The Governor of the Central Bank Julian Francis has criticized the government for reported plans to borrow money to pay civil servants their outstanding salary increases, describing the intention as “wrong” and “dangerous” for the Bahamian economy.
Mr. Francis made the comments on the Love 97 programme ‘Jones and Company,’ which aired yesterday.
“I know the government has to borrow the money, they certainly don’t have it,” he said. “I think it is dangerous to be borrowing money to pay these kinds of payments.”
Mr. Francis said that if the government felt it is indeed necessary to pay the salary increases it should look at allocating the funds from some other government project or service.
“If the government is going to pay it, it has to come from somewhere else,” he said. “Maybe we can’t build some schools, maybe we can’t do some roads that we were going to do, may be the hospital programme will have to be delayed and so on,” Mr. Francis said.
But he maintained that it would not be the right decision financially for the country.
“It is wrong. It is improper from a financial management point of view to go and borrow that money,” he said. “We are putting our economy in danger.”
Some of the money to pay civil servants their increases could come from the $200 million borrowed in the summer through a bond issue, a government official has acknowledged.
The government has announced that it planned to use some of the money to pay off a short-term $125 million loan. The remaining $75 million was earmarked to finance a portion of the 2003-2004 budget.
Minister of State for Finance James Smith said today there are no specific plans to borrow the $24 million required to pay the salary increases.
“There are no plans for any specific loan to be borrowed,” Mr. Smith said.
He told the Bahama Journal that the increases would be paid out of “the normal course of government revenue.”
Minister Smith said that so far this fiscal year the government is “breaking even” in its goal to generate $1.005 billion in revenue.
He added that $12 million would be paid to civil servants, as promised, by the end of December.
The remaining $12 million will be paid out in monthly installments of $100 to each of the country’s approximately 20,000 civil servants until June of next year.
Last week, after months of wrangling between the government and public service union leaders over the government’s decision to delay payment of the salary increases until December, union leaders met with Prime Minister Perry Christie.
Public Service Minister Fred Mitchell said the talks were frank and fruitful.
The Bahama Journal was told by a union leader Friday that the agreement was that a fraction of the civil servants’ salary increases be paid in November while the greater remaining portion of the increases are to be remitted in December.
But Public Service Minister Fred Mitchell announced today that the payments will begin in December.
The salary increases were promised to the civil servants for payment in July of this year by the former Free National Movement administration.
The Bahama Journal
