ECONOMIST JEREMY STEPHEN is concerned about the raising of Government’s special loans limit by $1 billion, stating that it could potentially drag economic growth if the loans were being sourced internationally and if the proposed capital projects were not realised.
Stephen, who is president of the Barbados Economic Society (BES), acknowledged that Government needed to raise the loan limit to create capacity for long-term borrowing, but he cautioned that if it was looking toward external debt, then it would increase borrowing costs which were already quite high.
“The interest costs toward paying off the debt are among the highest expenditure items that the Government has on its fiscal budget, so that becomes a major consideration in the face of a deeper cut into the junk bond region,” he told the MIDWEEK NATION following an amendment to raise the special loans limit from $1.5 billion to $2.5 billion passed in Parliament last week.
