I suggest the Minister of Finance issues a full explanation of how this proposed US loan is going to help our finances.
He has stated that the loan will provide relief to the constant pressure our now very scarce supply of foreign exchange is under.
Well, let's look at this carefully. Due to our previous overdependence on petroleum revenues and the associated loss of interest and competitiveness in other forms of economic activity, we now cannot generate enough foreign exchange with current low oil and gas prices, and declining production rates. These low prices are generally forecast to be long-lasting.
Foreign exchange is sorely needed, not only to satisfy our desire to buy expensive cars, boats, TV's, holidays and household fittings, but also for necessities like food, medicine, raw materials, and external debt repayments. By incurring another foreign debt, the regular demand will not disappear. No, the need for foreign exchange will increase, because now we have a new debt to service in US dollars. So, if we didn't have enough to meet total requirements before, how exactly does the minister intend to meet the increased requirements when oil prices stay low and the decline in production rates continue?
It's all rather similar to the Greek economy which must borrow money to make its repayments on existing debt. The Greek economy is generally regarded as a basket case. I am no economist and I must say this case has me rather confused.
Before you go off on your 'roadshow' Mr Minister, please explain the plan.
Reg Potter
Glencoe