THE Prime Minister says once this country is able to repay its international loans, deficit budgets is not a bad thing.
Dr Rowley was asked on Monday how long could this country continue to keep borrowing money to pay wages and fund debt while running a deficit budget for a number of years amid falling revenue.
“Debt has a partner and it is called ability to repay. Whenever you borrow it is not a bad thing or a good thing. What is looked at is your ability to service that debt. The money we are borrowing, we are not in a position to say we cannot repay where that has happened in the case of Petrotrin.
“We’ve done something about it and that has not been a very pleasant experience for many people, but that was the situation where borrowing had put you in a repayment problem.”
He said if Government did not borrow, they would have had to shut down a lot of what they are doing or what was required to be done in order to service the country with things people looked forward to for a decent quality of life. Giving examples, he spoke of health care and education.
“When you borrow, you look at your ability to repay, your lenders look at that. If you can repay your debts, deficit budgets are not a problem. It is when you are not able to repay that you have a real problem. What would you spend the money on when you borrow? If you spend it on give aways and corruption then you’re in real trouble because the borrowing would not have contributed to any growth.”
He added: “We are borrowing to buy ferries for Tobago because we know if we don’t have those ferries it will affect the economies on both sides...borrowing to build roads, if roads are not built we don’t open up the land available for the economy.
“We are borrowing to pay debt, that is our number one repayment. Money that was spent in an earlier time are due to be paid now. We borrow to deal with contracts.”
When it was pointed out that TT’s debt gross domestic product (GDP) runs at 63 per cent, Rowley said that figure was “manageable.”
He said countries that run at 80-120 per cent were productive economies, and they are guaranteed to have huge amount of revenues to deal with that kind of debt. “Ideally the less your debt load is the more comfortable you are in a repayment schedule, but if we don’t borrow, that is when the economy will not do anything.”