Former Finance Minister’s argument on the increase of the debt ceiling comical and disingenuous (Part 1)

Senior Minister with responsibility for Finance, Dr. Ashni Singh, recently proposed in the National Assembly – to raise the current public debt ceiling, which was adjusted in the early 1990s. In this regard, the Hon. Minister proposed to raise the domestic debt ceiling from $150 billion to $500 billion, and the existing external debt ceiling to be increased to $650 billion. The Minister also noted that this increase will facilitate the regularization of inherited liabilities incurred under the previous regime, which were not treated in the appropriate manner.
This does not mean, though, that the new debt ceilings limit will be maxed out immediately since it would appear that this is what the Former Finance Minister thinks along with other commentators like GHK Lall and a certain section of the media. The increase debt ceiling is necessary to simply allow for increased borrowings – relative to the rate of expansion of the economy that will occur over the next decade at least.
Following this presentation in the National Assembly, the Former Finance Minister, Winston Jordan, in an invited commentary in another section of the media, hastened to chastise the Hon. Minister, Dr. Ashni Singh for the increase in the public debt ceiling. Mr. Jordan in his ramblings described the move as one that spells danger and will somehow be burdensome on current and future tax-payers. The former Minister’s utterances were not only comical and idiotic but more worryingly – disingenuous.
The former Minister stated that the Hon. Minister, Dr. Ashni Singh, is pulling “the proverbial wool over the eyes of the discerning public since the evidence will show that over the last five years, the APNU+AFC regime racked up a deficit of $92 billion.” Then he went on to state that the deficit for 2020 projected under the current regime was projected at $75 billion, before they went to parliament on December 28, last, to extract another $17 billion”. By this comparison, Jordan sought to argue the point that the current Government’s deficit in 2020 alone is equivalent to the accumulated deficit under his tenure in five years. In other words, the simple interpretation by a layman reading Jordan’s statement would lead one to believe that the current Government in less than one year in office would have expended the equivalent of all the monies expended by the previous Government in five years.
This notion, however, is far from the truth and the real evidence will in fact prove the inverse of Jordan’s postulations.
Having said that, let’s understand what deficit of $92 billion Jordan is referring to and how much monies did he actually expend in five years during his tenure as Finance Minister. The evidence in this regard is illustrated in the table below of which the data were extracted from Bank of Guyana Annual reports as well as the Auditor General Reports.
The data in the above table illustrating Government’s total expenditure for the period 2010 – 2019 revealed that total expenditure during the period 2015 – 2019 amounted to $1.143 trillion, while for the period 2010 – 2014 total Government expenditure amounted to $794 billion. By the time the new Government assumed office in August 2020, Jordan racked up over $1.2 trillion in five years – which is almost twice the amount of monies expended during the period 2010 – 2014 by Dr. Ashni Singh who was also Minister of Finance during that period. It is humorous and sad at the same time – reflecting on the fact that the former Minister Jordan and by extension the previous Government – have absolutely nothing to show for the more than 1.2 trillion expended – twice the amount of monies expended in a five-years cycle by this current Government.

To be continued next week…

About the Author: JC. Bhagwandin is a financial analyst, lecturer and business & financial consultant. The views expressed are exclusively his own and do not necessarily represent those of this newspaper and the institutions he represents. For comments, send to [email protected].