The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ national debt stood at almost $5.8 billion at end-June 2014, increasing by $131.2 million during the year’s second quarter despite a narrowing of the Government’s fiscal deficit.

The Central Bank of the Bahamas’ quarterly economic review, released yesterday, again emphasised how the Government’s total debt continues to march steadily northwards, becoming ever larger, prior to the implementation of Value-Added Tax (VAT).

The new and increased taxes in the 2013-2014 Budget merely slowed, not halted, the rate of growth in the national debt, with the Government’s contingent liabilities (debt guaranteed on behalf of corporations and agencies) up $33.6 million year-over-year at $638.1 million.

“Government retired $503.3 million of its outstanding liabilities over the [2014 second] quarter,” the Central Bank said.

“Some $366.8 million was used to meet internal Bahamian dollar obligations and $125 million to retire domestic foreign currency commitments relating to a bridging facility.

“Consequent on these developments, the direct charge on the Government grew by 2.7 per cent ($134.5 million) to $5.156 billion over the quarter, and by 9.9 per cent ($466.3 million) compared to the corresponding period of 2013,” it added.

“As a result of these developments, the national debt - inclusive of contingent liabilities - advanced by $131.2 million (2.3 per cent) over the March quarter, and by $499.9 million (9.4 per cent) vis- �-vis the preceding year, to $5.794 billion.”

To finance its 2013-2014 fiscal year, the Government drew on $526 million in domestic borrowing, featuring $139 million in short-term Bahamian dollar loans and advances; $115 million in long-term bonds; $81 million in Treasury bills; and short-term foreign currency loans worth $191 million.

It also ended up borrowing $439 million abroad, including its $300 million US dollar sovereign bond issue and $139.4 million in project-based loans.

“Foreign currency debt service payments grew by 22.6 per cent ($10.3 million) to $55.9 million, in comparison to the same period of 2013, primarily attributed to a 39.9 per cent ($10.6 million) hike in the Government’s component, to $37.1 million, amid the rising stock of outstanding debt,” the Central Bank said.

“Foreign currency debt of the public sector firmed by 2.6 per cent ($59.9 million) over the review quarter, and by 24.3 per cent ($465.4 million) year-on-year to $2.377 billion at end-June, as new drawings of $73.4 million outpaced amortization payments of $13.5 million.

“The Government’s foreign currency debt - which comprised the bulk (65.2 per cent) of the total - increased by 4.1 per cent ($60.5 million) to $1.551 billion, while the public corporations’ portion declined slightly, by 0.1 per cent ($0.6 million) to $826.0 million.”