The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Governor yesterday confirmed the Government remains compliant with legal limits on how much it can borrow from the Central Bank despite Opposition concerns this debt has risen by $500m in two years.

John Rolle, responding to Tribune Business inquiries via text message, wrote: “The Government is within its statutory limits on borrowing from the Central Bank.” These limits were revised just last year to curtail the Government’s borrowing from the banking regulator by capping it at no more than 15.5 percent of the former’s “average” or “estimated ordinary revenue” - whichever is greater.

However, Michael Pintard, the Opposition’s leader, yesterday affirmed that it plans to check whether the Government is compliant with the legal limits on the advances it can obtain from the Central Bank. This comes after Tribune Business revealed a sharp $158.9m in net government borrowings from the Central Bank during the 2024-2025 first quarter, based on a Ministry of Finance report.

“I note with concern the public debt trajectory outlined in both the most recent Central Bank September 2024 monthly economic and financial developments summary report, and the Government’s public debt statistical bulletin for the first quarter, 2024,” the Marco City MP said.

“In the first quarter of the fiscal year, the central government’s overall debt has increased by over $300m in three short months. Just as concerning, over that same period, the Government has increased its net debt position with the Central Bank by over $100m.

“The amended Central Bank Act of 2023 purposely limits how much the central government can borrow from the Central Bank, given the potential negative fiscal consequences that follows any government borrowing too heavily from its central bank by any government,” Mr Pintard continued. 

“The Opposition is duly concerned and, as such, we are making inquiries to the necessary authorities to ensure that the Government is not at or over its statutory limit of outstanding debt to the Central Bank. We note also that by the Government’s own reports, the central government’s indebtedness to the Central Bank has grown by more than $500m since June 2022.”

The Ministry of Finance report said that “among domestic creditors, liabilities to the Central Bank advanced by $118.6m (13.6 percent) for a dominant 1.4 percentage point boost in share to 15.3 percent” of total outstanding domestic or Bahamian dollar debt owed by the Government.

Kwasi Thompson, the Opposition’s finance spokesman, yesterday confirmed that the FNM has written to the Central Bank for clarification on whether the debt limits set out in the Central Bank of The Bahamas Act are being complied with. “That is a question that we have raised with the Central Bank,” he said. “Obviously, the Government has put in place limits on how much they are able to borrow from the Central Bank.

“We’ve asked for confirmation on this now. The leader of the Opposition has asked the Governor of the Central Bank for confirmation on this point. This is not one where we jump to a conclusion. We have already made the request for the Central Bank to confirm whether the borrowing that the Government has made is in excess of the law.

“What is particularly troubling is that the Government has [since June 2022] increased its net advances from the Central Bank by almost $500m, including another $100m plus in borrowing just over the last few months. Do these amounts fall within the Central Bank borrowing limits that the Davis administration set in the law? Further, why no mention of this planned loan from the Central Bank in its annual borrowing plan?”

Mr Thompson also questioned whether the 2024-2025 first quarter borrowings, headlined by the $216.2m extension of credit on an existing Deutsche Bank facility and $100m loan from the Royal Bank of Canada (RBC), are in line with the Government’s annual borrowing plan released back in early June. This called for $360m and $100m in external and local bank borrowings and loans, respectively.

And the Marco City MP also argued that the Bahamian people are not receiving any relief from still-high living costs via the Government’s increased spending and greater debt, the latter of which increased by $342.5m during the three months to end-September 2024.

“We are concerned about the spending trends of the Government, particularly in light of the high cost of living,” he said, seemingly seeking to capitalise on the Prime Minister’s recent comments on the issue. “We don’t want to lose sight of what’s happening in The Bahamas to ordinary families.

“The increase with respect to debt-to-GDP. Again, it reflects poor choices by the Government. We want to impress upon the Government to make the relevant choices that bring down the high cost of living for Bahamians. The unfortunate part is that the spending continues to rise, the debt continues to rise, but the cost of living for ordinary Bahamians remains high.

“That’s the troubling part. The Government continues to spend, but their spending has no effect on bringing down the cost of living.... It is a tragedy that the debt continues to rise and the spending does not assist the ordinary Bahamian with the high cost of living.”