Cabinet proposes severe borrowing limits

It looks more like a financial straight jacket than meaningful reform but Cabinet yesterday endorsed new legislation to severely limit its power to borrow money. A press release outlining elements of a soon-to-be-proposed finance and audit bill indicates that the National Assembly will have to approve any loan greater than ten million dollars. It also places an absolute limit on the total amount, which may be borrowed in any financial year of ten percent of the nation’s gross domestic product. With GDP at a little over a billion dollars that would confine annual borrowing to a hundred million or so–an amount that might sound prudent for the next few years of belt tightening, but it remains to be explained what would happen in better times, or more importantly, during a national emergency.