Government today responded to a report from the international credit rating agency Standard and Poor's, which states that the national debt is an alarming 106% of GDP $2.12 billion, far surpassing the internationally accepted safe debt to GDP ratio of 60%.
But in a statement today, GOB says that S&P got it wrong, or at least not fully right. Government makes the differentiation between publicly guaranteed debt, and actual public sector debt - stating that it only has to pay the actual debt because the guaranteed debt is paid by privatized utilities and cash flows from securitized mortgages. And government says that according to it's math, its actual debt, $1.34 billion, is 60.2% of GDP.
But while the differentiation between actual and guaranteed debt is instructive, it's somewhat spurious. That's because in the current climate where DFC's bad debts are coming home to roost in flocks, what's publicly guaranteed is quickly becoming what's publicly owed. Take for example Novelo's $30 million debt - which was bundled off in a bond offering. Since Novelo's have not been paying that debt of over $400,000 a month - GOB has had to pick up the slack, thus making guaranteed debt actual debt.
But while splitting hairs is not our style, perhaps the most compelling figure is that according to today's release the IMF's last report puts debt at 92% of GDP; in 1998 that figure - according to the same IMF and calculated in the same way - was 38%, and 38.2% in 1999.