The financing of the debt was done domestically through the issuance of treasury bills by the Central Bank starves the domestic commercial banking sector of much needed financial capital to finance expansion of the private sector activities.
The Governor told the joint parliamentary committee that government recognizes that in addition to crowding out the private sector, the consequences of the persistent deficit financing of government's activities 'limits the ability of monetary policy to have the desired effect.'
The joint committee was also informed of the fact that short-term treasury bills have been increasing dramatically to finance government's fiscal operations, some of which are frivolous expenditures that this regime is so fond of funding.
Inflation becomes a persistent problem that the Central Bank is limited in capacity to fight effectively.
The International Monetary Fund (Fund) has warned in report after report about the need for 'prudence' in managing the domestic debt. But it is evident that the warnings have been falling in deft ears. What else would explain the doubling of the domestic debt in one fiscal year if it not a regime that flouts international rules, procedures and requirements.