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The House of Representatives yesterday (Jan.30) approved amendments to the Loans Act, to move from $650 billion to $700 billion, the maximum amount of money that can be borrowed by the government.
Finance and Planning, Minister Dr. Omar Davies, who moved the motion, explained that the loan ceiling comprised debt borrowed by the government excluding on the external side, borrowing from the multilateral lending agencies and on the domestic side, treasury bills, land bonds, national saving bonds, and national development bonds.
He noted that those loans were governed by specific pieces of legislation and hence do not relate to the loan ceilings under the Loans Act.
The Finance Minister informed that as at March 31, 2006 the total loan raised under the Act was $623 billion and of the amount, $493.4 billion was used for domestic purposes and $130 billion for external purposes.
Up to September 30, 2006 the amount raised was $645 billion of which domestic debt was $514 billion and external debt was $131.5 billion, he added.
In the meantime, Opposition Spokesman on Finance, Audley Shaw, suggested that the government use the “windfall of the PetroCaribe money as part of the scheme of debt reduction”.
“We believe that if the (PetroCaribe) money is used creatively in the debt reduction programme, this can really lead towards making an important step to not only debt containment, but an important step towards debt reduction,” he stated.
Dr. Davies in responding to Mr. Shaw’s comments, argued that “one has to balance between utilizing it ((PetroCaribe) in a manner like that (facilitating debt reduction) as opposed to utilizing it to foster economic development”.
“Do you seek to pay down your debt.or do you also utilize it to foster an expansion of the economy because the priorities are not just housekeeping, but also in terms of how can you use it to initiate additional activities,” he stated.
The Finance Minister pointed out that funds from the PetroCaribe facility have been loaned to the Port Authority and “we are lending to the Airports Authority, so these funds can be utilized in different ways and we are exercising these options”.
“It is a judgement call as you cannot have this facility and utilize it simply in terms of exchanging debt, because you have to judge whether the use to stimulate additional economic activity in the long run is the better investment,” added Dr. Davies.