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Raising public debt ceiling spells danger for future and current generations – Ex-Finance Minister
Former Finance Minister, Winston Jordan.
Kaieteur News – Following the tabling of two orders yesterday in the National Assembly by Senior Minister with responsibility for Finance, Dr. Ashni Singh to raise the debt ceiling for domestic and external debt by $500 billion and $650 billion respectively, several members within the political opposition have expressed great concern about the implications of this decision for the nation’s taxpayers.
During an invited comment yesterday with Kaieteur News, former Finance Minister, Winston Jordan, was keen to note that the raising of the debt ceiling essentially spells danger for the current and future generations who would be made to service the ballooning debt.
Jordan recalled that the reasoning proffered by Dr. Singh for the raising of the domestic debt ceiling was to remedy the existence of a large Consolidated Fund overdraft at the Bank of Guyana which accumulated over the last five years. Dr. Singh had also said that the increase of the external debt ceiling is to accommodate the existing level of external debt contracted, plus anticipated new borrowing to fund the government’s development agenda.
Jordan was quick to note however that this is simply an attempt by the Senior Minister to pull the proverbial wool over the eyes of the discerning public since the evidence will show that over the last five years, the APNU+AFC regime had only racked up a deficit of $92B. In contrast to the PPP/C, Jordan said that it has racked up the same amount for 2020 alone.
The former Finance Minister said, “…The deficit for 2020 under PPP was projected at $75B before they went to the Parliament on December 28, last, to extract another $17B. So if you assume that they collected all the revenues, which they claim they collected in 2020 and they spent all the money they claimed they did, then in one year, their deficit in 2020 is equivalent to the accumulated deficit of the APNU+ADFC regime in five years…”
Jordan added, “…So his attempt to deflect won’t hold. What you are seeing is a clear mismanagement of the nation’s resources in a short space of time relative to the former regime.”
Further to this, Jordan said that the PPP/C is constantly in the habit of saying that the APNU+AFC had a proclivity for overtaxing the nation and spending. Jordan said that while this continues to be one of the ‘erroneous mantras’ that it has an affinity for repeating, the PPP has now replaced it with a love for borrowing and spending. He warned once more that this approach will leave a huge burden on current and future generations.
The former Minister said, “The PPP will essentially be expanding and borrowing massively instead of putting in quality domestic policies that would negate the need for such type of borrowing. In the 2020 budget, for example, a range of tax collecting measures were removed and as a result of doing that, the deficit ballooned.”
He continued, “So what we ended up with is the worst deficit this country has ever seen in its history in a single year. What kind of policy is that? Is that sound macroeconomic policy? …”
Jordan also bemoaned the fact that the PPP/C continues to criticize the Natural Resource Fund and its governing legislation while the account which is being held at the Federal Resource Bank in New York continues to collect millions of dollars from the sale of the nation’s oil. Instead of making use of this money, Jordan said that Guyana’s new government has taken the decision to “borrow like there is no tomorrow, like we are drunken sailors.”
At the end of the day, the economist said that the raising of the debt ceiling is without question, a frightening development, especially at a time when one would have expected that part of the new oil bounty would not only negate the need for new borrowing but retire some of the existing debt. “…It is as if we have taken one step forward and 10 steps backward,” the former Minister concluded.
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