The Ministry of Finance and Economic Planning has moved to clarify what it says are inaccurate statements made by Leader of the Opposition Dr. Godwin Friday, in relation to the Government’s use of Parliament-approved overdraft facilities.
The Ministry said the claims were made by Dr. Friday during the debate on the 2020 Appropriation Bill, and during a News Conference on Tuesday February 18th. It said the Opposition Leader falsely asserted that the Government was acting in an “illegal” and “lawless” manner.
In responding to the allegation, the Ministry explained that each year, the Parliament issues two important authorizations to the Government regarding its ability to borrow:
It said a Parliamentary resolution authorizes the Minister of Finance to borrow by way of a fluctuating overdraft or other borrowing at any local commercial bank. The amount of the overdraft approved by Parliament has varied over the years, between $35 million and $75 million.
Second, a Public Sector Investment Loan Act is passed annually to authorize the Government to raise funds for the Public Sector Investment Programme, PSIL. The PSIL borrowings authorized by Parliament are usually around $100 million.
The Ministry said the Public Sector Investment Loan Act is an important, blanket authorization to the Government, to borrow money on favorable terms up to the prescribed limit. Without this authorization, every loan or bond issued by the Government would require its own individual parliamentary approval.
The Ministry said the failure by the Leader of the Opposition to mention the additional legal authorization to borrow is significant. It said, in discussing only the overdraft authorization, Dr. Friday states that the subsequent “Accountant General Loans” are illegally borrowed without Parliamentary approval.
The Ministry made it clear that this is false, since the Parliamentary approval to incur Accountant General Loans, lies in the general authority given to the Government to borrow annually under the Public Sector Investment Loan Act.
It explained that if the Government is below its prescribed annual PSIL limit, it is legally permitted to convert any public indebtedness to a loan, with more favorable terms under the general legal authority of the PSIL, as long as that conversion does not push the total borrowings past the legal limit.