Borrowing Ceiling Raised to $700 Billion

A Bill to amend the Loan Act, which will increase the government’s borrowing ceiling from $650 billion to $700 billion, was passed in the Senate on Friday, March 2.
Leader of Government Business in the Senate, A.J. Nicholson in piloting the Bill, pointed out that this amendment was designed to “facilitate government’s programmed borrowings over the medium term, and to allow for the increases in the (debt) stock, as a result of the capitalization of interest costs accrued on debt securities issued by the Bank of Jamaica, for FINSAC related operations and obligations”. Senator Nicholson, who is also Attorney General and Minister of Justice, noted that as of March 31, 2006 the total loan raised under the Act was $623.63 billion. This amount comprised of $493.376 billion on the domestic side and $130.252 on the external side. “At September 30, the amount raised was $645.818 billion, comprising domestic debt of $514.333 billion and $131.486 billion on the external side,” he added.
Opposition Senator, Christopher Tufton said that while the Opposition was not opposed to the concept of borrowing, he urged the Senate to examine the tangible benefits that ordinary Jamaicans have derived from the government’s increased borrowing over the years.
“The government needs to send the people of Jamaica a signal that there is going to be a relationship between the borrowing and the returns to the Jamaican people, so that people can at least be comforted that over time, they are going to see benefits from government’s borrowing,” he said.
Responding to the concern raised by Senator Tufton, Government Senator, Trevor Munroe pointed to the Jamaica Social Investment Fund (JSIF), as one of the programmes that have benefited from government’s borrowing.
He added that the ninth annual report of the JSIF showed that at the community level, many persons have benefited from numerous projects and programmes, including the Early Childhood Centre for children with disabilities and for rehabilitation, in Spanish Town, St. Catherine; the Anchovy Primary School fencing project in St. James; construction of the Buff Bay Baptist Basic School in Portland; and the Central Village Health Centre rehabilitation and expansion project, among others.
The Loan Act of 1964 constitutes the legal basis for borrowings to finance government’s expenditure programmes. It confers on the Minister of Finance the power to raise, by loan, a sum not exceeding the figure stipulated in the Act and its subsequent amendments.