PUBLIC DE BT
ACCOUNTING
ACT3101
Lecture 5
OUTLINE:
Government borrowing
Public Debt
Composition of Public Debt
Measurement of Public Debt
Public Debt
There are alternative definitions of public sector debt. In the
World Debt Tables, the World Bank defines external public debt
as the sum of public and publicly guaranteed debt. These two
categories are defined as follows:
➢a) Public debt is the sum of all domestic and external
obligations of public debtors which include the (i) central
government and its agencies; (ii) states, provinces or similar
political subdivisions including their agencies; and (iii)
autonomous public bodies such as state enterprises and
subsidiaries in which they have joint ownership with the private
sector and a major shareholding.
Public Debt
The obligations of public bodies outside the central
government include borrowings that are both guaranteed
and not guaranteed by the government.
➢b) Publicly guaranteed debt is the sum of all domestic
and external obligations of the private sector that is
guaranteed for repayment by a public entity.
In another definition, the International Monetary Fund
divides the public sector into the Financial and Non-
Financial Public Sector.
Public Debt
The financial public sector covers monetary and non-
monetary institutions and the non-financial public sector
covers the central government, states/provinces and local
government authorities and non-financial state
enterprises.
Public monetary institutions include the Central or Reserve
Bank and state owned depository financial institutions
including commercial banks.
Public Debt
Public non-monetary financial institutions are non-
depository institutions such as state owned development
finance lending agencies.
Categories of Public Debt
1. Internal and External Debt
Internal public debt refers to the public loans floated within the country, whereas external debt refers
to the obligations of a country to foreign countries or international institutions.
2. Voluntary and Compulsory Debt
In the case of voluntary debt, people are free to buy public debt at their will. Whereas, compulsory
debt involves force.
Categories of Public Debt
3. Productive and Unproductive Debt:
Productive debts are those loans which are raised by the government for
financing projects which yield income to the government. On the other hand,
public debt incurred to cover budgetary deficits on revenue account or for
purposes which do not yield any direct income to the government is classified
as unproductive debt.
4. Redeemable and Irredeemable Debt:
Public debt may be redeemable or irredeemable.
Categories of Public Debt
5. Funded and Unfunded Debts
Funded debts are long term debt created by the government, for generating a
permanent capital asset. Unfunded debt is a short term fund.
6. Marketable and Non-Marketable Debt
A marketable debt is one in which the debt instruments are negotiable. Non-
marketable debts are those debts such as savings bonds which cannot be
bought and sold in stock-exchange markets.
Categories of Public Debt
7. Callable and Non-Callable Debt
Callable debts are those debts which the government can repay even before the
period of maturity, whenever it is found convenient for the government to do
so. Non-callable debts can be repaid only at the time of maturity.
8. Short-Term, Medium-Term and Long-Term Debt
Based on the duration of the loan, public debt can be classified into short term,
medium term and long term debt.
Guyana’s Total Public Debt
As at December 2015, Guyana's total public debt (external
and domestic) amounted to $317.7 billion, reflecting a
decrease of 3.6 percent compared to its 2014 level. This
decrease was largely due to repayments of the oil debt
under the Guyana-Venezuela Rice Trade Arrangement.
Guyana’s Total Public Debt
During the five (5) year review period 2011 to 2015, total
public debt fluctuated peaking at its highest level in 2012 at
$371.3 billion before gradually declining to its lowest level in
2015. The peak during 2012 was mainly due to an increase in
disbursements from Guyana's external creditors.
Public External Debt
As at end-2015, Guyana’s public external debt stood at
US$1,143.1 million, a decline of 6.0 percent from its end-
2014 level. As a percentage of GDP, the public external debt
stock was 36.1 percent at the end of 2015, compared to 39.5
percent at the end 2014. This decrease was largely due to
repayments of the oil debt to Venezuela in the form of rice
and paddy shipments to Venezuela. Guyana concluded two
Debt Compensation Agreements with Venezuela (PDVSA) in
2015, for a total of US$88.7 million. One debt compensation
agreement for US$43.8 million is yet to be signed.
