WITHIN RECENT TIMES, the borrowing of money by sovereign countries has become a matter of high political import. It has become an issue occupying the attention of the man in the street, simply because the consequences of debt, and the servicing or otherwise of debt either by sovereign countries or by major corporations, have had a direct impact on the creation or loss of jobs and thus on pockets and lifestyles.

In the private sector, the cessation of work at the Four Seasons project in Black Rock, St Michael, appears to have been connected to a collapse of the sources of borrowing, and the restart of the project similarly awaits a new flow of credit financing.

The story of this project is a singular example of how our everyday lives can be impacted by the availability of credit, which is another way of describing debt. What is more, it was the inability of ordinary people to pay their house mortgages in the United States which, in part, fed the default by some banks and other investment houses on the bonds and other financial instruments which they had created to fund the mortgages.

The politics of that issue reverberated right around the world and has had a profound impact on the political fortunes of the major political parties in that country and in others.

Here at home we have a more pertinent instance of how our social development has been considerably enhanced by the use of debt financing. The completion of the circle of free secondary education was effected by the late Right Excellent Errol Barrow, using the technique of deficit financing after a political campaign during which his opponents criticised his manifesto promise on the issue, arguing that an absence of revenue would make the promise a non-starter!

Now current recessionary times have pushed this matter of deficit financing back to our political and economic front burners, and presently the fiscal deficit is almost eight per cent of the gross domestic product.

In her final review of the economy last week, former Governor of the Central Bank of Barbados, Dr Marion Williams, spoke to the reasons for this increase beyond the desired three per cent.

She noted: "I do not normally agree to increasing the size of the fiscal deficit, but in a recessionary situation that is probably the only course if you want to mitigate the slowdown in output on the private sector side, by an improved level of output on the public sector side."

She also pointed out that many countries had increased their deficits to keep economic activity going, and that she did not believe "Government actually does have much of a choice . . . in a recessionary situation".

In principle, we support the views of the former governor, for a slowdown in the private sectors of the economy results in increased unemployment and reduced government revenues among other miseries, which may include lesser amounts of money for the social safety net programmes.

However, given the aversion of ordinary Barbadians to "getting into debt", we can understand the potential for political criticism, especially of the timing of the policy, and the implementation of other discretionary spending by Government at this time.

We leave the pros and cons of these specific issues to the political adversaries, but the necessity to sustain the levels of employment and government revenues in recessionary times will test any government anywhere.

Small open economies such as ours require a judicious mixture of deficit financing coupled with foreign borrowing on the global capital market, if they are to ride out the recession.

These policies were successfully used in 2001, but borrowing was a central plank in that policy, and so, once again, national borrowing is a hot political issue, but it has to be supported as the only way out!