Fijileaks: IMF offered 3%; SDL took on 6.85%, Khaiyum borrowed at 9%
This is what Finance Minister Khaiyum told Parliament yesterday as he tried to explain the goings on in a secret sitting of Parliament last month.
Where is the saving that you are talking about, Mr Khaiyum? You are just borrowing more money to pay an existing debt – getting the nation deeper and deeper into debt. Your attempt to dupe the public is despicable, to say the least.
The simple facts of the matter are as follows:
#2006 - Qarase Government borrowed USD150m from the international Bond market at an interest rate of 6%, redeemable in 2011. The money was raised to finance the 2007 Budget deficit. Qarase was deposed in December 2006 and the entire sum was used by the Bainimarama regime.
#2011 - The regime had no money to repay so it rolled over the debt for a further 5 years at an exorbitantly high interest rate of 9%. But instead of borrowing USD 150m to pay off the 2006 debt, it borrowed USD 250 million. The additional $USD100m, it said was to be spent on capital works.
A detailed account of how this extra USD100m (($F200m) was spent has not been provided. The loan was brokered by the ANZ Bank which made a tidy sum as its commission/fees.
Fiji has so far paid USD112 million in interest alone on this loan. A further $66.20 million will have to be paid over the next 5 years on the new loan of USD200m ($F400) – a total of $USD178.70m in all.
#2015 - Redemption of the USD 250m ($F500m) Bond issue due in March 2016 was brought forward by 6 months to Sept 22 2015 by borrowing a further USD 200m ($F400m) at 6.62% and the balance of USD 50m ($F100m) was paid from the Sinking Fund which had been set up to discharge the debt when due but had insufficient funds as moneys had been withdrawn from it for other purposes.
The fresh borrowing of USD200m ($F400m) was sourced from the international Bond market at a rate much higher than that generally prevailing at the time for countries in the Asia/Pacific region. Countries with well managed economies are able to access 5 year loan funds from this facility for between 2.5-3.5%.
Fiji, on the other hand, has to pay almost twice the prevailing rate (6.62%) because of the country risk factor. So, there is no saving as Khaiyum claims. Indeed, the opposite is the case as the loan is to be repaid at twice the current prevailing rate of interest.
In the last 5 years, Fiji’s national debt has doubled from $F2 billion to $F4 billion and is still rising. Its external debt increased from $F545m in 2010 to $F1.25 billion in 2014.
Now the regime is negotiating another $F100m ADB loan facility for the transport sector. The World Bank is at its doorsteps with a loan offer of another $F100m for the so-called public sector reforms, we are told. Then there are several pending loan negotiations with Exim Banks of India and China for the sugar and infrastructure sectors.
The regime has dug its debt pit deep- it has developed an insatiable appetite for loans.
That sure is a ‘record breaking’ achievement in the art of living on borrowed monies, Mr Khaiyum!