A notable economist has questioned how either major political party will finance many of the promises made so far on the election trail.
In the weeks since the general election was announced, both major political parties have riddled off lofty initiatives and concessions that would be implemented should they gain governance on Thursday.
Rupert Pinder said while he doesn’t suspect the concessions will have any significant impact on budgets, the country’s finances are strained beyond measure.
“The government needs every penny it can get right now. We’re running this huge deficit. Last year we had a deficit on record of almost $1.3 billion, this year we are running a deficit of just under a billion dollars,” he said in an interview with Guardian Business.
“So within the last three cycles we’re looking at in excess of $3 billion added to the national debt.
“Bearing in mind that the government’s accounting is done on a cash basis as opposed to an accrual basis means that the expenditure outlays are only recognized when there is an outlay.”
In addition to building new hospitals or expanding existing facilities, the Free National Movement (FNM) and Progressive Liberal Party (PLP) have also promised sweeping capital works projects, among other things.
Although the Ministry of Finance has laid out its revenue collections and capital expenditure in the most recent budget exercise and fiscal snapshot reports, it has not revealed the current state of the government’s cash balance.
According to the most recent Central Bank Quarterly Statistical Digest, it is projected that there was a $330 million increase in the change in cash balance at the end of the last fiscal year.
“The long and short of it is that when you have significant amount of government resources going toward servicing debt, that is not something that goes away in one budget cycle even with the rebound in tourism,” Pinder said.
“Even if the economy in terms of GDP (gross domestic product) comes back to pre-pandemic levels and the debt to GDP ratio improves a bit. Let’s say you manage to even contain the debt again, there is still a shortfall.”
The national debt breached the $10 billion threshold at the end of the last fiscal year.
Both political parties have said more borrowing would be needed to meet fiscal obligations.