The Tribune

By FAY SIMMONS

TRIBUNE BUSINESS REPORTER

jsimmons@tribunemedia.net

THE FISCAL Responsibility Council has flagged a mismatch between the Government's debt forecasts and its actual borrowing and repayment plans, raising questions about how quickly public debt can be reduced over the medium term.

The FRC found that the Government's financing figures imply a net reduction in liabilities of $119.5m during FY2026/27, while its medium-term fiscal and debt outlook projects a $289.8m reduction in Central Government debt over the same period.

The figures are contained in the Fiscal Strategy Report FRC assessment.

Draft Estimates of Revenue and Expenditure provide for $934.5m in borrowing during FY2026/27 against $1.054bn in debt repayments, resulting in net incurrence of liabilities of negative $119.5m.

The FRC said this suggests a $119.5m reduction in debt, but the medium-term fiscal and debt outlook contained in the FSR projects a larger $289.8m reduction by the end of FY2026/27.

"The FRC is of the view that a revision of the debt projections in the medium-term fiscal outlook is necessary," the council said.

The council also raised concerns about the absence of a medium-term financing forecast in the Fiscal Strategy Report itself.

It noted that the FSR does not provide a medium-term debt financing outlook, despite the Draft Estimates containing borrowing and repayment projections.

The FRC said the absence of financing forecasts represented non-compliance with the Public Finance Management Act's requirement for the Fiscal Strategy Report to include "a summary of the sources of budget financing."

It said disclosure of projected medium-term financing is "a core feature that aligns with the principle of fiscal transparency."

The discrepancy comes as the Government targets a substantial reduction in its debt burden over the medium term.

The Fiscal Strategy Report projects Central Government debt declining from $11.387bn, or 64.6 percent of GDP, at end-FY2025/26 to $10.487bn, or 52.2 percent of GDP, by end-FY2028/29.

The Government ultimately aims to reduce debt to 50 percent of GDP or less by FY2030/31.

However, the FRC said another debt projection in the Government's fiscal documents was also inconsistent.

Its assessment noted that the debt sustainability analysis in FSR 2026 produces medium-term debt projections that are not consistent with the projections provided in the report's medium-term fiscal outlook.

The FRC said the debt sustainability analysis projects debt-to-GDP falling below 50 percent to 49.1 percent by end-FY2028/29 and further to 39.9 percent by end-FY2030/31, but noted that those projections are not consistent with the medium-term fiscal outlook contained in the FSR.

The council nevertheless acknowledged Government's use of sinking-fund contributions as a way of building liquidity buffers to manage refinancing risk.

Government has programmed annual contributions of $46.5m to the sinking fund over the medium term to help meet upcoming debt maturities.

The debt discrepancies come alongside broader concerns about Government obligations.

The FRC's Fiscal Strategy Report assessment identifies Government guarantees, public-private partnerships, State-Owned Enterprises, pension obligations and payment arrears as fiscal risks that could affect the Government's overall position.

Payment arrears, in particular, stood at $241.8m at end-December 2025, compared with $122.4m a year earlier.

The FRC said arrears "can pose a particular risk to the Government if unaccounted for in fiscal forecasts" and recommended that implementation of accrual-based accounting to improve reporting and monitoring be prioritised.

The council's findings leave the Government with a clear need to reconcile its debt projections across the Fiscal Strategy Report, budget financing documents and debt sustainability analysis as it seeks to demonstrate a sustained decline in the country's debt burden.