|
|
|
|
Last Updated: Jun 22, 2018 - 7:15:46 PM |
 NASSAU, The Bahamas – The 2018-19 Budget is a sincere attempt by the Government of The Bahamas to meet the challenges confronting the nation, Government Leader in the Senate, Attorney General and Minister of Legal Affairs, Senator the Hon. Carl W. Bethel, QC said Wednesday.
Opening Debate on the 2018/2019 Budget in the Senate, Attorney General Bethel said the Budget was “an exercise in enormous fiscal and financial restraint on the one hand. On the other, it is a call to national self-sacrifice and burden-bearing (even at the governmental level).”
Senator Bethel said the country finds itself in its current position based on decades-long practices of successive governments borrowing money to pay off loans and for capital spending for public works, repairs and new buildings.
The debt burden as a result of those practices anywhere from 10-30 years ago is “entirely unsustainable.”
Senator Bethel said as a result: “we are all called upon to make sacrifices and carry heavy burdens” even at the governmental level.
“Truly we are being called upon to do more with less. The chickens have come home to roost. The old model of what is called ‘Deficit Financing’ has reached the point of no return. It must be addressed for the good and welfare of every Bahamian,” Senator Bethel said.
“When money is borrowed, as they say, to ‘roll-over’ debt, it is also being borrowed historically to pay the interest payments due. When money is borrowed for capital works, that is always new borrowing.
“The old rule of thumb was to peg the amount borrowed for capital works close to the amount borrowed to pay the interest payments due on the existing debt load. Successive Ministers of Finance then promised to ‘reduce the rate of increase in the national debt’; read any budget communication going back over the last 25 years and you will see this consistent promise – to decrease the rate at which the national debt increases. Never to decrease the national debt itself, which they knew would continue to inexorably increase. And it has.
“Why has the national debt continued to increase each year? Simply because when you borrow to pay interest payments, then interest (being the cost of the money already borrowed), it becomes money borrowed. It is converted to principal and each year is added to the national debt – roughly $200 million a year until the financial crisis of 2009 and the recent hurricane disasters all of which have put interest payments at $300 million a year, every year, and when borrowed, added more than $300 million a year to the national debt.”
Senator Bethel said borrowing on the Capital Account for public works spending, added roughly $200 million a year to the national debt in the early 2000s to pay for new roads, buildings, repair works to existing roads and buildings, and hurricane relief public works.
“Now we see that the amounts needed for public works each year and post the 2009 financial crisis has risen to $300 million a year. This borrowed $300 million each year is added to the burgeoning national debt.
“And now we have to borrow one billion dollars this year simply to ‘roll-over’ debts that have come due and pay the interest payments owed on money already borrowed. The interest component will be added to the national debt. The ‘rolled-over’ loans will be at a higher rate of interest than before because of the four downgrades under the former Administration, and the debt burden each year will inexorably increase to the point of economic strangulation and collapse, unless we act now.”
© Copyright 2018 by thebahamasweekly.com
Top of Page
|
|
|
|
