$11-billion drawdown curtails NHT activities

News post November 18, 2015

 DAVIS… one hopes that at the end of March 2017, that [the drawdown] would be historyWhen the government announced in 2013 that it would be taking $11.4 billion from the National Housing Trust (NHT) for four years to help finance the national budget, the public was assured that this would not affect the agency’s operations, but this has not exactly been the case.Chairman of the NHT Dr Carlton Davis has acknowledged that the annual drawdown has meant that the NHT has been less “expansive” in its activities.He was speaking at the Observer’s Monday Exchange on November 16.

“It really would mean in effect that you would have $11 billion more to spend… $11 billion would make a significant difference,” he stated, but added that what the NHT is giving up is congruous with the national good.”If we didn’t meet the fiscal target and reduce the level of borrowing, we would be in serious trouble, and one hopes that at the end of March in 2017 that the drawdown would be history,” Dr. Davis said.He pointed out that although the NHT does not foresee the arrangement going beyond March 2017, if the government were to decide at that time to extend it, the NHT would have to review its long-term plans.”It would (affect plans). That’s why we say anything that we are doing now, we are going to revise it at the end of March 2017, because we would then know just what we can or can’t do,” Dr. Davis said.He pointed to the recent agreement that the government reached with the International Monetary Fund (IMF) to lower the primary surplus target set under its ongoing stand-by arrangement, from 7.5 to seven per cent of the country’s Gross DomesticProduct (GDP) by 2016/17. “If you take the GDP at $1.6 trillion, that would be about $8 billion on an annualised basis, so it may ease the sort of pressure on NHT in the future. While we have to think about houses as our primary focus, we have to bear this in mind because if we don’t have a stable economic environment, all our efforts will not be as stable as we would like,” Dr. Davis reasoned. A lower primary surplus — what is used to service debt after the government addresses its general expenditure — is expected to create additional fiscal space to facilitate capital projects, all while paying down the national debt. In March 2013, the House of Representatives passed legislation to make it legal for the government to withdraw $11.4 billion each year from the NHT to help to run the country from 2013/14 to 2016.17. The Opposition and special interest groups at the time rejected the move as another “raid” on the NHT.

 

Published By: The Observer

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