Parliament on Monday voted 12 votes to six, authorising the government to borrow a further US$16 million for the EC$729 million Argyle International Airport.
It was the second loan for the project since Aug. 4, when the opposition supported a loan for US$5 million.
House leader, Prime Minister Ralph Gonsalves, asked for a division of the house as lawmakers prepared to vote around 7 p.m.
The six opposition members present voted against the bill, which the government said contains monies to assist with the financing of a contract relating to the airport and connected purposes.
In leading the opposition’s response, MP for Central Kingstown, St. Clair Leacock noted the name of the Bill — “Economic Diversification Loan Authorisation (No.2) Bill, 2015”.
He said it was “misleading” and a “misnomer” and was intended to “wrap the request in foreign clothes and to hide the agenda of the legislation before the Parliament”.
The seven-year loan is from the Export Credit Guarantee Department of the United Kingdom government, trading as UFEF
It is to be repaid in 14 semi-annual instalments, the first of which is due six months after the starting point of credit.
Interest is to be calculated using the commercial interest reference rate (CIRR) relating to dollars and published by Organisation for Economic Co-operation and Development (OECD).
To the extent that such reference rate is not ascertainable, the rate will determine and calculated by the lender on the same rate as the OECD, being the average of U.S. Treasury rate for the preceding month, plus 1 per cent, Gonsalves said.
He told lawmakers that in addition to the interest payable, there are a one-off 2 per cent arranger fee and a 1 per cent administrator fee, payable on the outstanding balance to the lender’s agent.
Gonsalves said these interest rates are “modest” in the circumstances.
Gonsalves said the US$16 million loan was provided for in the Budget that Parliament passed in January.
“Mr. Speaker, it is here in the Estimates. So when it is said that this is sprung as a surprise, it is here,” Gonsalves said.
He added: “And these Estimates were approved. All I am doing today is to satisfy the legal requisites for the payments to be made for items, which have already been purchased and received.
“Anybody reading these Estimates would be able to see what I am talking about, and reading these Estimates in conjunction with the supplementary appropriation bill, as I have indicated, of 2012, which came with the close to the 200 million dollars,” Gonsalves said.
In June 2013, Parliament gave the government permission to borrow EC$208 million which then Minister of Works, Sen. Julian Francis said was necessary to finish the airport.
But in his rebuttal, Leacock accused Gonsalves of trying to pull the wool over the eyes of lawmakers.
“If the truth be told, Mr. Speaker, when the Honourable Prime Minister goes on to say that the funds required are here in the Estimates, there must be a very strong and potent rebuff to say that it is not,” Leacock said.
He said the movement was asking Parliament for around EC$44 million, noting that Gonsalves had said the funds are a replacement for EC$33 million identified in the Budget as project 401002 for EC$33, 480,000.
“You may argue that seven is greater than 10; I would insist that 44.5 million is far greater than 33 million dollars.
“You are in fact asking for 12 million dollars more than had been approved in that Parliament,” Leacock said.
Explaining the latest loan, Gonsalves told Parliament that over the last four years, IADC has been in negotiation with UFEF to secure export credit to acquire a range of equipment furniture and supply for the airport.
Gonsalves, who is also Minister of Finance, said the package of goods and supplies was approved in principle by UKEF.
However, it has taken more than two years for the UKEF to work out all the legal and administrative arrangements to have it available for his government to sign.
As a consequence, UKEF gave the government permission to proceed with the acquisition of certain items in the package with the understanding that IADC will be refunded when the credit is extended, Gonsalves said.
The government has said that the airport will become operational this year, after missing deadlines annually since 2011.
But the opposition has dismissed this timeline as intended to fool electors ahead of general elections, which Gonsalves has said will be held before year-end.
The problem with this boondoggle is that we are now in a position where there is no option but to try and complete it so that it is operational to some extent.
So much money has been spent that as a country we can do nothing but try and re-coup some of the expenses. I say some because we will never recoup what was actually spent; certainly not in my, or the next 2, generations lifetime.
