The government intends to borrow the bulk of its expected $1.3 billion debt load in foreign currency, Acting Financial Secretary Marlon Johnson said yesterday, adding that much of that money could come from international lending institutions like the World Bank.
Johnson, who was responding to a question during the Ministry of Finance’s budget communication press conference, explained that institutions such as the World Bank, the Caribbean Development Bank (CDB) and the Inter-American Development Bank (IDB) are likely to give the Bahamas government the “best possible rates”.
He added that given the country’s current economic position and the inevitable drawdown of the country’s foreign reserves, the government took the position to do most of its borrowing in foreign currency. He added that the government has yet to decide the amount.
“Given the circumstances where we are, the intention is to source the majority of that in foreign currency,” said Johnson.
“And the reason for that is, generally speaking, we seek to borrow the majority of our loan instruments in Bahamian dollars, but given the slowdown in the economy and the need to ensure that we preserve our foreign exchange holdings as much as possible, government has taken the decision this year to actually borrow the majority of its funds in foreign currency.
“And so we haven’t set the amount yet, but I can say the majority of the funds will be in foreign currency and the rates will be dependent upon several things. Generally speaking, we seek to maximize our lending from the international institutions like the IDB, the Caribbean Development Bank and the World Bank and their facilities that we have available. [With] those we get the best rates possible.”
Johnson added that the government will seek to borrow from the private markets when The Bahamas’ economy improves and international investors will be confident in placing their money.
“We have a defined plan that we’re working on and we’re looking forward to that,” he said.