MONITOR IT: Dr Dhanayshar Mahabir
‘Don’t be like Greece’
Senator warns Govt on growing debt
Camille Bethel email@example.com
Independent Senator Dr Dhanayshar Mahabir believes that the country’s increasing debt is a problem that Minister of Finance Larry Howai must realise and take serious steps toward managing for future generations.
Addressing the Senate last Friday night during the 2013-2014 budget debate, Mahabir pointed out that debt must be serviced from the revenue of the State in the future and this growing debt was now a cause for some concern.
“Minister of Finance Larry Howai must assure the Senate and the country as a whole that he is cognizant of this problem...that he has in his mind a target for maximum debt,” said Mahabir.
“Given that we have experienced a period of stagnation and decline for the past five years, when I look at the signs, I can see structurally we may be replicating the experience of 1983 to 1994. The immediate effect of what we have experienced over the past five years is a culmination of deficit financing. We have realised deficits of $7 billion...
“One does not have an issue with deficit financing but we do need as a society...to ask ourselves what is the level of public debt that this Government, that the country find very difficult to hide.
“Is it going to reach a point where we are going to say the level of the public debt is such that it is going to become an onerous obligation to the next generation of taxpayers?
“We do not want to find ourselves in the situation of Portugal, Ireland, Greece and Spain. The citizens were not aware but their governments were quietly accumulating debt until their economies became very fragile,” he said.
Mahabir estimated that this country could have generated at least $30 billion in additional debt.
And if that is added to the $40 billion already known, then it means the current debt stock should be around $70 billion, he said.
“Which appears to be accurate, but then I ask myself where is the CLICO/HCU debt in there. It couldn’t be that the $72 billion in the financial documents is this country’s entire debt. This is in addition to the contingent liability, which I’ve always thought was included in the debt, but the CLICO debt is something which we ought to account for. I cannot see it being included in the current $70 billion and if we were to add CLICO then it would mean our debt stock could easily be around $90 billion.”
Mahabir added that this debt was well in excess of what it was in 2008 and economically the argument was when depressed conditions were being experienced deficit financing would assist in a significant way to solve the problem.
The debt problem, he said, will therefore have to be continuously monitored and he suggested that “the debt monitoring unit in the Ministry of Finance be made very effective so that any citizen should be able to go on the ministry’s website and be able to determine what the true state of our public debt is”.
“We are leaving for the future a certain stock of assets, but at the same time the stock of debt is way in excess of the assets. I think the Minister has to tell us what is his target, not only for the debt stock but what is his target for that Heritage Fund,” Mahabir said.