This Airport project will bankrupt us as a nation. I am aware that there are many who say that we needed an International Airport due to the problems of Liat which we experience when transiting through our neighbouring islands. Yes Liats service is bad however we cannot afford this Airport and it is not a project which should have been undertaken. As far as we know, no International Airline as agreed to flight direct to St. Vincent from the UK, Canada or USA. Which an operational date of by year end shouldnt we have already had such agreements in place?
We have spent, and are continuing to spend monies which we do not have. We are borrowing from so many avenues and the terms for repayment will cripple us financially. Just think about it, even if the Airport made an operating profit of $5million a year it will take over 140 years to just get back what we spent, and this does not even include the interest we are paying on the loans. Even if secondary revenue was brought into the country due to the international airport, and I have seen no evidence to suggest that this will be of anything substantial. The revenue which will be pumped into the economy will not be noteworthy.
While there is now no choice but to try and finish this, the Opposition were however right to vote against the bill asking for further approval for borrowing. While I do not know their reasons, no further spending should have been approved until we as a nation were provided with a clear breakdown of what the monies are to be spent on. It is all well and good Ralph saying it is to finish the airport and buy this furniture and that furniture however no accounts are being published (as far as I am aware) and no one is publishing any sort of audit to show how the monies are spent. This is our money; it is not ULP; it is not Ralphs; It is Vincentians monies because whenever Ralph and his cronies leave office, we, and our children, are the ones who will still have to repay the loans.
A lot of these politicians will be able to retire from politics on their pensions and fat bank accounts. The average Vincentian do not have this luxury and we are the ones who will suffer.
The other reason why I do not believe that any further borrowing should be approved is because with a looming election the propensity for mismanagement and outright theft is too great. Do I believe that any monies received between now and the election is going to be properly spent; not at all. A lot of these individuals will be looking out to line their own pockets. As with what happens following the change of any Government in St. Vincent, it will take a mere number of months (or even weeks) before we hear the cries of the money gone missing.
Even if the NDP formed the next government, they should not approve any further big spending until there is a published audit of the spending so far. They should also lay out a clear plan of what needs to be done and the cost for doing so. So when they say to us that $x million is needed to do this, once the $x million has been spent, we can all see that it was spent on what was agreed.
Where there has been mismanagement, regardless of which Government appointed them, those who are responsible should be held to account in the criminal courts.
Well said.
Just one important quibble: You say that “even if the Airport made an operating profit of $5million [per annum]” if would take 140 years to repay the building costs.
Actually, no Caribbean airport that I am aware of — and probably most international airports around the world — ever even break even on their operating costs. The argument is always that (1) as a public service, the goal of the airport is not to make money per se but to provide a perceived necessary form — or in our case wished for form — of modern transportation and (2) the value-added to make the airport economically viable will come from the spin-off private sector profits from money spent outside the airport by more visitors and increased travel by local and overseas Vincentians.
As you rightly point out, the spin-off tourist and other benefits will be negligible in SVG.
Overall then, the economic costs of the airport will outway its benefits by a huge and devasting multiple. May God have mercy on us all!
C Ben,
Now how died and made you an expert on Airports, You small minded Vincentian love to run your mouth when you don’t know one Sh”t you are talking.
You are a demented laughing stock, and please leave God out of you slanted attempts.
Finally, with this vote in Parliament, we can see that the Opposition is ready to govern.
Unreasonable fears of Gonsalves’ propaganda is now dismissed.
They are ready.
Gonsalves claims it will cost $10 million a year to run the airport, it will cost a million a week to run the airport and a further million a week to go towards repayment of capital cost and loans. That’s a $104 million dollars year. Where the Micky Mouse figures come from of $10 million a year I really do not know.
There very sill estimate of bringing in 10X400 seat aircraft a week will cost $400,000 US dollars in seat subsidy to those airlines, that alone is EC$1,075,200 over a million dollars a week and not in my figures above.
This whole project is based on lies.
So is the ULP going to get this loan in spite of the opposition vote against it? It’s time to call a no confidence vote in parliament and organize a demonstration until more information is provided by the government. NDP should point out to the people that they are the ones who will have to repay the loan no matter who forms the next government.