PM Douglas Attempts to Explain Resolution to Borrow Half a Billion Dollars

Members of the Opposition in the parliament and citizens generally, have been expressing their disapproval to the resolution, charging that the country cannot afford to increase the heavy burden of the National Debt, (which is already over 3 billion), by another 500 million dollars.

Others have questioned the need for the Government to be seeking to borrow such large sums of money, even though they have recently introduced the Value Added Tax, VAT, which was touted as the financial mechanism to reduce the National Debt. This has caused many to ask if the VAT is not generating enough revenue to meet public expenditure while still servicing the debt.

In response, Prime Minister Douglas has attempted to explain the actions of his Administration, while also accusing opposition parliamentarians of deliberately trying to mislead the public.

“It is either out of ignorance that people make these statements or seeking to have some political mileage, because ignorance can always be clarified with what the facts are, especially when the facts have to do with existing legislation,” said Prime Minister Douglas, who pointed out that the Finance Administration Act 2007, provides for the control and management of public funds, the authorizing of expenditure, the raising of money by Government and the control of the public debt and giving of guarantees by the government for itself or other entities in terms of borrowing.

He said that the legislation was passed in 2007 to ensure that borrowing guarantees were provided for by law.

“Part VIII of the Act provides for Public Debt and guarantees. In section 48 it states that ‘Money shall not be raised on the credit of the Government except under the authority of an Act of Parliament or of a Resolution of the National Assembly’.

That is why several resolutions were brought to this Parliament the last time that we sat,” said Dr. Douglas, who also referred to subsequent sections that outline how short-term borrowing and long term borrowing should be dealt with.

“Section 49 (1) deals with Short Term Borrowing and states ‘The Minister may in a financial year, when authorized by resolution of the National Assembly for the purpose of meeting current requirements, borrow money from a bank, any other financial institution or any other entity by means of advances to an amount not exceeding in aggregate the sum specified in the resolution and 49 (2) states that ‘A Resolution referred to in subsection (1) shall have effect for a period not exceeding twelve months’,” Dr. Douglas said.

He said it means that on an annual basis, the Minister of Finance must come to the National Assembly and request approval for the renewal of the Government’s short term borrowing since these funds continue to be necessary to meet the financing requirements of Government to administer the affairs of our nation.

“So what we did at the previous sitting of the Parliament is what we did last year, because the Act speaks to borrowing, guaranteeing, etc. indicating clearly that it has to be done every year. It does not mean that we are borrowing a half billion dollars as some who are ignorant of the law or the practices, the procedures of Parliament, the procedures of administration, especially financing administration, ignorant of these things going out into the public making false statements,” said Prime Minister Douglas.

“At no stretch of the imagination, Mr. Speaker, were we saying at the last time that we were meeting that the Government was going to National Bank, to borrow EC$350 million to pay for our Treasury Bills because we cannot pay,” said Dr. Douglas.

“These are fluctuating overdrafts, treasury bills, or other similar means. Therefore, since the Government has Treasury Bills and Overdraft facilities that it would like to continue or roll over to use for the operation of the Government annually, the short term Resolution to give the authority to use these instruments must be approved annually by the National Assembly.  Even though the Short term Resolution can be used to increase the limits on short term borrowing, given the Government’s commitment to put debt on a downward trajectory we have not increased the limit for Short term financing over the last three years,” explained Prime Minister Douglas in the National Assembly.

The resolutions were circulated at the February 9th meeting of the National Assembly and passed at the March 17th sitting.

 

 

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