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Why Borrow $252m From Imf, Asks Plp’S Cooper

PLP deputy leader Chester Cooper. Photo: Terrel W Carey Sr/Tribune Staff

PLP deputy leader Chester Cooper. Photo: Terrel W Carey Sr/Tribune Staff

By RASHAD ROLLE

Tribune Senior Reporter

rrolle@tribunemedia.net

PROGRESSIVE Liberal Party deputy leader Chester Cooper yesterday questioned why the Minnis administration will borrow $252 million from the International Monetary Fund.

Speaking during the budget debate which began yesterday, he said Bahamians should understand what the borrowing move may signal to the international community.

“The IMF is typically the lender of last resort for countries, just as the Central Bank is usually the lender of last resort for commercial banks,” he said. “The IMF, like a Central Bank, would lower its emergency lending rate in a crisis to encourage troubled countries to borrow.

“So, the cost of funds or tenure of the funding are meaningless in this context. The IMF loan being squeezed into the 2019/2020 budget, that the minister did not mention in any budget communication, could send a troubling signal to the world that The Bahamas is a financially troubled country. Yet, it was none other than the minister of finance, the member for East Grand Bahama, who publicly ruled out the IMF’s original offer; no doubt for this very reason.

“In fact, when the minister of finance originally sought parliamentary approval for the supplementary borrowing, the IMF was not listed as a possible lender. Does this mean that the funding options he presented to Parliament previously have not materialised for this administration? If so, that might signal a worrisome collapse of confidence in this administration by lenders. If lenders are unwilling to lend to the government now, why would they be willing to lend to the government in the next fiscal year to fund a $1.3 billion deficit? In my view, the path the country is on is quite clear and unless there is a drastic shift, it is only a matter of time before this administration goes back to the IMF, cap in hand, for additional funding.”

Mr Cooper also expressed doubt about the administration’s fiscal projections, saying the figures showing that the country’s debt-to-GDP ratio will reach 82.8 percent do not encompass all of the government’s obligations.

He said: “…This is not the comprehensive picture, as the government tabled a resolution in this Parliament on May 28 to convert $246 million in Bahamas Power and Light government guaranteed loans into direct government debt.

“This conversion, which is to take place in July, has astoundingly been omitted from the budget, from my examination of it. This was not even tabled by the minister of finance, but by the prime minister, who did so the day after the budget communication just before the adjournment, after speaking about restrictions in the emergency order being lifted. He slipped it in, in the dead of night. Why that wasn’t included in the budget the day before raises more credibility concerns. Did they not know about it? Or is that what the PR people suggested? This is the exact opposite of fiscal transparency.”

The budget debate resumes today at 3pm.

Comments

moncurcool 4 months, 1 week ago

Cooper is too smart to allow politics to play into this game. I was one who was skeptical about going to the IMF, until I listed to the economists explain what this particular loan was about.

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TigerB 4 months, 1 week ago

I am confuse.. he wanted to gov't to borrow 2 billion some weeks ago... now he don't want them borrow 252 million...strange!

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tetelestai 4 months, 1 week ago

That's not what he said, TigerB. Stop playing politics.

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Hoda 4 months, 1 week ago

If you read the article published yesterday, they include quotes of him saying that the government should borrow between 1 - 2 billion

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themessenger 4 months, 1 week ago

Let’s not forget which road we traveled to reach this place, Dorian and pandemic notwithstanding, lenders were extremely leery of The Bahamas long before Minnis and Co arrived on the scene. No Bahamian government has ever faced a financial disaster of this magnitude, and not of their own making in our history, the fact that the mighty USA have officially declared themselves in recession should tell you something. Many of us had high hopes that with Cooper a new page might have been turned with the PLP, unfortunately it would appear we to have gotten a Bodie on steroids.

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Baha10 4 months, 1 week ago

At least Cooper appreciates the significance ... and consequences of dancing with the IMF ... the Financial Grim Reaper of the World ... the time of reckoning is nigh ... and Lord help us for we have sinned!

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The_Oracle 4 months, 1 week ago

Lender of last resort, to whom you cannot return to with hat in hand. This is the full amount of emergency funds available. This is the last stop before the cliff. Once the IMF puts you on the "austerity" program, they are now controlling. Not that we ever did. A perfect case of being given enough rope to hang ourselves with.

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joeblow 4 months, 1 week ago

... but the PLP never had any problems borrowing from the IMF when things were not so difficult!!

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