may delay production for a bit, but we expect Exxon to move forward,” said Jordan.
There is, of course, the tricky problem with Venezuela. Venezuela has laid claim to the offshore block and issued a series of not-so-veiled threats against Guyana. Venezuela pulled out its ambassador and closed the border, just as it did with western neighbour Colombia a few months ago.