The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet Minister yesterday admitted that Government borrowing was “not totally avoidable” despite escalating concerns over a $6.378 billion national debt that grew 10 per cent in the year to end-May 2015.

Michael Halkitis, minister of state for finance, said:

“It’s a concern because our debt over the year has escalated, so I cannot stand here and say it’s not a concern.

“We have to be very careful. The reality is that you have to be able to manage it, and so to the extent that your revenues do not cover your expenses, you want to move towards a situation where it does. Currently, we are not in that situation.”

He added: “What we have to do in that case is be as prudent as we can with our spending and make borrowing a last resort.

“It’s not totally avoidable, but to the extent that we have to then we must seek the best terms and the lowest interest rates.”

The Opposition’s finance spokesman, K.Peter Turnquest, recently described Tribune Business’s revelation that the national debt increased by $581.4 million, or 10 per cent, in the year to end-June 2015 as a “chilling reality”.

“According to the Central Bank of the Bahamas just recently-released Quarterly Economic Report, the overall national debt has increased by a staggering $581.4 million (10 per cent) to June 2015 relative to the prior year, for a total national debt of over $6 billion,” Mr Turnquest said.

“This statistic suggesting a debt-to-GDP ratio of almost 75 per cent, well into the danger zone suggested by the IMF, is on its present course unsustainable. When one considers that VAT for the same period is said to have amounted to $182 million, removing this new revenue from the equation means this Government has actually increased the deficit by $763 million in just one year.”

Mr Halkitis said yesterday that reducing the national debt was a key priority for the Christie administration. “The question of the national debt is one that is on the minds of the Bahamian people,” he added.

“We hear them and it is one that that is on our minds as well, which is why we have a medium-term plan and we have been seeing the deficits come down.

“There will be unforeseen circumstances like this hurricane, but we have to make sure we are getting value for money in rebuilding and making sure that borrowing  is the last resort.”