Although the government projects a planned budget surplus of $25 million in the upcoming fiscal year which starts July 1, it expects to borrow $190 million, Minister of State for Finance Zhivargo Laing explained as he led off debate on the 2007/2008 budget in the House of Assembly on Tuesday afternoon.

Link To Original Article (http://www.jonesbahamas.com/?c=45&a=12856)

why we need to borrow, Please help me understand this.Anyone

why we need to borrow, Please help me understand this.Anyone

if you read the entire article and not just the headlines you will understand why.

why we need to borrow, Please help me understand this.Anyone

Borrowing is nothing new for the government. I'm no economist or finance person, but here is what I gathered from there explanation.

Recurrent revenue is expected to be $1,490,000,000 , recurrent expenditure is projected to be $1,464,000,000, therefore, tax dollars and govt fees generates is expected to cover recurring expenses for the government like salaries.

Capital expenditure is $224,000,000. Capital revenue is only $10,000,000. Therefore, the difference is being paid for by borrowing $190,000,000 (190 mill and not 214 mil because there is a surplus from recurrent revenue left over)

This is about $38,424,820 less than what was borrowed last year.

Figures may be slightly off due to rounding.

why we need to borrow, Please help me understand this. Anyone

That is what the FNM and the Master Financial Economic Mismanager of the century, Hubert Ingraham, the Bay Street and Abaco Lackey does best. Borrow money and Plunge the Nation into greater and greater foreign debt.
He did it first in 1992 when he sent our little country fiscal house spiraling downward into massive external borrowings for the first time in its history.
With his then x Sear Roebuck credit application taker, and and possible US informant good guy the lil nation was plunged into its first big external debt. This bit of voodoo economics was heralded as a major accomplishment. Today it has mushroomed to the now deliberatly underreported US$190 millions dollars but adjusted by me:shhh: to US$250-$300 million.
Now the Master Fiscal and Economic mismanagement is back sinking the Governments fiscal house deeper and deeper into massive debt and borrowings.
Clearly, the figure is not $190 million. :hammer: The correct figure is more in the neighborhood of some US $250 - $300 million dollars.
:hammer: How do we know they have under reported their intended borrowing? Well, the history of FNM borrowing and fiscal management, an undisciplined and :shhh: incompetent Financial Secretary, a toothless yes sire man,Zhivargo Liang, installed as Minister of State, who will carry the blame and bad news for the incompetent Minister of Finance and Master of Fiscal and Economic mismanagement.

That is what the FNM and the Master Financial Economic Mismanager of the century, Hubert Ingraham, the Bay Street and Abaco Lackey does best. Borrow money and Plunge the Nation into greater and greater foreign debt.
He did it first in 1992 when he sent our little country fiscal house spiraling downward into massive external borrowings for the first time in its history.
With his then x Sear Roebuck credit application taker, and and possible US informant good guy the lil nation was plunged into its first big external debt. This bit of voodoo economics was heralded as a major accomplishment. Today it has mushroomed to the now deliberatly underreported US$190 millions dollars but adjusted by me:shhh: to US$250-$300 million.
Now the Master Fiscal and Economic mismanagement is back sinking the Governments fiscal house deeper and deeper into massive debt and borrowings.
Clearly, the figure is not $190 million. :hammer: The correct figure is more in the neighborhood of some US $250 - $300 million dollars.
:hammer: How do we know they have under reported their intended borrowing? Well, the history of FNM borrowing and fiscal management, an undisciplined and :shhh: incompetent Financial Secretary, a toothless yes sire man,Zhivargo Liang, installed as Minister of State, who will carry the blame and bad news for the incompetent Minister of Finance and Master of Fiscal and Economic mismanagement.

So, the former government didn't borrow?

$315,438,974
$206,908,892
$227,984,783

Proceeds from borrowings under the last 3 budgets by the PLP government. I also beleive it was under the prior govt when debt to GDP increased close to 40%. So like I said to the OP, borrowing is nothing new for the government of the Bahamas.

why we need to borrow, Please help me understand this.Anyone


If you don't borrow then the alternative is worse. Be careful when you hear people use phrases like "voodoo economics" - they're using a term that they don't completely understand. When such fiscal policies were employed it went against conventional wisdom and worked. Since nobody understood how you could go against conventional wisdom and be right - they called it "voodoo economics". The idea is that government reduce its tax earnings, the outcome would be increased employment and increased output. Increased employment and increased output produces increased GDP. If you keep borrowing at a steady level, then as a percentage of GDP, debt will decrease. For example if you pay rent of 400 and you make 4000 a month, then your debt is 10 percent of your income. If you borrow money to pay the rent and you take the 400 you were using to pay rent and you invest it - then you have to invest it in something that produces a greater return than the interest rate you borrowed. If you borrow at 10 percent interest, then you have to pay the bank 440 a month. And if you use the money you were using to pay rent to buy a duplex and you charge rent of 480 a month, 440 of which you have to pay your debt with. Now every month you end up with 3640 in stead of 3600 (4000 - 400 - 440 + 480). Your debt is now 9.9 percent of income - 400/4040 = 9.9 percent.

