Halkitis: No plans to increase level of borrowing

As parliamentarians prepare to debate the supplementary budget in the House of Assembly next week, Minister of Economic Affairs Michael Halkitis assured yesterday that there is no plan for an increase in the level of borrowing.

The Minnis administration budgeted nearly $1 billion of borrowing during this fiscal year, pushing the national debt closer to $11 billion.

“Public debt levels in The Bahamas have increased from 61 percent in 2018/2019 to over 100 percent currently. This has had a negative impact on our credit rating and the nation’s sovereign debt rating. What this means simply is that our borrowing costs have increased and this diverts government funds from other programs that are very important to servicing the debt, so it is important that we get on top of this budget. It is important to state that in the supplementary budget the government has no plans to increase the level of borrowing in the May 2021 budget. Our principal concern is stabilizing finances,” Halkitis said while addressing the Long Island Business Outlook, held virtually yesterday.

Although the new Davis administration has put off going to international markets for now, aiming to primarily raise funds on the domestic market, Halkitis earlier this week said the government hasn’t ruled out going to the international markets at some point this fiscal year.

“When coming to office we looked at a proposal to go to the international bond market to raise some money. We felt that in terms of timing it would be more prudent for us as a new administration to have an opportunity to put our stamp on the economy and the fiscal position and to begin to do the reforms that we spoke of, so that we can have some early wins and some early results, so that when we go to the international markets we can have a good story to tell and be able to point to some results,” he said.

“So from that perspective, our view is as best we can, we shift some of the foreign currency borrowing – particularly when talking about going to the international bond markets later on into the budget year – and use this intervening time to put our stamp on the economy, to begin to get some results.”

Bahamas Power and Light (BPL) was seeking to raise more than $530 million on the international markets to finance infrastructural upgrades and pay down legacy debt. Prime Minister Philip Brave Davis said last month that if the bond was placed as intended, it would cost Bahamian taxpayers $20 million.

Speaking to foreign borrowing, Halkitis said, “We are cognizant, we know that our actions are being judged and rated by investors, but we are in a bit of a unique situation… We want to manage the costs, we see how the bonds are trading and we want the markets to settle a bit before we attempt to go back to the international market.”

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