The Government’s sustained efforts at debt reduction are bearing fruit, with the lowering of debt servicing costs by 30.9 per cent this year, from $325.9 billion to $225.2 billion.
This major reduction has also narrowed the debt as a percentage of the budget from 54 per cent to 43 per cent.
“It is this reduction in the debt servicing costs that has enabled us, even in this difficult year, to allocate badly needed financial resources to social services, and for the protection of the poor and most vulnerable in our society,” said Minister of Finance and Planning, Dr. the Hon. Peter Phillips.
The Finance Minister was opening the 2013/14 Budget Debate in the House of Representatives on Thursday, April 18, under the theme, ‘Restoring Hope-Expanding Opportunity’.
Dr. Phillips said reducing the country’s debt will boost activities in areas critical to nation’s development.
“The need to repay the debt diverts money away from the necessary investments in development. Last fiscal year, debt servicing amounted to $325.9 billion or 54 per cent of the budget. This was, by far, the largest allocation in the budget and it diverted resources from critical sectors such as health, education, road infrastructure, etcetera,” he stated.
He noted further that having a high debt burden reduces a country’s ability to access international capital markets at reasonable rates.
“In the same way that a banker only lends to those assessed with having the ability to repay, similarly a country, which seems unlikely to be able to repay, will not get access to loans… Highly indebted countries are not only denied access to international capital markets, but to local capital markets as well, unless they are willing to pay exorbitant rates of interest,” he noted.
Dr. Phillips noted further that reducing the burden of the public debt is vital “if we are going to enable future generations to realise their dreams and aspirations and to fulfill the vision of the founding fathers and mothers”.
“Unless we do this we will have forfeited the dreams of past and future generations,” he added.
By Chris Patterson, JIS Reporter