On 19 June 2019, the Daily FT newspaper quoted the state minister of finance making the above statement in Parliament.
Since the statement does not specify a time period for this claim, FactCheck evaluated it for each year since the change in government in January 2015.
The claim can be assessed by using a statistic called the “primary balance” reported in the Central Bank Annual Report. It is calculated by subtracting all government expenditures, except for interest payments, from the total revenue plus grants received by the government.
If the minister’s statement is correct, new government borrowings would have been required only to repay capital and pay interest on debt. This means the budget deficit in a year would not be more than interest payments for that year. In such years, the primary balance will be positive. (Note: Capital repayment of debt is not classified as government expenditure in public sector accounting). Exhibit 1 shows the primary balance for each year from 2015-2018.
Exhibit 1: Government Fiscal Operations (2015-2018)
Exhibit 1 shows that the primary balance has been positive in 2017 and 2018. This means the minister’s claim is true for the years that he has been State Minister of Finance (since May 2017). However, the primary balance has not been positive in the prior years of 2015 and 2016, which is still under the tenure of the present government.
Therefore, we classify the minister’s reported statement as PARTLY TRUE.
After this statement was reported, the minister has correctly stated in parliament that all government borrowings have been used to repay debt only for the years 2017 and 2018 (Parliament Hansard of 9th July 2019).
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