But, borrowing decreases the value of the Bahamian dollar, which I assume Kareem was suggesting when he spoke of the debt increasing from 190 to 250 - of course that's an exaggeration but it is somewhat accurate. The part that seemed conveniently forgotten was that GDP is driven by invesment and foreign borrowings. As long as we're making more than we are borrowing then the affect of a depreciating dollar will be offset to a greater degree by the appreciation affect of an increasing bahamian dollar.

In other words, Mr Laing knows what he is talking about, Kareem does not.

Although the government projects a planned budget surplus of $25 million in the upcoming fiscal year which starts July 1, it expects to borrow $190 million, Minister of State for Finance Zhivargo Laing explained as he led off debate on the 2007/2008 budget in the House of Assembly on Tuesday afternoon.
Link To Original Article (http://www.jonesbahamas.com/?c=45&a=12856)


i think they should wait an see what we have and then borrow what we need.
don't just borrow because we can.what is our current amount collected,any one know.

i think they should wait an see what we have and then borrow what we need.
don't just borrow because we can.what is our current amount collected,any one know.

I would imagine, if you project recurrent revenue to be 1.4 billion and total expenditure to be 1.6+ billion, you have to borrow to pay the difference. If not then I would imagine taxes and other fees would have to go up to make up the 200 million dollar difference.

i think they should wait an see what we have and then borrow what we need.
don't just borrow because we can.what is our current amount collected,any one know.


That doesn't make sense from a planning perspective. The biggest problem with debt is the interest rate. If you double the interest rate you can end up paying 3 or 4 times the amount you borrowed. A nation will always have debt, otherwise they can't grow. A large part of GDP comes from foreign debt, if you cut that out then you cut GDP and you cut a nation's growth. The problem isn't that you borrow, the problem is what you do with the money you borrowed. Getting back to the issue of interest rates - right now interest rates are relatively low. And borrowing in advance helps you plan the future of your country and its economy. If you wait until you actually need the money then you won't be able to borrow at a low interest rate. It is fiscally irresponsible and stupid to wait until you need the money and end up getting 10 percent interest when you could've been smart and borrowed at 5 percent interest. If you want, you can calculate the difference.

That doesn't make sense from a planning perspective. The biggest problem with debt is the interest rate. If you double the interest rate you can end up paying 3 or 4 times the amount you borrowed. A nation will always have debt, otherwise they can't grow. A large part of GDP comes from foreign debt, if you cut that out then you cut GDP and you cut a nation's growth. The problem isn't that you borrow, the problem is what you do with the money you borrowed. Getting back to the issue of interest rates - right now interest rates are relatively low. And borrowing in advance helps you plan the future of your country and its economy. If you wait until you actually need the money then you won't be able to borrow at a low interest rate. It is fiscally irresponsible and stupid to wait until you need the money and end up getting 10 percent interest when you could've been smart and borrowed at 5 percent interest. If you want, you can calculate the difference.

ahhh makes sense

That is what the FNM and the Master Financial Economic Mismanager of the century, Hubert Ingraham, the Bay Street and Abaco Lackey does best. Borrow money and Plunge the Nation into greater and greater foreign debt.
He did it first in 1992 when he sent our little country fiscal house spiraling downward into massive external borrowings for the first time in its history.
With his then x Sear Roebuck credit application taker, and and possible US informant good guy the lil nation was plunged into its first big external debt. This bit of voodoo economics was heralded as a major accomplishment. Today it has mushroomed to the now deliberatly underreported US$190 millions dollars but adjusted by me:shhh: to US$250-$300 million.
Now the Master Fiscal and Economic mismanagement is back sinking the Governments fiscal house deeper and deeper into massive debt and borrowings.
Clearly, the figure is not $190 million. :hammer: The correct figure is more in the neighborhood of some US $250 - $300 million dollars.
:hammer: How do we know they have under reported their intended borrowing? Well, the history of FNM borrowing and fiscal management, an undisciplined and :shhh: incompetent Financial Secretary, a toothless yes sire man,Zhivargo Liang, installed as Minister of State, who will carry the blame and bad news for the incompetent Minister of Finance and Master of Fiscal and Economic mismanagement.

they are borrowing because of the high gdp left by the plp u imbocile so don't try to act like you know what you talking bout.

they are borrowing because of the high gdp left by the plp u imbocile so don't try to act like you know what you talking bout.


High GDP is a good thing.

they are borrowing because of the high gdp left by the plp u imbocile so don't try to act like you know what you talking bout.

like tingum said

The GDP is the dollar value of all goods and services produced in our shores in a given year. Most persons use it the measuring stick of the economy. If real GDP grows then the better the economy is doing,

like tingum said
The GDP is the dollar value of all goods and services produced in our shores in a given year. Most persons use it the measuring stick of the economy. If real GDP grows then the better the economy is doing,

oh sorry i thought it represented the debt ratio to income.