PLP deputy leader Chester Cooper. Photo: Terrel W Carey Sr/Tribune Staff
By RASHAD ROLLE
Tribune Senior Reporter
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.