Government to raise debt ceiling by $600m

  • Curtis Dickinson, the finance minister (File photograph by Blaire Simmons)

    Curtis Dickinson, the finance minister (File photograph by Blaire Simmons)


The Government is to raise the debt ceiling by $600 million to $3.5 billion.

Curtis Dickinson, the finance minister, tabled an amendment to the Government Loans Act 1978 to raise the statutory borrowing limit in the House of Assembly yesterday.

He added that the Government also planned a bond issuance on the international capital markets that, depending on market conditions, could range between $1 billion and $1.25 billion.

Mr Dickinson said: “The proposed amendment will provide for the authority of the Government to borrow up to the newly established limit as we navigate our way through the Covid-19 pandemic and beyond.

“The proposed statutory debt ceiling of $3.5 billion is set at a level to enable funding of the Government and its economic recovery over the next two to three years.”

He added: “This borrowing strategy will allow the Government to lock in historically low rates, potentially reduce our interest expense on some of our current bonds and take advantage of strong current global demand for investment-grade assets.”

Yesterday’s move means the Government will have raised the debt ceiling by $1 billion in the space of a year.

Mr Dickinson said yesterday that the proceeds from the bond sale were intended to finance the anticipated deficits for fiscal years 2020-21, 2021-22 and 2022-23, refinance the credit facility associated with the Caroline Bay project and other credit facilities for general liquidity needs as well as Covid-19 emergency measures, and, depending on market conditions, to “liability manage tranches of existing indebtedness”.

In July 2019, the Government raised the statutory borrowing limit by $250 million in anticipation of taking on the debts of the stalled Caroline Bay project. And in April this year, the Government raised the debt ceiling by $150 million to $2.9 billion to ensure it could fund public health and emergency financial measures to support the island during the Covid-19 pandemic.

Mr Dickinson told MPs that the Government had come into power three years ago with a strategy of not raising the debt ceiling, which then stood at $2.5 billion.

For two years, they were able to achieve that, but a combination of taking on the debts of Caroline Bay and dealing with the economic effects of Covid-19 means borrowing more.

Mr Dickinson said: “At the end of March 2020, net debt stood at $2.68 billion, an increase of approximately $280 million over the July 2017 balance.”

He said the main elements of the additional indebtedness were:

• About $187 million related to payment of obligations under the Caroline Bay project guarantees and related costs

• $64.2 million related to the funding the 2018/19 Sinking Fund contribution

• The remainder to finance capital expenditures in fiscal years 2017-18, 2018-19 and 2019-20

In May this year, in response to the pandemic, the Government entered into a $150 million credit facility with local banks. “To date, approximately $80 million of this facility has been drawn to fund emergency measures associated with Covid-19,” Mr Dickinson said.

Two months ago, Mr Dickinson projected a budget deficit of between $275 million and $315 million for the 2020-21 fiscal year, as the pandemic-hit economy causes a sharp fall in tax revenues and an increase in spending.

To read Curtis Dickinson’s statement in full, click on the PDF under “Related Media”

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Published Jul 18, 2020 at 8:00 am (Updated Jul 18, 2020 at 7:59 am)

Government to raise debt ceiling by $600m

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