The Opposition’s leader yesterday challenged the Prime Minister to explain why The Bahamas’ two top finance officials “would openly contradict each other” over the Government’s recent $500m borrowing.

Michael Pintard, among a series of questions tabled in the House of Assembly on the ten-year loan, asked Philip Davis KC why John Rolle, the Central Bank’s governor, would signal the proceeds were used to refinance existing debt and repay short-term overdraft facilities when Simon Wilson, the Ministry of Finance’s financial secretary, had said the monies cannot be used for these purposes.

The Free National Movement (FNM) leader, in the tenth of his 11 written questions, queried: “Would the honourable prime minister and minister of finance explain why the nation’s two top public sector officials in the field of public finance would openly contradict each other?

“Would the honourable prime minister and minister of finance indicate why the Governor of the Central Bank on January 29, 2024, stated that in January 2024 the Government undertook significant US dollar financing operations (borrowing), which were used to pay off bank overdrafts and to help ‘rollover significant US debt’ while, on the other hand, the financial secretary has insisted that the only significant US dollar financing operation by the Government during the month of January was not used to rollover any US debt?”

Tribune Business previously reported on the contradiction now seized upon by the Opposition after Mr Rolle, during the Central Bank’s latest quarterly economic briefing at end-January, said the Government had undertaken “refinancing operations” early in the New Year to “rollover significant US dollar debt”.

Referring to a slight improvement in the country’s foreign currency reserves during the first weeks of 2024, Mr Rolle said: “Through the end of 2024, the most recent period, the external reserve balances showed a modest rebound from the end of 2023 to close at about $2.75bn.

“This was mainly due to the timing in the Government’s recent US dollar refinancing operations since December, which paid off some overdraft balances with local lenders and which helped to rollover significant US dollar debt.”

Mr Rolle did not identify the nature of the “US dollar refinancing” he was referring to but the only such “operation” that has been made public was the $500m, ten-year loan that is 40 percent backed by the Inter-American Development Bank’s (IDB) policy-based loan guarantee.

However, Mr Wilson told this newspaper he “can say without fear of contradiction” that proceeds from the $500m facility were not employed to refinance a $300m US dollar bond due to mature just days later on January 16, 2024.

This confidence, he explained, came from the fact that the $300m bond’s investors were repaid prior to the Government receiving the monies from the half-a-billion dollar loan, which meant the latter could not have been employed for refinancing this existing debt. The $500m loan was announced on January 12, 2024.

However, several financial sources suggested that part of the $500m loan proceeds may indeed have been used to pay-out the $300m bond’s investors. Based on Mr Rolle’s explanation, they suggested the Davis administration has likely been financing its 2023-2024 fiscal deficit, which stood at near-$120m at end-October 2023, with short-term bank overdraft facilities.

They added that the Governor’s comments on the “rollover of significant US dollar debt” signalled that the same overdraft facilities may have been employed to repay the $300m bond, with this short-term financing then replaced by long-term borrowing through the $500m loan proceeds.

Mr Pintard, meanwhile, through his other questions also asked how the Government intended to refinance the rollover of $872.6m in maturing foreign currency debt, which according to its annual borrowing plan is due to mature during the 12 months to end-June 2024, if the proceeds from the $500m loan cannot be used for such purposes.

“With less than six months left in the fiscal year, would the honourable prime minister and minister of finance indicate which loan facilities and financing arrangements will be used to cover the nearly $1bn in external financing requirements before end of June 2024,” the Opposition leader stated.

Besides confirming how the loan proceeds will be used, Mr Pintard also urged the Prime Minister to “provide the full terms and conditions of the loan facility, inclusive of interest rates, fees charges”. And he also called on the Government to divulge the policy pledges it has made to the IDB to obtain the policy-based guarantee said to have helped it secure below-market interest rates.

“It cannot be used for refinancing,” Mr Wilson previously told Tribune Business of the ten-year credit facility. “The release speaks to what the proceeds can be used for. It cannot be used for refinancing. When you read the Public Debt Management Act in conjunction with the borrowing resolution for $131m, that helps people to understand how we can borrow at this level and the deficit still be $131m.

“One thing it is not going to be used for is to refinance existing debt. The Public Debt Management Act gives the minister of finance the ability to borrow to meet short-term cash needs. Our revenue is cyclical in nature. We have very strong months of revenue when we have a surplus, and we have months when we run a deficit,.

“Between July and December the deficit expands, and between January and April the deficit shrinks. The borrowing resolution gives us the authority to borrow a net amount at the end of the fiscal period. During that period, borrowing goes up and down depending on how the deficit performs. That’s what gives us the authority to borrow this amount.”

And, while there have been calls for greater transparency surrounding the $500m loan, especially on its undisclosed interest rate and other terms, Mr Wilson said these have not been revealed because the transaction has not reached full maturity.

“I cannot speak to what the interest rate is because of non-disclosure agreements,” the financial secretary said. “The release had to be approved by both the bank [Santander, as lead arranger and placement agent] as well as the IDB. That was the information they felt which could have been disclosed at this time. As the transaction matures we will be able to release that information, but right now the transaction is not mature.”

That, and a subsequent explanation for the non-disclosure along similar lines by Michael Halkitis, the minister of economic affairs, has failed to satisfy the opposition. Kwasi Thompson, the Opposition’s finance spokesman, said of Mr Halkitis’ comments: “The minister’s posture is that the Government will get around to tell us the details months and months after the transaction is completed.

“He wants us to wait for the third quarter public debt report when, as of February 1, the second quarter debt report was due and is now late.... That is wholly unacceptable, and it is the complete opposite of the transparency and accountability this government campaigned on, but regarding which has so far actually moved the country backward.

“We do not accept the Government’s explanation as to why they cannot reveal the interest rates and terms as their first obligation is to the Bahamian people.” Mr Thompson also argued that there was nothing to stop the Government unveiling the policy commitments it has made to the IDB in return for the guarantee.