A closer look at country’s debt

This article was written and submitted by Anthony P. Wood a former minister in the Owen Arthur administration.

An article entitled $407M To Resolve Insurance Matters,

in the Midweek Nation of December 10, 2025, reported that Minister in the Ministry of Finance Ryan Straughn revealed the current Government borrowed $7.341 billion and repaid $9.643 billion since taking office seven and a half years ago.

Such a revelation aroused my interest since I have been closely monitoring and commenting on the borrowing and debt management policies of the Government.

An important observation is that the borrowing amount is understated. During the presentation of the 2025 Budgetary Proposals and Financial Statement, Minister Straughn provided a schedule

(Page 21) which indicated that between June 2018 and March 2025, the Government borrowed $7.264 billion and repaid $7.370 billion.

When the actual repayment of $2.205 billion replaces the provisional figure of $1.836 billion for the 2024-2025 financial year, the repayment amount increases to $7.735 billion over the period.

It is unfortunate that whereas total repayments include debt service (principal repayments and interest payments) for the current financial year beginning April 1, 2025, the corresponding amount for borrowing during the period is excluded. That is, unlike the repayments, the borrowing figure has not been updated beyond the Budget presentation.

Available evidence indicates that the Government has borrowed close to $1.9 billion for the financial year and is on course to reach a record level of $2 billion for the 12 months ending March 31, 2026.

It is important to explain an aspect of debt analysis for the public’s benefit. The level of Government debt is a stock variable and is defined as the total outstanding principal owed by the Government at a specific point in time. The principal is the amount of money borrowed or the outstanding balance of the loan.

Two instances

The debt stock typically does not include interest payments associated with the debt. Interest cost is included in the debt stock in two instances.

First, when interest payments are in arrears and, second, when capitalised interest arises with a renegotiated/ reorganised debt agreement.

Conversely, debt service is the amount of money paid over a specified period, usually a year, which includes principal repayments (amortisation) and interest payments.

Based on the above key definitions, it is easy to understand and appreciate that the Government’s debt repayments exceeding borrowing over a specific period does not necessarily translate into a declining debt stock.

This results from the inclusion of interest payments in debt repayments. This situation applies to the Barbadian experience. At the conclusion of the debt restructuring/ default exercise in late 2018, the debt level declined precipitously from $15.84 billion to around $11.7 billion. However, despite repayments of $9.643 billion over the past seven and a half years, the Government’s voracious appetite for borrowing resulted in the debt level increasing to approximately $15 billion at September 30, 2025.

This means that net borrowing (gross borrowing minus principal repayments or amortisation) was $3.3 billion over the period.