Public External Debt
Borrower Category
Guyana’s external debt outstanding by borrower category
has not changed significantly during the review period. The
Central Government continued to be the main recipient of
external financing. Its share has increased incrementally,
rising from 92 percent in 2011 to 97.6 percent in 2014 to
98.3 percent in 2015. As the share of central government
rose gradually, the share of public external debt held by the
Central Bank decreased correspondingly during the period
under review.
Borrower Category
Repayments of the International Monetary Fund (IMF) debt
and the cancellation of the debt to the CARICOM
Multilateral Clearing Facility (CMCF) in 2014 were the main
factors behind the decline. The loan to the parastatal,
Guyana Power and Light Inc., accounted for 1 percent of the
public external debt in 2011 and was repaid in 2014.
Guyana’s Public Domestic
Debt
As at end December 2015, Guyana’s public domestic debt
stock stood at $81.7 billion. This represents an increase of
4.2 percent compared to $78.4 billion at the end of 2014.
The increase in the public domestic debt stock was mainly
due to the increase in issuance of Treasury bills (T-bills),
causing the stock of T-bills to increase by 4.4 percent. In
2015, the issuance of 91-day T-bills and 364-day T-bills rose
by 27.0 and 8.6 percent respectively.
Debt Indicators
Total Public Debt to GDP
Public debt as a share of GDP is an important measure of
debt sustainability and indicates how much of a country’s
total national income would be needed to repay the entire
debt stock. This ratio, known as the solvency ratio, has
decreased over the review period. Guyana's total public debt
to GDP decreased to 48.6 percent in 2015 from 51.9 percent
in 2014.
Total Debt Service to Revenue
The total debt service to revenue ratio is categorised as
liquidity debt ratio. It measures the total debt service
payments of principal and interest as a share of current
revenue. This ratio can be used as a measure of
sustainability and the government's ability to mobilise
revenues. An increase in this indicator obligations over time
may indicate potential problems in a country meeting its
debt
Total External Debt Service To
Exports
The total external debt service to exports ratio is often
referred to as the debt service ratio. It is frequently used as a
measure for debt sustainability because it indicates how
much of a country's export revenues are used for servicing
external debt and how vulnerable servicing is to a change in
exports.
DETAILS OF PUBLIC DEBT in 2018
& 2019
DETAILS OF PUBLIC DEBT in 2018
& 2019
As illustrated in Chart 1, the stock of total public debt at the end of
June 2019 was US$1,657.80 million, a US$23.83 million increase from
US$1,633.97 million at the end of June 2018. This increase was
mainly attributed to a US$22.17 million or 1.8 percent increase in the
external debt stock, which was driven by increased
disbursements from multilateral and bilateral creditors.
DETAILS OF PUBLIC DEBT in 2019
DETAILS OF PUBLIC DEBT in 2019
For the second quarter of 2019, total public debt service was US$23.74
million, of which external debt service was US$17.27 million, while
domestic debt service was US$6.48 million.
EXTERNAL PUBLIC DEBT in 2018 &
2019
EXTERNAL PUBLIC DEBT in 2019
For the first half of 2019, total debt service payments amounted to
US$51.98 million, representing a 17.3 percent or US$7.67 million
increase when compared to US$44.31 million for the
corresponding period in 2018. This increase is mainly attributable to
higher interest rates on Inter-American Development Bank (IDB)
and Caribbean Development Bank (CDB) loans, and the
commencement of repayments to Kuwait Investment Authority (KIA).
EXTERNAL PUBLIC DEBT in 2019
EXTERNAL PUBLIC DEBT in 2019
As depicted in Chart 3, the six largest creditors accounted for about
89.1 percent of the external debt portfolio. Among these, only Libya is
in arrears.
EXTERNAL PUBLIC DEBT
EXTERNAL PUBLIC DEBT
As shown in Table 2, at the end of quarter 2 2019,
multilateral debt accounted for the largest share of the
external debt portfolio at US$789.24 million, or about
61.9 percent. This amount represents a moderate
increase of US$3.6 million relative to the first quarter of
2019.
EXTERNAL PUBLIC DEBT
EXTERNAL PUBLIC DEBT
EXTERNAL PUBLIC DEBT
EXTERNAL PUBLIC DEBT
DOMESTIC PUBLIC DEBT in 2019
DOMESTIC PUBLIC DEBT in 2019
DOMESTIC PUBLIC DEBT in 2019
End of
Lecture
