Martinelli spending spree fuels move to raise debt ceiling

 
415Views 0Comments Posted 05/09/2014

WHILE increasing social spending and delaying the removal of the electricity subsidy, the Varela government has asked for a raise of the state's legal debt ceiling to $1.756 billion

Dulcidio De La Guardia, Minister of Economy and Finance, attributes the decision to request an adjustment to "... the size of the fiscal deficit in the first half of this year.
According to the minister ... As of June 2014, the administration of Ricardo Martinelli left a deficit of 3.2% of GDP, having increased spending by over $600 million without adequate financial backing, and because revenues were $335 million lower than budgeted for."

"... With the change requested by the new government, the deficit will increase to $1.756 billion or 3.7% of GDP. This represents an increase of $505 million, equivalent to 1% of GDP. La Guardia clarified with Laestrella.com.pa that "... 'The increase in the deficit will be only for 2014 and no changes will be made to any limits for the following years'.
"Economist Adolfo Quintero said:" 'It was not necessary' to increase the deficit ceiling. The government had demonstrated other mechanisms for cost containment. 'This increase will increase public debt.