By Omar Anderson, Gleaner Writer
Golding wants constitutionally binding cap on public debt. - Rudolph Brown/Staff Photographer
THE PUBLIC debt is likely to reach $1 trillion by 2006, according to Bruce Golding, Opposition Senator.
He made the charge in the Senate yesterday where a Bill was passed to enable the Government to legally borrow up to $650 billion.
"At the rate at which the debt is increasing by December 2006 the public debt of Jamaica will exceed $1 trillion," Mr. Golding projected.
According to him, based on the current public debt, an unborn child at the Victoria Jubilee Hospital has already been saddled with a $260,000 debt commitment.
The Opposition Senator proposed the implementation of an entrenched constitutional provision to cap the national debt. He also renewed calls for the decentralisation of the central bank which has responsibility for monetary policies.
Mr. Golding said the Govern-ment's frequent amending of the Loan Act to increase the borrowing ceiling was like a borrower "determining and approving his own overdraft." He also questioned the Government's effectiveness for periodically moving the "goal post."
The Bill, entitled An Act to Amend the Loan Act, 1964, was ratified with Opposition members refusing to vote. The Act was last amended in 2002 to raise the ceiling to $400 billion.
In introducing the Bill, Senate Leader Burchell Whiteman said while Govern-ment is seeking to reduce its dependence on borrowing, the Bill would increase the ceiling allowing the present administration to function legally in accordance with its needs.
But, Mr. Golding criticised the Government for "routinely borrowing" and increasing the public debt which, he said, stood at $681 billion as at January, this year. He noted that without the amendment to the Loan Act, the public debt could still be increased as there were some 13 other legislations through which the Government could borrow money.
He spoke to the consequences of the Government's actions: "Excessive borrowing has some implications for the country; it's imposing a mortgage on our future."
"The ability to borrow at will not only threatens the economy, but the future of the country," he added.
According to Mr. Golding, when the Loan Act was enacted in 1964, the public debt was £25 million, which was shortly increased to £75 million. By the late 1960s, the debt ceiling had moved to $150 million. During the 1970s, the ceiling was increased to $3 billion, then to almost $16 billion in the 1980s. In the 1990s the debt ceiling was increased to $170 billion, then to $400 billion in 2002.
MANAGEMENT MARKERS
Mr. Golding asserted that there were three indicators which went to the heart of proper economic management. These are the control of the country's fiscal deficit, inflation and the exchange rate.
In rebutting some of Mr. Golding's arguments, Mr. Whiteman said it was always a "balancing act" to keep interest rates, exchange rates, and inflation at optimum levels. He added that many developing and developed countries had used debt as an instrument for growth and development.
"In Jamaica, you can point to a great deal of what debt has purchased and provided by way of infrastructure and facilities on which you can construct a platform for growth," he stated.
Mr. Whiteman said it was not entirely true there was no control over Government's ability to borrow, as lenders usually assess countries' macroeconomic reality to borrow and repay.
