National Planning Commission (NPC) Director-General Tom Alweendo said this on Wednesday while briefing the media on the progress regarding the implementation of NDP4, which was launched in July 2012.
“I am aware that there are those who are anxious about affordability of the needed investment, especially public investment. They caution against high budget deficits that will lead to an unsustainable public debt,” Alweendo stated, adding that it is argued that unsustainable debt will erode the macroeconomic stability the country has managed to build over the years.
“These are legitimate concerns that cannot be ignored. I therefore want to assure you that one of the principles underpinning the formulation of NDP4 is the maintenance of our macroeconomic stability, without which it will be impossible to achieve the set targets,” he said.
Alweendo further noted that the country’s development cannot be fully funded through the traditional funding mechanism – the National Budget.
This, he said, will require leverage on private sector funding through innovative partnership agreements between the public and private sectors.
“In this regard, we welcome the Public-Private Partnership (PPP) policy that has been developed by the Ministry of Trade and Industry and we urge the implementation thereof without further delay,” he said.
Over the last five years, the average public debt to Gross Domestic Product (GDP) ratio was 20 per cent, while the deficit ratio was two per cent.
It is estimated that the 2012/2013 deficit will be below five per cent.
“These are not alarming statistics by any measure,” Alweendo said, adding that there is still sufficient fiscal space to do a little more.
Speaking about Government borrowing for infrastructure development, he said borrowing costs are currently the lowest they have been for some time, making it less costly to borrow.