The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A former minister of state for finance yesterday said he expects the near-$2.3bn in Bahamian dollar debt, which is due for repayment over the next 18 months, to be rolled over without any alarm.

Zhivargo Laing, who held that post during the 2007-2012 Ingraham administration, told Tribune Business it was not unusual for such a significant amount of debt to become due within a compressed time period.

“If you negotiate the loan, you would have known that it would come due at that point, and the standard has been for the lenders to roll over that debt as a matter of routine,” he said. Mr Laing added that there had been no indication that the Government’s domestic creditors, including the commercial banks, insurance firms, pension and investment funds, and credit unions, have any objections to or concerns over such a refinancing.

He reiterated: “There is nothing unusual about debt to that order coming due when you negotiated it. So it can’t be a surprise, and it can’t be a surprise to the lenders, because they all would have done their due diligence and have known as a matter of public information what the Government took out as loans to themselves and others.”

Mr Laing said a “substantial” part of the Government’s domestic debt is owed to the National Insurance Board (NIB), which it controls, adding: “One of the things people have to recognise is that on the other side of every government debt is an asset of a company earning income for their own selves for that debt.

“You have to ask yourself the question: Are those companies saying we no longer want, or believe we can and should be investing to earn that income, if they are pension funds and the NIB. Where else would they find an alternative to that investment that is safe and lucrative, in the sense of earning interest?”

The Ministry of Finance, in its public sector debt bulletin for the nine months to end-March 2022, said of its debt portfolio: “The average time to maturity (ATM) was 6.8 years at end-March 2022. An average 23 percent of the portfolio was coming due in one year, given the impact of the short-term nature of Treasury bills and notes, which extended the percentage of the domestic debt maturing in one year to a high of 35.5 percent.”

Mr Laing added: “A government cannot by virtue of its Budget, or even its own behaviour, create any new industry or prompt it along. Industry building is an entrepreneurial exercise. Entrepreneurs create businesses and create new industry. Governments can only facilitate them by having laws that encourage, or ensuring there are no processes, procedures or laws that impede.”