Jan 08 - GSD Says Chief Minister's Explanation Of Change To Public Borrowing Bill Is "Woefully Inadequate"
The Opposition responded to the Chief Minister’s explanation of the bill to amend the Public Finance Borrowing Powers Act, describing it as “woefully inadequate”.
At a press conference held at GSD headquarters yesterday, the Leader of the Opposition Daniel Feetham accuses the Government of either “redefining the formula for how they calculate the debt ceiling” before the General Elections or that something has happened after the elections that has necessitated this amendment to be introduced on the 24th December.
Mr Feetham adds: “If it’s the second, then it’s serious and the Government should come clean as to what has happened.”
The GSD says there was no GSLP-Liberal Alliance manifesto commitment to increase the legal net debt limits, and points out that in their manifesto, it says they are comfortably within the current legal limit of £457million.
Roy Clinton, shadow MP with responsibility for public finances, points out that in June 2015, net debt was already at £418million.
He also points out that the increase in public borrowing from £200million to £300million, has no practical effect on the debt limit which is set at 80% of Prior Year Recurrent Revenue which will be £457million.
He highlights that the proposed amendment would set the net debt limit at £657million, which is 40% of GDP, which would allow the Government to borrow an additional £200million.
The GSD said that relying on GDP alone risks the economy being self-feeding as debt could increase GDP, and recommends the use of recurrent revenue as a better measure of ability to repay debt.
In an interview held with GBC, the Chief Minister Fabian Picardo said this Bill would make the borrowing arrangement more in keeping with international criteria and makes borrowing more manageable.
Mr Picardo said he was surprised at that the Opposition challenged the amendment to the Bill without it being discussed in Parliament, and adds that there have been no fluctuations in income in recent months.
The Government, Mr Picardo stressed, is on course to meet the GSLP-Liberal Alliance manifesto target of £300million in net debt, adding that net debt will be £314million at the end of this financial year.
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