JUST UNDER A BILLION MORE: Govt debt expected to surpass $11B in next four years, says MOF

JUST UNDER A BILLION MORE: Govt debt expected to surpass $11B in next four years, says MOF

NASSAU, BAHAMAS — Government debt is expected to hit an estimated $11.5 billion in the next four years, according to the 2021 pre-election fiscal and economic outlook data by the Ministry of Finance.

Government debt for fiscal year 2021/22 is budgeted to be $10.9 billion, according to the report, dated August 27.

It noted that prospective borrowings to meet the projected deficits in fiscal year 2021/22 through fiscal 2024/25 will culminate in the government’s direct charge increasing to an estimated $11,520.2 million or 78.1 percent of gross domestic product by fiscal year 2024/25, which is in line with the 2020 Fiscal Strategy Report’s 2020 projections.

“At end-June 2021, the government’s direct charge stood at an estimated $9,935.3 million, which equated to an estimated 86.3 percent of GDP,” the report noted.

“Of the total debt stock, approximately $5,386.6 million or 54.2 percent was in Bahamian dollars and the balance of $4,548.7 million (45.8 percent) in foreign currency — the bulk of which is in United States dollars.”

The fiscal year 2021/22 Annual Borrowing Plan, released by the government on July 8, 2021, outlined the annual strategy for debt operations within the context of the $1.9 billion aggregate financing requirement approved by Parliament. That debt strategy contemplates sourcing approximately 48.2 percent of the borrowing requirements from the domestic market and the remaining 51.8 percent from foreign currency sources.

The report noted that since July 1, 2021, to date, the government’s fundraising activities against the fiscal year 2021/22 borrowing authorization totaled approximately $187 million. This was comprised of $173 million in 91-day treasury bills, scheduled to be retired out of the proceeds of the prospective international bond issuance; and $14 million by way of new bond issuance.

The government also refinanced $52.3 million in maturing bonds via a combination of new bonds ($18.1 million) and treasury bills ($34.2 million) — activities that do not result in an increase in the outstanding debt.

Contingent liabilities are currently estimated at $420 million, the bulk of which are obligations of the Mortgage Corporation (38 percent), Public Hospitals Authority (16 percent), the Water and Sewerage Corporation (16 percent) and the Educational Loan Authority (11 percent).

The report noted that at the end of July 2021, the government settled $297.7 of the facility established to liquidate $362 million in then-unreported payment arrears identified in fiscal year 2017/18. The remaining liability balance of $64.3 million will continue to be addressed over the medium-term through the budgetary process.