By Balford Henry, Senior Reporter
MINISTER OF Finance and Planning, Dr. Omar Davies, yesterday indicated a mixture of tight fiscal management and reduced domestic borrowing to control Government debt during 2001/2002.
Dr. Davies said a major policy of the programme of containment and management of the heavy debt burden would be interest rate reduction by containing government borrowing. Government's borrowing this year will be concentrated in the international capital market, to simultaneously reduce the cost of some of the funds as well as its presence in the domestic capital market, he said.
He warned tight fiscal management would be the centrepiece of the programme.
The Minister was responding to questions raised by Opposition Spokesman on Finance, Audley Shaw, during yesterday's meeting of the Standing Finance Commi-ttee of the House of Represent-atives. He told the Opposition spokesman that the concentration on foreign borrowing would be followed, even mindful of the impact it would have on the exchange rate.
Asked by Mr. Shaw to reveal the interest rates assumptions of the 2001/2002 budget, Dr. Davies said he would indicate the ranges when he opened his budget presentation on April 11, as that was more applicable to the issue of the financing of the budget.
Dr. Davies admitted, however, that the interest rate target figure would be below 16 per cent, although he refused to say whether they would be significantly or insignificantly below.
He also admitted provisions in the budget for contingencies, which normally finance salaries agreements reached between the Government and its workers after the budget has been tabled, were well below normal allocations. But, he reassured public sector workers that whatever agreements were reached, would be met on a phased basis.
The 2001/2002 budget has a provision for contingencies of only $200 million, compared to $2.65 billion in 2000/2001. This is in spite of the fact that pay disputes with teachers, civil servants and several other sectors of the service remain unresolved.
Minister of State for Industry, Commerce and Technology, Colin Campbell, asked whether it meant the Ministries would have to absorb the increases from their own resources.
Dr. Davies said the only settlement which had been totally completed was that of the police and provisions were made in the estimates of the Ministry of National Security and Justice to meet those payments. He said the Ministry of Finance and Planning's Establishments Division would alert the ministry of any new settlement to be dealt with. But, he warned settlements would have to be on a phased basis.
He suggested either the new rates or the retroactive payments would have to be delayed: "Part of the settlement will have to be phased, in terms of their payments, and there are two parts to the payment: one is the new rates and the other is the back pay," he said.
Dr. Davies tried to assure the junior minister that the system would work, but Mr. Campbell insisted that he had never seen a budget with such limited resources to meet pay increases in the public sector.
Responding to a question from Opposition Spokesman on Industry and Commerce Karl Samuda as to whether he had given any consideration to forming an entirely new entity to participate in handling FINSAC's bad debt portfolio, Dr. Davies admitted there were proposals to that effect.
"There are proposals which, I am told, would be along those lines. (But) to the extent that these suggestions are being advanced one can't expect, at the same time, suggestions for additional expenditure. Every dollar not collected is a dollar we can't spend or a dollar taken away from this budget. I think the country, as well as Honourable Members here will have to face that reality," he said.
The Standing Finance Committee also dealt with the Ministries of National Security and Justice and Tourism and Sport. It will resume this morning at 10 when Ministries such as Foreign Affairs and Labour and Social Security will be tackled.
