The Tribune

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net THE Government's "extraordinary borrowing" of $1.3 billion in the last four-and-a-half years was essential to mitigating the recession's impact on the Bahamian economy, the minister of state for finance has argued. Zhivargo Laing, who was a panellist at a Economic Resiliency Forum at the College of the Bahamas (COB), said claims the Ingraham administration had borrowed $2 billion wer not true, pointing to $1.3-plus billion as the true figure. Mr Laing said: "It is untrue that the Bahamas borrowed $2 billion over last four-and-a-half years. The number was $1.3-plus billion. "Between 1992-2002, the country borrowed $700 million. Between 2002 -2007, the country borrowed $800 million. In the extraordinary circumstances of the last four-and-a-half years, in order to sustain a standard of living to support an economy that had been severely impacted by the global economic crisis, and to support a significant number of Bahamians who had been dislocated and dislodged, we did extraordinary boirowing, no question about it." Addressing downgrades by credit rating agencies such as Moody's and Standard and Poor's, Mr Laing said: "They have their own methodology and they have their assessments to make. What is important for the Bahamas is to continue to look at its circumstances and make those policy choices that protect its fiscal house and economy for itself. "How others evaluate you is important, but it is also important to take account of your own circumstances and try to act as prudently as you can." He added: "You cannot control how others judge you. We think about their judgment, because the persons from whom we borrow think about their judgment. Most of our borrowing is domestic borrowing. We have a very low rate of borrowing from foreign institutions compared to any other places in the region. What we have to be focused on is doing prudent things." PLP Senator Michael Halkitis said he was a proponent of a balanced Budget amendment. He added: "I am a believer in moving towards a balanced budget amendment. I think we need to be able to say, going forward, when we are spending money where exactly we are getting this money from. I think that is something we definitely need to look at and, if we will be running deficits, I am a proponent of - and am in agreement with - the recent changes in the legislation where, if we are running a deficit, we also tell the public we are running a deficit. This is how we propose to eliminate it over the next few years." Dr Olivia Saunders, economist and associate professor at COB's School of Business, said: "The fact that we have been downgraded makes our ability to borrow from abroad more expensive. That is not necessarily a bad thing; it means we have to be more prudent in how we manage our affairs as opposed to getting cheaper credit. "But, at the same time, I am wondering why we are paying so much attention to Moodys and S&P. These are two organisations that thought that all those banks in the US were A+++. Most other institutions who made those kinds of boo boos would be out of business. Our thing is for us to concentrate on what we can do to manage our fiscal situation."