PM Gaston Browne shakes hands with President ‘Lula’ of Brazil (picture by nicefmradio.com)
The government will restructure the nation’s debt portfolio through a significant bond issuance anticipated in the next three months.
Prime Minister Gaston Browne revealed that the administration aims to launch a bond valued between US$250 million and US$300 million to tackle high-interest domestic debts.
“We’re now seeking to float a bond to address the issue of the debt service ratio. Our goal is to secure cheaper funding and to settle some of the arrears, particularly with domestic creditors,” Browne said on Saturday.
He also noted that they are exploring options with Oppenheimer and possibly the Development Bank of Latin America and the Caribbean (CAF), expressing optimism about raising the necessary funds within 90 days.
Further, the government is engaging in discussions with international creditors to address various decades-old debt matters.
Among these debts is a Brazilian loan that started at $5 million in the 1980s but has ballooned to $44 million due to accumulating interest and penalties.
Browne has reached out to Brazilian President Luiz Inácio Lula da Silva requesting a potential write-off of the interest and penalties associated with this loan.
“There was less than $5 million borrowed back in the 80s for a Deep Bay development project, and it has now escalated to over $44 million,” he pointed out.
Additionally, the administration is addressing obligations related to Venezuela, with negotiations having reduced the Petrocaribe debt from over $500 million to around $250 million. There is also a pending discussion regarding a separate $50 million Venezuelan loan from a previous government.
Browne emphasized that the aim of these debt restructuring efforts is to lower the nation’s current debt service ratio from approximately 30 percent to about 20 percent, thereby creating more financial flexibility for future government initiatives.
Currently, the debt service ratio accounts for roughly $300 million annually, against government revenues of about $900 million.
I believe in not owing anyone. I realize there are times when we just have to borrow. However, instead of repaying when we have the means to, we keep our money and the debt which just digs a deeper and deeper hole. How can a person or a government or a business or any entity be solvent/ successful when saddled with debt? Being debt free must be the goal- operating in the black with a surplus, or at the very least, not taking on more debt until old debt has been paid off.
Finally! Tackling domestic debt is long overdue. Our local contractors and service providers have been waiting for payments for years. Hope this bond really brings relief or pulls through
Borrowing more to pay off old debt? Sounds like shifting the problem instead of solving it. What about spending reforms?
Speak English so the layman can understand. Debt bond ect. What’s that
What long-term fiscal discipline measures will be put in place to ensure that the benefits of this debt restructuring aren’t eroded by future borrowing or expenditure?