Prime Minister Musa and his finance czar, Dr. Carla Barnett are going on a media cycle to spread good spin about the new budget this week. As we told you at the top of the newscast, they've met with the social partners, and plan still to meet with the business sector and the media. But all that may not be necessary, because the budget is already out there and circulating through many hands, even after the Cabinet has been purged of the men the PM called dis-loyalists.
7NEWS has obtained a draft copy of the budget estimates for 2005 to 2006 and it shows the projection of a massive deficit amounting to 6.07% of GDP. We stress that it is a draft though because it does not propose any new revenue measures to close that deficit. That leaves a $200 million financing gap, which could be covered either by cutbacks in spending, new revenue measures, or new borrowing.
In line with that last option, 7NEWS has received confirmed reports that government is pursuing a privately placed US$125 million bond with Bear Stearns and Artemis Global Finance. This offering is expected by the end of March in time for the start of the new fiscal year. It's notable that the bond has a special feature that's called "political risk insurance." It's good for 30 days, which will cost government over US$30 thousand to be deposited in Citibank, New York. We'll have the full details on this new borrowing tomorrow night.
