11-point plan to reduce National Debt unveiled
By VonDez Phipps
Reporter-SKNVibes.com
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Hon. Dr. Timothy Harris
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BASSETERRE, St. Kitts – During his first Budget presentation, Minister of Finance, Industry, Commerce and Consumer Affairs Hon. Dr. Timothy Harris outlined his government’s plans to reduce the public sector debt, which has reached what he has described to be “an unprecedented high”.
Over the last year, there was a 2 percent increase in the national debt raising the figure to EC$2.43 billion. Twenty-two percent was attributed to Public Corporations, 67 percent to the Central government, and 11 percent to the Nevis Island Administration.
Although the debt to GDP ratio has declined to 177.4 percent of GDP, Harris declared that “this level of indebtedness does not provide us with the fiscal policy space that we would like or the agility to manoeuvre in times of turmoil”. He said the magnitude of the National Debt remains a “serious constraining factor” on the nation’s fiscal response.
“We intend to give debt reduction the highest sustained attention. We still must travel a long and challenging road to bring the Public Debt to acceptable levels. Hence, we are intensifying our efforts to reduce the debt and grow the economy at a sustained high level. In particular, we have obtained the assistance of the Government of Canada to partner with our Government to procure the services of a debt advisory firm to assist us in the formulation of an even more detailed plan to address the debt situation.
“Some elements of the Debt Management Strategy that Cabinet has approved and that will be followed in the short-term include refocusing the Fiscal Stabilization Program to concentrate on Debt Reduction and improving the expertise available to the Debt Unit. These would involve greater participation of the Debt Unit in analysis of the debt. ~~Adz:Right~~
“[We shall] reduce expenditure through measures such as a rationalization of public sector employment to generate savings on the wage bill. [We will also] reduce short-term interest rates and utilize the Regional Government Securities Market (RGSM) to issue Treasury Bills. There must also be concerted efforts to transform the economy and maintain a growth rate of 3 to 4%.”
Dr. Harris added that there must be a definite commitment on land sales and other strategic privatization to amount to EC$50 million to EC$100 million per year, and stressed the need for greater prioritization and increased vigilance in the management of Capital Projects. He further stated that his government will be committed to expenditure control, improved efficiency and productivity and elimination of waste in government ministries and departments, and will attempt to implement Tax Reform Measures including further consultation and a decision on VAT implementation.
Other focal points included seeking further assistance in putting a policy framework in place to achieve the goals of the Debt Strategy and encouraging the “buy-in” by the Nevis Island Administration to the Federal Government’s Debt Strategy.
Harris made it clear that his government is confident that the implementation of the plan, when finalized, will see an even more rapid reduction in the Public Debt.
