Ani­ka Gumbs-San­di­ford

This is the warn­ing be­ing sound­ed by econ­o­mist Dhanesh­war Ma­habir who said Fi­nance Min­is­ter Win­ston Dook­er­an failed to cap the es­ca­lat­ing debt in his 2010/2011 bud­get pack­age. Ma­habir said while the coun­try rev­enue ex­ceed­ed ex­pec­ta­tions, gov­ern­ment moves to in­crease ex­pen­di­ture could pose a chal­lenge. "His col­lec­tion rate im­proved giv­en that some $41 bil­lion was col­lect­ed, how­ev­er, he has in­creased the lev­el of ex­pen­di­ture and un­less he is able to fill this gap he would have to make some ad­just­ments for the next bud­get. The min­is­ter would have to come to a bal­ance very soon giv­en that he can­not con­tin­ue bor­row­ing for the next five years, es­ca­lat­ing the lev­el of pub­lic debt and ty­ing his own hands with out­stand­ing in­ter­est pay­ments."

Debt trap loom­ing

From all in­di­ca­tions Ma­habir said the red flags were up and Dook­er­an needs to tread cau­tious­ly. "He is not look­ing at the debt trap. The debt trap is go­ing to oc­cur when he has to pay so much in­ter­est on that debt and the bulk of his tax rev­enues would sim­ply go to debt ser­vic­ing and very lit­tle would be avail­able for the es­sen­tial needs he would want to sat­is­fy the pop­u­la­tion. He is not as cau­tious of the pub­lic debt as he ought to be. He needs to give him­self a tar­get of the amount of tax rev­enues he would like to see al­lo­cat­ed to the pub­lic debt."

Cut back spend­ing

Re­it­er­at­ing that the coun­try's debt is at its lim­it, Ma­habir said Dook­er­an need­ed to seal the cap now. "The min­is­ter has reached the lim­it of debt and needs to cap it now giv­en that 10 per cent of gov­ern­ment rev­enue is al­lo­cat­ed to in­ter­est pay­ments. He has to be cau­tious with re­spect to bor­row­ing over the next three years. If in fact the econ­o­my stag­nates, even though he pro­vid­ed ma­jor con­ces­sions to oil com­pa­nies, he must be mind­ful that con­ces­sions do not cre­ate out­put, it is the wells. The min­is­ter has to take cog­nizance of the fact that the lev­el of spend­ing for fis­cal 2011 may not be sus­tain­able. He has to be look­ing at economies and ef­fi­cien­cies and ar­eas which he would want to scale back and ar­eas he may want to pro­vide some kind of ra­tio­nal­i­sa­tion for." (AGS)