Record levels of debt....Public sector debt increases Thursday, September 11 2014 click on pic to zoom in THE country’s net public sector debt is expected to increase by the end of the current fiscal year. This was one of the findings contained in the Review of The Economy 2014 document which was laid in the House of Representatives on Monday, prior to the reading of the $65 billion 2014/2015 Budget by Finance and Economy Minister Larry Howai. The document said net public sector debt “is projected to increase by 10.2 percent from $70,929.5 million in fiscal 2013 to $78, 134 million by the end of the current fiscal year.” The document goes on to say that net public sector debt as a percentage of Gross Domestic Product (GDP)is expected to rise by 3.1 percent, from 40.4 percent in fiscal 2013 to 43.4 percent in fiscal 2014. A disaggregation of the net public sector debt shows that 59.5 percent is comprised of Central Government Debt while the remaining 40.5 percent is attributed to contingent liabilities. The document states that by the end of the current fiscal year, External Debt which accounts for 19.8 percent of Net Public Sector Debt is projected to expand by $3,581 million or 30 percent. The remaining 80.2 percent of Net Public Sector Debt, which is attributed to domestic debt, and is inclusive of borrowings by Central Government, as well as Contingent Liabilities, is expected to grow by $3,624.2 million or 6.1 percent. Central Government Debt( both foreign and domestic) is anticipated to increase by 8.6 percent to $46, 524 million or 25.9 percent of GDP, while Contingent Liabilities or Government Guaranteed Debt by the end of September 2014. Total Public Sector or Gross Public Sector Debt; which includes borrowings for Open Market Operations; moved to $101 million from $92,488.8 million. The document said that contributing to this increase was the issuance of Treasury Bills ($908 million), Treasury Notes ($392 million) and Treasury Bonds ($1,000 million) for liquidity management during the year. The proceeds of these funds are not utilised by Government but are sterilised at the Central Bank. The document states that the 8.6 percent increase was principally due to increased external borrowing s by the Central Government during the fiscal year. Another contributor to the increase in Central Government External Debt were disbursements in the amount of $611 million from external facilities contracted in fiscal 2013. These included a 33.8 million euro export credit facility for the extension of the San Fernando General Hospital at Chancery Lane; a US$85 million Preferential Buyers Credit Facility for the construction of six sporting facilities; a 990 million Renminbi Concessional Facility for the construction of the Couva Children’s Hospital and a US$26.3 million facility representing the foreign financing component for the procurement of a digital communication system for the Trinidad and Tobago Police Service. Disbursements from the multilateral agencies in the amount of $202.1 million were also recorded in the current fiscal year. Central Government Domestic Debt which accounts for 71. 4 percent of the total Central Government Debt or 18.5 percent of GDP, is expected to decline by $13.9 million. This decrease was as a result of the maturity of two government fixed rate bonds in the current fiscal year. These were a $516 million, ten-year, six percent bond issued on September 15, 2004 and a $1,018 million, seven-year, eight percent bond issued on April 27, 2007 — under the former People’s National Movement (PNM) administration. In his Budget presentation on Monday, Howai said, “The fiscal deficit is on course to meet the 2016 objective of bringing the fiscal accounts into balance, notwithstanding the budgeted deficit of $6,357 billion for fiscal 2014. He also indicated that, “public sector debt remains at a sustainable level at 43 percent of GDP with the external debt service ration remaining in single digit.” “These debt ratios are well within established international benchmark,” Howai added. The Budget debate begins in the House tomorrow, with the response of Opposition Leader Dr Keith Rowley to Howai’s presentation. Under the new Standing Orders of the House, Rowley (who is also PNM political leader) will be allowed the same amount of time which Howai had, to make his contribtution. The Budget debate is expected to be concluded in the House by September 17. In his initial response to the Budget on Monday, Rowley questioned where will Government get the billions of dollars it needs to fund the plethora of initiatives which Howai outlined in his presentation. Recalling Government’s promise over the last four years to introduce “projects and programmes on the revenue side to increase the economic pie of the country,” Rowley observed, “This Budget has been loudly silent on them and that is very worrisome.”
Posted on: Sat, 13 Sep 2014 14:06:05 +0000
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