It is very much in the national interest that the ratio of government debt to GDP is kept well below the danger level of 40 per cent, Prime Minister Perry Christie told the House of Assembly yesterday.
Presenting the budget, the prime minister said government is nearing the 40 per cent mark as the deficit is expected to climb to 38.7 per cent this fiscal year.
The 38.7 per cent figure is an important indicator because based on worldwide experience, a ratio of government debt to GDP greater than 40 per cent, increases the risks of releasing unfavourable debt dynamics. This is especially so if at the same time there are major adverse external developments.
The first step in reducing the deficit would be to use aﾠ combination of expenditure contaiment parallel with fostering growth in the economy through revenue enhancement measures.
New sources of revenue provide government with such an opportunity.
It is essential, said Mr. Christie, that The Bahamas demonstrate to the international community that it is very serious in its intention to bring the fiscal situation under firm control.
Source: The Tribune
