The government projects significant operating surpluses for the short and medium term, although projected surpluses start to dwindle over the long term.
The Strategic Policy Statement tabled in the Legislative Assembly Friday projects government operating surpluses of $49.69 million in 2008/09; $35.98 million in 2009/10; and $26.78 million in 2010/11.
The SPS predicts the surpluses to decline annually over the following seven years, sinking to $8.08 million in 2016/17 and $4.18 million in 2017/18.
Financial Secretary Kenneth Jefferson said long-term financial projections showed the surpluses were sustainable.
‘The financial projections indicate that the three-year target track is sustainable over the ten-year projection period,’ Mr. Jefferson said. ‘The projections show sustained operating surpluses. More importantly, the cash flow projections show that these operating surpluses are sufficient to finance the new borrowings to be entered into over the forecast period.’
Mr. Jefferson said the government had a deliberate fiscal strategy to use part of the cash arising from operating surpluses to finance the government’s capital programme over the next three fiscal years.
Net borrowings are forecasted to be $154.1 million in 2008/09; $76.6 million in 2009/10; and $52 million in 2010/11.
Mr. Jefferson said the anticipated borrowing levels remained within the limits prescribed by the Principles of Responsible Financial Management.
‘The projections show that new borrowings to fund the Government’s planned capital programme are affordable.’
The borrowing ratio, which requires the total debt servicing cost to be no more than 10 per cent of core government revenue, is forecast in the SPS to be 7.9 per cent in 2008/09; 8.7 per cent in 2009/10; and 9.0 per cent in 2010/11.
Mr. Jefferson said there had been some incorrect remarks indicating the level of government debt was approximately $1 billion.
‘[The SPS] shows that level of Government debt is expected to be approximately $244M, which is considerably less than the incorrect $1 billion figure,’ he said.
However, borrowing balances are forecasted to grow to $444.89 million by 2010/11.
Opposition MLA Rolston Anglin pointed out the borrowing balance was projected in the SPS to continue rising every year through the end of its projection in 2017/18, when it is expected to stand at $594.17 million.
‘To go from $243.847 million at the 30 June 2008 to $594.175 million 10 years later – and that’s just core government – if that doesn’t tell us where and how this government sees this country, nothing will,’ he said.
Mr. Anglin accused the government of mortgaging the country’s future.
‘They want to try to build every building imaginable without any prioritisation,’ he said.
‘When I look at where this country is heading, I see a compromise of the long term for short term instant gratification.’
Mr. Anglin warned that the economy might not grow as much as expected.
‘What happens when the smallest of events don’t go our way and we’re left with this massive amount of debt?’ he asked.
Cabinet Minister Alden McLaughlin said the proposed borrowing was completely affordable and accused Mr. Anglin of theatrics.
‘He comes in here preaching doom and gloom about the future of these islands,’ he said. ‘He’d have us sit in a paralysis of fear in face of his pessimistic prospects of this country.’
Mr. McLaughlin said the government spends a lot of time prioritizing.
‘We know we can’t do everything at once, but [the previous UDP government] left so many things undone,’ he said.
‘If anyone expects me to apologise for investing this country’s money in the future of our children, they have another thing coming.’