KINGSTOWN, St. Vincent – The national debt, as of Sept. 30, was $1,221,697,550, or 0.7 per cent lower than the total disbursed outstanding debt for the same period in 2010.

Prime Minister and Minister of Finance Dr. Ralph Gonsalves told Parliament on Tuesday that the domestic debt, which was EC$491.35 million as of Sept. 30 fell by 14.9 per cent or $86.29 million year-on-year.

On the other hand, the external debt for same period had increased by EC$77.15 million or 11.8 per cent to EC$730.35 million.

Gonsalves told lawmakers that the reduction in the domestic debt was due mainly to EC$13.4 million paid on amortized bonds, an EC$38.9 million reduction in the public sector overdraft balances, and EC$20.2 million repaid on loans.

He, however, said there was an EC$15 million increase in treasury bills even as payables went up by $8.6 million.

The main factors behind the movement of the external debt were Caribbean Development Bank (CDB) loans, which had increased by EC$103.8 million as a result of the Financial Stabilisation Loan and further draw downs on the Policy-Based Loan.

The CDB loans include the EC$100 million used to further capitalise the former National Commercial Bank (NCB) ahead of the divestment of a majority of the government’s shares.

Indebtedness to the International Monetary Fund also increased by EC$14.1 million because of the draw down on the Rapid Credit Facility to aid in the Tomas and Flood damage rehabilitation.

He further said that increases were moderated by the reduction in other loans as a result of the repayment of principal, with some of the more important ones being state-owned enterprise loans not serviced by the Central Government, which fell by $19.9 million, and EC$27.4 million repaid on bonds.

Total debt service for 2012 is estimated to be EC$131.8 million or 26 per cent of the current revenue. The debt service requirements for 2012 comprise interest payments of EC$51.45 million; amortization, EC$74.33 million; and, sinking fund contributions, EC$6 million, a total of EC$131.80 million.

Interest payments are 3.4 per cent lower than last year’s approved budget.

This is as a direct result of the loan swap that was undertaken via the CDB Financial Stabilisation Loan, where higher interest domestic loans were exchanged for a lower interest external loan, Gonsalves said.

Principal repayments are expected to be 3.6 per cent above the amount budgeted in 2011.

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