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Gov’t defends decision to raise debt limit to $4B amid heavy opposition criticism
Amid strong Opposition criticism, the Freundel Stuart Government today sought and got parliamentary approval to raise the country’s debt ceiling to $4 billion, with the Prime Minister making it clear that his administration had no intention of borrowing to the full extent of the ceiling.
However, Stuart, in a stout defence of the move, said there was need for Government to set a realistic limit so that it could carry out its functions without having to make repeated presentations of resolutions before the House.
In his contribution to the debate on the measure, Stuart noted that no Government had ever come before the House to lower the debt limit.
“Governments have always come here to raise the limit, because Governments borrow,” Stuart said, adding that “there is nothing unusual about that”.
He made clear that “the legislation exists because Government needs it and because Governments need to borrow from time to time”.
“The resolution is not about Government wanting to borrow $4 billion. This is a limit beyond which Government cannot go if it wants to borrow.
“We thought that it would be a waste of parliament’s time for this or any other Government, whenever it wants to get money, to be constantly coming to the House, week after week, Tuesday after Tuesday asking to have the limit raised.
“Therefore, [we] put the limit at a level that it would [give] Governments some comfort in the management of the country’s affairs and that would put Governments in a position where they would not be, as it were, riding too close to the edge of the road.
“That is the simple reason why we decided to put the limit at $4 billion that will last for some considerable time and we would not have to be wasting Parliament’s time bringing resolutions after resolutions to raise from $2.5 billion to $2.6 billion.
He insisted that that would be “a waste of time”.
‘We thought a figure as the limit that would give governments all the flexibility they need to deal with the country’s affairs,” Stuart added.
The St Michael South MP, whose Government had come under fire during the debate from Opposition MPs for the move, said it was “a monstrous distortion and a criminal piece of deception” to say that his Government had brought the resolution to borrow $4 billion.
Dismissing the view that the Opposition Barbados Labour Party had more competent persons to run the economy, Stuart argued that he had never seen “Barbados’ economic graph pointing up while those of the USA, the United Kingdom and Canada [were] pointing down”.
Stuart argued that being a service-oriented economy, Barbados economic health hinged on that of the health of the United States, Britain and Canada.
Stuart, an attorney-at-law further argued that there was no magic to the success of former Prime Minister Owen Arthur’s tenure as Minister of Finance since the capitalist world was experiencing a period of sustained growth which he cased in on.
Earlier, the Minister of Finance Chris Sinckler pointed out that no one liked to be in the financial markets borrowing money consistently.
In piloting the resolution to raise the ceiling of borrowing on financial markets Sinckler said: “I want to make that point. We are hoping to grow the economy, and to move our debt to GDP trajectory in the opposite direction to which it is going now.
“In the short term we have to face the realities of what we have to do. Buses have to run, schools have to open, debt has to be paid, defence has to looked after and policing of the country has to be done. Those things have to be done and therefore it would be remiss of any responsible and mature government to see a situation like that and not deal with it in the short term and that is what we are saying in relation to this.
“It is moving to a limit of $4 billion with the understanding that the current outstanding balance of Treasury Bills is $2.298 billion. We are basically increasing the ceiling by $1.25 billion,” Sinckler explained.
The resolution passed late this evening although it was not supported by the Opposition.