Captain the ship is sinking
NDP View
The budget presented by Prime Minister Dr. Ralph Gonsalves shows no stark contrast to the one presented last year. In responding to Dr. Gonsalves budget presentation our leader said, this country’s fiscal situation will continue to deteriorate under the ULP’s mismanagement of the nation resources.
This country’s economy continues to shrink, and what was said on Monday during Prime Minister Dr. Ralph Gonsalves speech was several hours of excuses for failure.
St. Vincent and the Grenadines led by the ULP has ended its 4th year of negative growth, and was recently ranked last by the IMF in terms of growth in GDP in Latin America and the Caribbean for 2011.
This is an unprecedented moment in the country’s history where many people both in the public and private sector have lost their jobs and where many families are struggling to make ends meet.
All of this is happening while the government continues to keep a number of retirees whose job descriptions are not clear and who continue to utilize a great deal of the nation’s financial resources, while many young people are left unemployed. This shows the insensitivity of the ULP government.
Our New Master
The IMF Board since February 28, 2010 approved a Rapid Credit Facility of SDR 2,075 and a number of conditions applied to that financing, the details of which the Country was never told. This was the application for assistance made by the Government after the passage of Hurricane Tomas.
All of these recommendations have now to be followed up. Under the Rapid Credit Facility to finance hurricane and weather damage, the ULP government committed itself to certain policy reforms, ten (10) in all. These include: Improving Tax compliance; Establishing a large Tax Payer Unit which includes seventy-seven (77) companies that pay 83% of VAT, corporate income taxes and payee collections; Broadening the collection of property taxes; Streamlining exemptions; Containing the wage bill (no wage increases until the fiscal condition improves); Streamlining spending on Goods and Services.
At the ending of October 2010, St. Vincent and the Grenadines was hit by Hurricane Tomas resulting in significant damage estimated at about 5% of GDP. The country received financial assistance pledges of around US$23.7 million (of which $13.7 million dollars was for immediate emergency assistance and the $10.0 million dollars for reconstruction projects over the next three (3) or so years. About 90% of the US $11.0 million dollars had been disbursed by May 2011. St. Vincent and the Grenadines had also under the Exogenous Shocks Facility received US $5.6 million dollars to help mitigate the impact of the adverse global economic downturn. So the Country has already used 70% of its quota. (the cumulative access limit is 100% not much left.)
Its noteworthy that we have only 30% of the St. Vincent and the Grenadines’ IMF quota left and the ULP government did not announce the ten (10) conditions to which they must adhere in order to receive IMF’s assistance. It is Gonsalves who said that St. Vincent and the Grenadines is no colony of the IMF, yet he was making arrangements with the IMF which involved a number of conditions including NOT INCREASING SALARIES, none of which was made known to the people of this country.
Further Mismanagement
As far as the fiscal situation for the year 2011 is concerned, actual revenue and grants fell by $22.5 million dollars below projection, while total expenditure exceeded revenue and grants by $38.4 million dollars leading to a sizeable negative primary balance of $15.1 million dollars which is twice the amount projected. At $7.3 million dollars for January – July 2011 we were well below the projection of $26.1 million dollars. Net domestic borrowings at $33.7 million dollars was twice the amount of $16.9 million dollars that had been projected, this is not a sustainable situation.
A current account of the balance of payments is expected to narrow this year reflecting lower imports. Exports on the other hand are expected, according to the IMF, to pick up in 2011 after a decline by 12% in 2010 reflecting a recovery in banana exports in the latter part of 2011. But, this projection was made before the banana production decline due to the Black Sigatoka disease ravaging the industry as a result of the Minister’s incompetence and failure to properly manage the spray schedule to fight the disease.
Foreign Direct Investment is also expected to decline as there will be delays in projects been implemented and cuts in capital spending.
Band Your Belly
In order to restore economic growth, along with ensuring medium term fiscal sustainability and protecting the social achievements realized in the past decades, Prime Minister Dr. Ralph Gonsalves has announced that as of this year Vincentians will have to pay 15 per cent more in property taxes while duties on beverages, tobacco, and vehicles will also see an increase.
For the poor it would be further trauma as there would be an increase in water rates relating to the basic supply of water.
Our Only Hope
Opposition leader the Hon. Arhnim Eustace, yesterday morning, outlined why he is the most qualified person to deal with the economic challenges confronting Saint Vincent and the Grenadines.
Mr. Eustace began his response to the Prime Minister’s presentation by detailing a few of his credentials, positioning him as the most experienced person in the Parliament to address the state of this nation’s economy. Eustace indicated that in the next few months he would have served this country, and particularly the people of East Kingstown for 14 consecutive years. He indicated that prior to doing this, he had been a Civil Servant in the Public Service of Saint Vincent and the Grenadines for ten years, rising to the level of Permanent Secretary and subsequently functioned as Fiscal Advisor to the government for four years, a total of 28 years in direct service to Vincentians.
He further worked as a regional public servant with the Caribbean Development Bank for 17 years, beginning as an Administrative Officer and for the last 8 years of his tenure as Director of Projects for the countries of the Caribbean.
In 1985 he was seconded by the CDB to the UN Development Programme which assigned him to the government of St. Vincent and the Grenadines as Director General of Finance to review and make changes to the fiscal situation in this country.
The Opposition Leader said that given this experience he is the most qualifed person in the House of Parliament to analyze and comment on the economic health of St. Vincent and the Grenadines
