Lm1,000 per hour

It has been said that the main reason for the persistent structural deficit is the cost of servicing our public debt. If we examine the facts, it is easy to conclude that this assertion is more than partially correct.

Suffice it to say that while our structural deficit hovers around Lm80 million to Lm90 million a year, the cost of our debt servicing amounts to around Lm100 million. Therefore, had we not such a large outstanding public debt, we would not have a deficit.

The Labour Party has been critical of this administration for failing to curb the national debt, which has exploded over the years. Notwithstanding the government's rebuttals, the figures vindicate Labour's persistent criticism.

When the Nationalist Party took over the reins of government in 1987, the public debt stood at a mere Lm64 million and was well counter-balanced by substantial government reserves. Undoubtedly, the interest on this amount was reasonable and reflected a very minute portion of the government's yearly expenditure.

Alarmingly, today, after 15 years of a Nationalist administration, the national debt has soared to an unbelievable Lm1.4 billion. This signifies an increase of no less than two thousand per cent.

Unjustly, the Nationalist government tries to attribute part of the problem to the Labour Party's short-lived government. Of the last 17 years, Labour was in government for just 22 months and statistics show that when it was returned to office in October 1996, the public debt had already exploded and we were already facing a deficit of around nine per cent. Since 1987 our national debt has been increasing steadily by Lm25,000 a day or over Lm1,000 an hour.

As I stated earlier, prior to 1987 debt servicing consisted of a mere fraction of the government's expenditure. In 1987, for example, the interest due on the national debt was a mere Lm6 million. Last year the government paid almost Lm100 million in interest. In basic terms, this signifies a cost of over Lm275,000 per day in interest, a figure that many economists would say is hardly sustainable.

This year, the government's performance has been no better. By the first half of the year Lm49 million had already been spent in interest. In all probability, the amount to be paid in the latter half of the year will be even larger. Together with this unbelievable figure, one must keep in mind the other hundreds of millions owed by corporate entities for which the government has issued letters of comfort.

The country is truly drowning in debt. In fact, the public debt today is equivalent to almost twice the gross domestic product and this is alarming, to say the least.

It will certainly prove a colossal task for any administration to start gradually reversing this trend. More so, it must be stated that as things stand today, foreign direct investment is practically at an all-time low and income from taxation has been stretched to the limit.

Curbing waste and capital investment on white elephant projects such as the Mater Dei Hospital would certainly be a step in the right direction. Such initiatives, however, require a change in mentality and a drastic new approach to governance.

The present administration has been there for too long and is entrenched in its modus operandi. Only a change in government, which is long overdue, could create the right climate and guarantee the necessary impetus to re-generate our economy.

Dr Herrera is a Labour MP.