Prime Minister Introduces Borrowing Authorization Bill to Parliament
Prime Minister Gaston Browne has presented a new bill to Parliament, titled the Borrowing Authorization 2025 Budget Bill 2024. The proposed legislation aims to enhance fiscal management by regularizing the rollover of treasury bills and bonds while addressing high-interest debt to create additional fiscal space.
Prime Minister Browne explained that the government has been rolling over short-term securities, such as treasury bills and bonds, since 2006. This practice involves paying interest and extending the obligations annually without reducing the principal debt. The bill seeks parliamentary approval for these rollovers and introduces measures to consolidate the government’s liabilities.
The proposed plan includes issuing a long-term bond of up to $450 million USD. This bond would replace the current short-term instruments, providing an opportunity to restructure debt and lower the government’s overall debt service ratio.
Browne highlighted that while Antigua and Barbuda has made progress in reducing its debt-to-GDP ratio, the high cost of servicing debt remains a challenge. Interest rates on existing domestic loans reportedly range between 7% and 8%. The Prime Minister noted that renegotiating these debts at lower interest rates could reduce the need for external borrowing.
The bill outlines two key objectives:
- The rollover of up to $100 million USD or its EC equivalent on the Eastern Caribbean Securities Exchange.
- Negotiations for a $450 million USD bond to consolidate existing debt and fund liability management operations.
The Prime Minister issued a warning to domestic commercial banks, urging them to proactively negotiate lower interest rates. He cautioned that failing to do so could result in the government securing lower-cost international financing, leading to an influx of liquidity in local banks and a potential reduction in their profitability.
Browne emphasized that the government’s goal is not to harm the banking sector but to streamline resources and create fiscal space. This space, he added, would enable the government to address pressing financial obligations, including the payment of outstanding arrears to public sector creditors.
The bill, described as a “precursor to negotiations,” provides interim authority for the government to proceed with discussions on the proposed bond. Browne assured Parliament that once negotiations are finalized, the government would return to the House to seek approval for the finalized terms.
“This is part of our liability management operations to create fiscal space,” Browne stated. He reaffirmed the government’s commitment to transparency and collaboration, noting that the bill keeps Parliament informed throughout the process.
If passed in the Upper House, the Borrowing Authorization 2025 Budget Bill 2024 would pave the way for a significant restructuring of Antigua and Barbuda’s debt portfolio, potentially reducing interest costs and improving fiscal flexibility. The Prime Minister urged lawmakers to support the bill, emphasizing its importance for the country’s financial stability and economic growth.
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I am no economist but maybe someone out there could help me out here.
If I borrow $10,000.00 from someone at an interest rate of 9% per year ($900.00 according to my calculation) and I only pay the interest for year after year (let’s say 11 years), would I be correct in saying that after 11 years, I would have paid out the equivalent of the principle in interest payments and still owe the principle?
Do I have that right?
If I have that right, how do I get myself out of such a financial hole?
The type of Loan are describing exists. Micro Finance companies like Axcel Finance will use that method – Interest is calculated ‘upfront’. Banks generally use the ‘Reducing Balance method i.e. the payment you make is split between Interest and Principal. So each year the principal decreases.
The Article is saying that we owe alot of People at different interest rates, so its expensive – they want to consolidate the debt, obtain a ‘Bond’ and pay it off…Cheaper!! i.e. lower interest
Let me guess…
Consolidation loans are EEVVVIIIIILLLL (Gladys potter voice). Yes?
Reducing interest payments to free up more revenue to address the people’s needs, complete back pay etc is gross wickedness. Right? RIGHT?
Talk to me UPP! I’ll wait…
PM your presentation was awesome. However I did not like how the debate went. All the MP’s are playing games with tax payers money. We hired you to do a job and the budget presentation and debates are paramount. I think that your colleagues should have still presented, although I believe that the UPP MP came late on purpose. Hon. Anthony Smith did not even get the opportunity to present the agriculture budget. This is what independence mean Anthony? So it was all very wrong that your ministers did not present to this nation as you said they would go into details.
I don’t k know who is advising the UPP MP,s. You have been in Parliament for 3 budget cycles and only debated once. If you want to govern this country should this nation what you are capable . Pringle was excellent in his response and followed by another by Richard Lewis . Then instead of continuing the debate you planned to return later and brought about the confusion . You know what was worst you stayed there and debated the stupid bill to allow Gaston to borrow money without giving any details. If you had debated the budget you could have tried blocking that other borrowing bill . Saying that we just finished debating the budget and here you goes knowing fully well that you had intention of borrowing this money and made no mention of it.
UPP you have lost the opportunity to come before Antigua as a relevant opposition.
So you ended up giving the government all the rights to go full steam ahead. Hey don’t me you will be instructing your opposition Senators not to debate as well. If this is the case best you all resign .
Don’t tell me you are not going to give Pearl the opportunity to debate this budget.
You should you are not read to run this country.
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