By NEIL HARTNELL
Tribune Business Editor
The Bahamas’ total national debt will be close to $5.5 billion by the time the Government’s fiscal year closes on June 30 next year, it was forecast yesterday, having grown at least $419 million in 12 months.
The Central Bank of the Bahamas’ review for the 2013 second quarter showed that the national debt increased by some $809.8 million during the Christie administration’s first year in office, hitting $5.277 billion at end-June.
Although this growth rate is forecast by the Government’s Budget to moderate to just over $400 million in the current 2013-2014 fiscal year, the data provides a further indication of just why the Government is so desperate to implement Value-Added Tax (VAT) and earn more revenue, in order to get the public finances back under control.
Many observers, though, are likely to wonder why the Government is failing to focus more on its spending, given that Budget projections from 2012-2013 and 2013-2014 show that, collectively, the Christie administration will have added almost $1.2 billion to the national debt in two years.
This is at least matching the growth rates achieved by the former Ingraham administration, which it much criticised.
For the 11 months to end-May 2013, the Central Bank said the Government raised $702.9 million in debt financing, including $325 million worth of bonds and $324.9 million in short-term Treasury Bills.
This was supplemented by $53 million in loans and advances, plus some $229.3 million in external loan drawdowns.
The net increase in public sector debt was more muted, though, as the Government repaid $258.2 million in outstanding debt, the majority of which was in Bahamian dollars.
“During the  second quarter, the direct charge on the Government firmed by 3.4 per cent ($154.7 million) and stood 19.9 per cent ($776.3 million) higher over last year, at $4.681 billion,” the Central Bank report said.
“Government’s guaranteed debt firmed slightly by $1.6 million (0.3 per cent) over the review period to $594.9 million, while the National Debt - which includes contingent liabilities - rose by 3.1 per cent ($156.3 million) when compared to the previous quarter, and was 18.1 per cent ($809.8 million) higher relative to last year at $5.277 billion.”
Looking ahead to the debt position for this fiscal year, the Central Bank said the Government’s debt financing needs were projected at $521.3 million, with most of this - some $465.8 million - coming from local Bahamian sources. External loans will provide the $55.5 million balance.
“Debt repayment is expected to contract by $29.6 million (25.8 per cent) to $85.2 million, the majority of which ($66.8 million) is allotted for internal Bahamian dollar obligations,” the Central Bank said.
“As a consequence, the Budget projects that the direct charge on the Government will grow by $419 million over the year to $4.875 billion, compared to the previous estimates, a slowdown from a forecasted increase of $828 million in the prior fiscal year.”
That, though, assuming contingent liabilities (government guarantees) remain stable at near $600 million, would leave the Bahamas with a national debt just shy of $5.5 billion at the day VAT is to be implemented on July 1, 2014.