WITH ITS HEAVY domestic borrowing programme, the Government runs the risk of crowding local businessmen out of the money market.

Economist Tennyson Beckles made this charge Friday, during the Democratic Labour Party's (DLP) lunchtime lecture at DLP headquarters on

George Street, St Michael.

But the assertion was challenged by journalist Patrick Hoyos, who joined Beckles and businessman Dick Stoute in making presentations on the local economy.

Beckles sought to dispel what he said was the impression given by Minister of State in the Ministry of Finance, Clyde Mascoll, that Government's heavy borrowing on the local market – estimated at $3 243 million at the end of last March – should not be a matter of concern.

"If the Government is borrowing the money, then, of course, the Government is in competition with private people for the money. Then the price of money is going to rise. The interest rate will rise...."

Depending on how effective the Government managed its debt problem, Barbadians could see it moving to increase taxes, restrain consumption below output, control wages below the level of productivity, increasing interest rates, thereby making money more expensive or even devaluing the currency.

"Devaluation is what we don't like to talk about," Beckles noted, "but ... in the final analysis if you do all of these things and you still find you cannot get your debt paid, then, of course, you have to devalue your currency."

Beckles also charged that Government was spending borrowed money "buying growth, buying popularity".

However, Hoyos said it was not correct to say that "Government was sucking the money out of the system at the expense of the private sector".

"The evidence is all to the contrary," he declared.

It was "not as if the Government was borrowing the money and competing so strongly for the funds that the private sector and the consumers could not get money", he countered.

"The evidence that I see is not to suggest that the normal competition for money has been to the detriment of the private sector or the individual person who wants to have money.

"In fact, the only time interest rates started to rise was last April when the Government imposed, through the Central Bank, an increase, four times, in the minimum deposit rate to force the banks to raise their interests rates on loans."