The nation, which finds
itself overdrawn in its current account, needing to raise funds to pay, public
sector salaries back pay, overdue bills, recurrent expenditure, finance its
infrastructural maintenance and new facilities, and is desperate to diversify
its economy, must carefully examine and educate its population about all
options. The executive can decide to continue borrowings, locally to finance
budget deficits inclusive of capital expenditure, and internationally to meet
its foreign currencies import bills and preserve its local currency strength,
projecting long-term debt repayments, which would, unless revenues rebound,
further grow the current public debt into an unmanageable size. The cabinet can
also withdraw from the nation's cash reserves, savings, stabilizing or sovereign
funds, invested in foreign low risks, low yield instruments, to finance its
previously mentioned needs. Noting that, both borrowings and withdrawals
together can solve the nation’s immediate cash flow problems.
Where do we go from here? Overdraft can be restored, public officers’
salaries back-pay can be paid, overdue bills can be renegotiated, recurrent
expenditure can be met, infrastructure capital expenses can be arranged, and
foreign currency reserves can be restored, but if traditional revenue continues
lower and no other economic growth is in sight, the previous financial situation
will reoccur. For Example, building houses to boost the construction sector,
while job losses occur in the extractive and related industries, can only
result in houses that no one can afford. The nation's housing stock needs to be
redesigned to address low cost rental units, until employment and wages pickup,
before using public funds to construct middle class homes. Noting that,
borrowings and withdrawals cannot and will not deliver the nation's medium-term
objectives.
We need new well paying jobs, which only comes from new
investments, local and foreign. Such investments require a clear line of sight
to profitable markets, strong earnings and sound returns. History has shown
pioneers risking everything into the unknown, followed by skilled workers and
educated thinkers seeking a better life. This mature nation now needs an
investment climate, where savvy workers and thinkers alike participate, fairly
in what has been accomplished and its future. The population must therefore be
made aware of this nation's true wealth and their portion and responsibility.
Noting that, borrowings and withdrawals can only hinder and deplete the
nation's long-term growth and wealth.
The nation; via the budget and investment divisions of the
Ministry of Finance, Corporation Sole, represented by the current Minister of
Finance, who sits in the cabinet, which forms the Executive branch of
Government, must seek to improve its cash flow to balance its budgets and
diversify its revenue sources and its economy. The strategy must be to borrow,
through the issuance and sale of debt financing instruments; Government Bonds,
Treasury Bills to finance the nation’s recurrent expenditure. Simultaneously,
the plan is to access soft, long-term, loans from international development
agencies to fund new and necessary infrastructure projects. While, issuing
shares of well establish essential operations, on to the local stock exchange
as new listings, Initial Public Offerings (IPO), selling or divesting a small
percent, at a fair but attractive price to investors, to raise funds to be used
for economic development; new revenue generating industries, servicing new
export markets and creating new jobs.
Investors, institutional; annuities and pension funds,
employee share ownership plans (ESOP), workers unions, mutual funds, etc. must
seek a safe haven; securely regulated and market driven, for their capital,
which will offer low risks, low growth but with a scheduled steady yield,
returns on investment, dividends that beat inflation, and exiting via the sale
to other investors or back to the issuing entity.
A very active local stock exchange, highly regulated, can
provide the financing the nation needs for its sustainable development, in the
medium to long-term, to diversify the economy, ideas into industries, and
create jobs. Investors, local and foreign, are sitting on the side lines
waiting on the Government's executive to lead. Legislation needs to be strengthen
to allow foreign currencies in and out. Prosecution of breaches in the Security
and Exchange Commission (SEC) act must be publicly settled. The corporation
sole can today announce its preparation and intention to list the National
Utilities Corporation (NUC) and divest as little as ten percent of its holdings
in water and electricity operations in the next fiscal year, followed by the
listing of the National Transportation Company (NTC) in the next and the listing
of the National Tourism Properties (NTP) in the year following, and generate,
at the very least, enough funds to supplement expected budget revenue short
falls. Noting that, borrowings and withdrawals involve principal repayment or
replacement whereas, investors’ capital will stay, recycled to list more
opportunities and simple earn a timely, modest dividend, better than bank
deposit rates.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
