More than $430 million spent on debt servicing in first quarter

It cost the government $434.2 million to service central government debt in the first quarter of this fiscal year, according to the first ever public debt statistical bulletin, which was recently published.

It is the first time a complete accounting of government’s borrowing and debt has been made available for public consumption.

At the end of the first quarter the national debt stood at $10.08 billion.

Of the $434.2 million repaid so far this fiscal year, $61.2 million was in foreign currency, of which $36 million was principal payments and $24.7 million was interest.

The remaining $373 million was repaid in domestic currency, of which $306.3 was principal payments and $66.7 million was interest.

At the end of September, external debt stood at $4.35 billion and internal debt stood at $5.73 billion.

However, according to the document, $1.986 billion in internal debt is expected to come due between October 2021 and June 2022.

The Ministry of Finance stated it intends to “smooth out” those maturity levels through liability management initiatives.

“The distribution of public debt forecasted redemptions through 2032 continue to highlight the large portfolio of domestic bonds in the portfolio. The redemption profile is well distributed from 2023 to 2032, although there is a spike in domestic debt in 2023 and in external repayments in 2024 and again between 2027 and 2032, in line with the maturity of various international bond issues. The government intends to smooth out these through appropriate liability management initiatives,” the bulletin states.

The bulk of domestic debt, 80 percent, was held by commercial banks and the private sector at $2.44 billion and $2.25 billion respectively.

“The government’s debt held by the public corporations of $578.6 million represented 10.1 percent of the total, and the $422.6 million (7.4 percent of the domestic debt) due to the Central Bank was unchanged from the end-June 2021, although seven percent higher than the end-September 2020 position,” the Ministry of Finance revealed.

On the external side, participants in the government’s international bond issuances held the bulk of the debt stock, at $2.47 million.

“This was followed by multilaterals with $1,129.3 million (25.9 percent). Next were financial institutions, with $683.0 million in loans (15.7 percent) and bilateral creditors, at $65.2 million (1.5 percent). Of the $1,129.3 million in loans from the multilateral institutions, the share distribution was dominated by the IDB (57.6 percent), followed by the IMF (22.8 percent), the World Bank (8.9 percent) and the CDB (10.7 percent). The single bilateral loan facility at $65.2 million or (1.4 percent) was from the Export-Import Bank of China,” the Ministry of Finance stated.

The Minnis administration passed the Public Debt Management Act, 2021 in March this year, which mandates that the Ministry of Finance prepare and publish public debt statistical bulletins, no later than thirty calendar days after the end of each quarter of the fiscal year.

“Dissemination of timely, consistent, comprehensive, reliable and internationally comparable public debt statistics represents a key element of the government’s commitment to promote accountability and transparency in debt management activities,” the ministry noted in a statement.

“It also contributes to informed decision making of domestic policy makers for sustainable macroeconomic growth, and is an invaluable source of information for international organizations, investors and other stakeholders who have an interest in the management of public debt in The Bahamas.”

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