Rambachan: Reckless borrowing by Government

In a release, Rambachan referred to a recent $1 billion bond issue which, he said, was borrowed to finance recurrent expenditure.

Rambachan said this shows the Government has no clear strategy as to how to manage the current economic and financial situation facing the country.

“The increasing levels of borrowing to finance recurrent expenditure on the premise that the country will, in the future, earn enough to pay these debts is a dangerous high-risk strategy which places the future of the country and the prosperity of citizens in serious jeopardy,” he argued. Rambachan also claimed the ruling People’s National Movement (PNM) has done nothing since assuming office in September 2015 to reassure the population that, “ earnings in the future, outside of oil and gas, are going to be increased, not even in tourism, which has been showing substantial declines in Tobago.” According to Rambachan, “ Every economist will tell you that borrowing medium to long-term to pay off recurrent expenditure is a strategy fraught with risks since money used to repay recurrent expenditure do not earn money like money invested in capital assets which have long-term earnings potential.” He warned that financial management strategies, which rely on increased borrowings, do several things including pushing the debt to GDP (Gross Domestic Product) into the critical area about 65 percent and “driving us even closer to the dreaded IMF (International Monetary Fund).” Rambachan also warned the risk of devaluation, “is now real,” there are prospects for more unemployment and a threat of social instability in the country. He declared, “The Government itself has become like a vehicle which has ‘shut TABAQUITE MP Dr Surujrattan Rambachan yesterday accused Government of “throwing caution to the wind” by engaging in, what he described as, reckless borrowing.

In a release, Rambachan referred to a recent $1 billion bond issue which, he said, was borrowed to finance recurrent expenditure.

Rambachan said this shows the Government has no clear strategy as to how to manage the current economic and financial situation facing the country.

“The increasing levels of borrowing to finance recurrent expenditure on the premise that the country will, in the future, earn enough to pay these debts is a dangerous high-risk strategy which places the future of the country and the prosperity of citizens in serious jeopardy,” he argued. Rambachan also claimed the ruling People’s National Movement (PNM) has done nothing since assuming office in September 2015 to reassure the population that, “ earnings in the future, outside of oil and gas, are going to be increased, not even in tourism, which has been showing substantial declines in Tobago.” According to Rambachan, “ Every economist will tell you that borrowing medium to long-term to pay off recurrent expenditure is a strategy fraught with risks since money used to repay recurrent expenditure do not earn money like money invested in capital assets which have long-term earnings potential.” He warned that financial management strategies, which rely on increased borrowings, do several things including pushing the debt to GDP (Gross Domestic Product) into the critical area about 65 percent and “driving us even closer to the dreaded IMF (International Monetary Fund).” Rambachan also warned the risk of devaluation, “is now real,” there are prospects for more unemployment and a threat of social instability in the country. He declared, “The Government itself has become like a vehicle which has ‘shut down’ with the driver and occupants waiting for someone to come and give it a push.”