Loan will help support income levels for people affected by the global pandemic

The Inter-American Development Bank (IDB) has approved a US$30.4 million loan to Guyana to assist its nationals most affected by COVID-19.

The loan, which was recently approved, is to contribute to ensuring minimum levels of quality of life for vulnerable persons affected by the global pandemic in Guyana. To do so, the programme will contribute to support minimum income levels and preserve the human capital of those affected by the pandemic.  

As of today December 26, 2020, Guyana recorded some 6,289 confirmed COVID-19 cases, with 162 deaths and 5,555 persons recovered from the coronavirus. 

Negative impact of COVID-19 on Guyanese

The crisis caused by COVID-19 has negatively affected the living standards of nearly all Guyanese. The impact has been particularly hard on vulnerable groups such as low income families, the elderly, individuals with disabilities and women, who suffered increased rates of intimate partner violence, as an unintended consequence of the confinement measures. 

In addition, the pandemic will have a negative impact on learning, with potential long-term effects on human capital and inequality. The global pandemic has directly impacted the education sector in a negative way, both on the demand side and on the supply side.  

To address these challenges, the IDB has approved a project costing US$30.2 million that will have two main components; social protection and support for educational continuity.  

Loan components

In its social protection component, the loan will support temporary extraordinary cash transfers of the Old Age Pension Service and public assistance and the provision of electricity bill credits for vulnerable households consuming less than 75 kilowatt hour (KWH) per month. This, is in addition to the implementation of the new Survivors Advocates Program, who will help women victims of violence access the criminal justice system, agency referrals, emergency shelters, and cash transfer programmes.  

As regards to the education component, the loan will finance actions to mitigate the effects of school closures during the COVID-19 pandemic and prepare for their reopening, including the development of educational content for radio and TV for students in nursery, primary and secondary schools.

This component will also cover the distribution of pedagogical materials such as textbooks and curricular guides for teachers, water supply improvement solutions including the installation of water pumps and storage tanks as well as debt relief for public university students. 

Beneficiaries under the programme

More than 250,000 Guyanese are to benefit from the loan programme. Some 56,000 beneficiaries will get more benefits through the Old Age Pension Service; 9,000 beneficiaries of the public assistance and 15,000 beneficiaries of electricity bill credits. The beneficiaries also include 350 women victims of violence; 146,000 students that will receive education delivered through TV and radio; 35,000 students, who will receive textbooks and worksheets and 1,765 beneficiaries of student loan relief. 

The $30.4-million loan will be executed during a two-year period. In the first instance there will be an allocation of US$21.8 million corresponding to Flexible Financing Facility, which will have an amortisation period of 25 years and an interest rate based on the London Interbank Offered Rate (LIBOR). LIBOR is the benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

The balance will be the concessional OC, which is the largest lending window of the IDB, providing non-concessional loans. This aspect of the loan will have an amortisation period of 40 years and 0.25 per cent interest rate. 

The IDB, which was established in 1959, is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.