by Linda Straker
- Economy anticipated to show recovery signs in 2021
- Public Debt Management Act enacted June 2015
- MTDS highlights a preferred strategy that can be used over 2022-2024
At the end of 2021, Central Government’s debt is estimated to be EC$2.06 billion, of which external debt amounts to EC$1.50 billion and domestic debt EC$ 0.56 billion. Total debt service for the year is estimated to be $ 367.8 million or 40.3% of revenue.
That’s among the findings in the executive summary of the Medium-Term Debt Management Strategy (MTDS) 2022-2024 which was recently laid in the Houses of Parliament as part of the documents of reference for the 2021 Estimates of Revenue and Expenditure.
“The debt data utilised for the MTDS encapsulates the Central Government’s external and domestic debt. T-bills are recorded at their discounted values only for the purpose of this MTDS,” said the Strategy which explained that Government Guaranteed Debt, was not included in the analysis except in cases where these debts were subsumed by the Government.
Following a sharp decline in output of 13.8% in 2020 occasioned by the Covid-19 pandemic, the economy is anticipated to show recovery signs in 2021. “The pace of recovery is contingent largely on global recovery and the path of the pandemic. Growth is expected to average 4.3% over the medium term (2022-2024),” said the Strategy. “The fiscal sector is projected to improve over the medium term on the assumptions of: (i) modest increases in total revenue, consistent with the projected economic activity; and (ii) deliberate measures (approved by the Cabinet) to contain discretionary expenditure and improve the strategic orientation and prioritisation of expenditure to safeguard medium-term fiscal and debt sustainability.”
“The primary and overall surpluses are projected to average 3.2% and 1.4% of GDP respectively over the period 2022-2024. Consistent with global trade restrictions and tightening financial conditions, the trade deficit is estimated to expand in 2021, a persistent widening is anticipated over the medium term.”
The Public Debt Management Act enacted in June 2015 provides the framework for effective debt management, which involves the establishment and execution of a strategy for managing public sector debt. The Medium-Term Debt Management Strategy (MTDS) is a plan aimed at achieving the desired debt portfolio consistent with the debt management objectives. It ensures that the Government’s funding needs are met with due consideration of its cost and risk objectives. The MTDS, among other considerations, highlights a preferred strategy that can be used over the medium term (2022-2024).