Bahamas national debt stands at $2.88 billion
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| Published on Thursday, June 7, 2007 |
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By Clunis Devaney
NASSAU, Bahamas (BIS): Minister of State for Finance, Zhivargo Laing revealed on Tuesday that the national debt of The Bahamas has grown by some $656 million or 29 per cent over the last five years, and is now pegged at $2.881 billion.
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| Bahamanian Prime Minister Hubert Ingraham arrives in Parliament Square for debate on the national budget Tuesday. (BIS photo by Patrick Hanna) |
Laing, who opened the debate on the $1.5 billion 2007-’08 Budget in the House of Assembly, said $2.382 billion or 83 per cent of the national debt represents a direct charge on the government.
“The direct charge on the government,” he stated, “has grown by some $580 million or 32 per cent from 2002 to 2006. The total deficit, taking into account of the government guarantees has grown by some $656 million or 29 per cent over the last five years.
“This represents an average annual increase of some 5.8 per cent. This level of growth of the national debt has had the consequence of pushing debt servicing, in terms of interest payments upward from $103.4 million in 2002/’03 to $141.4 million in 2006/’07, an increase of some $38 million or 37 per cent.”
Laing underscored that “sustained deficit spending produces increased indebtedness and an increased burden on future generations to service that deficit.”
Meantime, the Free National Movement Government is projecting a virtual elimination of the Budget Deficit by fiscal year 2010-2011.
Laing said “a part of our strategy to reduce the ratio of Government Debt to GDP (gross domestic product) involves targeting a reduction in the Budget Deficit, from 1.8 per cent in 2007-2008, to just over one per cent in the next two fiscal years, and then in 2010’11 to the virtual elimination of the deficit.”
Debate on the 2007-’08 Budget, which was seconded by Kendal Wright (FNM-Clifton) is expected to last two weeks in the House of Assembly. It will then move to the Senate for that chamber’s approval. The measure must be passed by June 30th, in time for the new fiscal year, which begins July 1st.
Laing said, “We are satisfied that we can achieve these most desirable fiscal goals, the elimination of the Budget Deficit and the reduction of the ratio of Government Debt to GDP to within the range 30 per cent to 35 per cent.
“Furthermore, and this is of critical importance, we are satisfied that we can achieve these goals without the necessity for raising additional taxation or by cutting back government expenditure on essential services.”
Lang emphasized that the government’s goals can be achieved by ensuring that the present taxation system “is consistently, strictly and honestly enforced so that there can be no recourse to loopholes or other means of evading or avoiding taxation.”
The Minister said that, in addition to enforcement of the present revenue system, “it is our intention in government to accelerate the growth of the Bahamian economy, and in that context to ensure that this growth is well balanced and of the highest quality.”
According to Laing, the government is convinced that revenue buoyancy will flow from this approach.
Laing said the government desires to increase productive spending.
“The reality is,” he said, “is that we need to and do have a desire to spend even more in a number of areas where we believe it can enhance the quality of life for our citizens. These areas include education (after school programming), youth development, health, prison reform, national security, infrastructure, etc. However, we are constrained by our somewhat fixed obligations. The extent to which these obligations make ever greater demands on our revenue stream is the extent to which we are unable to dedicate more funds to the areas of which I spoke.”
He stressed that the 2007-08 Budget calls for a planned surplus on the recurrent account of some $25 million, and that this amount stands in contrast to the planned recurrent budget deficit for this year of some $39 million and a likely outrun of some $4 million, “the latter of which could be higher once we fully account for all the contingency spending done in this year.”
Laing informed parliamentarians that a planned surplus on the recurrent budget means that the government does not have to borrow at all to finance its operating expenses.
“Indeed, we expect that revenue collected will fully fund our expenses on the recurrent side,” he said. “Rather than borrow to pay salaries, allowances, rent, etc., we are borrowing to cover the deficit on the capital account, which, understandably in our context, will almost invariably experience persistent deficits.
“With capital revenue of just $10 million and capital expenditure of some $225 million, we project a capital deficit of $215 million. With recurrent revenue forecasted to exceed expenditure by $25 million, this surplus can be used to cover a part of this deficit, leaving a $190 million balance to be covered by borrowings.”
The Minister said the $190 million the government expects to borrow “is $38 million less than the $228 million borrowing planned for this year and is $7 million less than the likely outturn, the latter of which, again I say, could be higher once we fully account for all the spending done this year.” | | | | Reads : 343 | | | |
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