Former Vice President Jacinto Peynado in the Listin Diario today expresses his opposition to the Mejia administration issuing sovereign bonds to meet its fiscal deficit. He says that when the PRD took power in 1978 the public debt was US$900 million and after leaving government eight years later, the debt had soared to US$4,500 million. Peynado is concerned that the short term financing of the bonds, with an interest rate of more than 11%, would only give the government more money for current expenditures. He notes that government construction is practically paralyzed due to the increase in wage payments and other non-capital expenditures. In his opinion, putting US$300-US$500 million in bonds on the international market will mortgage the future of several generations without any positive effect on the national economy. He urged the authorities to work on improving their managerial capacity so they can execute the US$600 million contracted in loans from the World Bank and the Interamerican Development Bank while at the same time reducing government expenditures instead of going the easy way of bonds financing. Those who favor the bonds say that the indebtedness of the country in regards to the Gross Domestic Product is only 20%.
