NewsWhore
10-12-2010, 07:20 PM
Former Governor of the Central Bank Guillermo Caram says that while government debt as a percentage of GDP is used to measure solvency, the problem is that debt affects cash flow. As reported in Hoy, Caram says the government needs to reduce its fiscal deficit and exercise restraint in taking on more debt. He said in the first half of the year the government was already RD$18.5 billion short of meeting its essential obligations, and had to borrow to cover them. Ministry of Hacienda reported tax revenues at RD$126 billion, but current spending at RD$116 billion, and debt service at RD$28.19 billion.
Caram says that a government fails and external interventions are required when the debt affects liquidity in regards to paying the debt. "What President Fernandez should monitor is that at this time the percentage of tax revenues to the payment of the debt is nearing 50% of tax collection," he said.
A government that has no resources of its own is a government that is losing its sovereignty and President Fernandez should see that for his own good as a leader and for his success as a leader, Caram told Hoy.
Caram said that the moment would come when lenders stopped lending to the government, and then there will be a crisis. He recommended that the government should perform a primary surgery on public spending, saying that the government needs to restrain borrowing and reduce the fiscal deficit.
He said that the government needed to reduce the electricity subsidy, but at the same time reduce the price of electricity because customers are already paying too much for the service. Caram is also opposed to increasing taxes for the government to receive more revenues.
He says that the Chamber of Accounts reports that the fiscal deficit for 2009 was RD$49 billion. And he says that outlook is that the deficit will not be reduced, because of the level of spending in the first half of the year.
More... (http://www.dr1.com/index.html#8)
Caram says that a government fails and external interventions are required when the debt affects liquidity in regards to paying the debt. "What President Fernandez should monitor is that at this time the percentage of tax revenues to the payment of the debt is nearing 50% of tax collection," he said.
A government that has no resources of its own is a government that is losing its sovereignty and President Fernandez should see that for his own good as a leader and for his success as a leader, Caram told Hoy.
Caram said that the moment would come when lenders stopped lending to the government, and then there will be a crisis. He recommended that the government should perform a primary surgery on public spending, saying that the government needs to restrain borrowing and reduce the fiscal deficit.
He said that the government needed to reduce the electricity subsidy, but at the same time reduce the price of electricity because customers are already paying too much for the service. Caram is also opposed to increasing taxes for the government to receive more revenues.
He says that the Chamber of Accounts reports that the fiscal deficit for 2009 was RD$49 billion. And he says that outlook is that the deficit will not be reduced, because of the level of spending in the first half of the year.
More... (http://www.dr1.com/index.html#8)