KINGSTOWN, St. Vincent — Opposition Leader Arnhim Eustace has compared the EC$913.5M (US$338.3M) estimates for 2010 to the buildings that crumbled in the earthquake in Haiti last week.
“I regard these estimates something like a pack of cards from which a building is built. In terms of revenue, it is not there and it will collapse, much like the buildings in Haiti,” Eustace told lawmakers.
He was contrasting the estimates to the magnitude 7.0 earthquake that devastated the fellow Caribbean Community (CARICOM) nation last week, claiming at least 40,000 lives.
He said the estimates lacked “internal consistency and was very optimistic in terms of expenditure vis-à-vis revenue”.
He said they were “the worst” he had seen for his multi-island nation of 107,000 citizens and doubted the ability of the Dr. Ralph Gonsalves headed Unity Labour Party (ULP) administration to implement it.
“As I looked at the [financial] summary, I wondered if I was seeing right. I wondered whether in fact our country was in anyway affected by the world economic and financial crisis,” said the former prime minister and former minister of finance under New Democratic Party (NDP) administrations.
“Indeed, it seems that we are immune from the effects of that crisis as we sort, once again, to increase our expenditure at a faster rate than we are earning revenue,” Eustace, an economist, said.(Follow I Witness-News on Facebook)
He said the estimates were not sustainable and the ULP administration, which might go to the poll seeking a third term this year, should prioritise.
“The question is, in the current financial environment, do we have the financial capacity to implement what we have on paper?
“Categorically, I say no,” he said, adding that since 2005 — the year when the ULP won its second consecutive term in office — he noticed “changes in the way in which the finances of the country was being run”.
“We did not have this run away expenditure train. If we continue along this path, I predict it won’t be long before we find ourselves in the hands of the International Monetary Fund and a structural adjustment programme,” he said.
“None of us in the Parliament would want that,” he added.
National debt simplified
Eustace allocated much of his 48-minute speech to the national debt, which, on Sept 30, 2009 had increased by 10.2 percent to EC$1.19B (US$400M), 75.4 percent of GDP.
“It means that every month we will be paying EC$12,416,000 (US$4.6M) on our national debt … per week EC$3.1M (US$1.14M) … EC$620,833 (US$230,000) every working day … every working hour we will be paying EC$77,604 (US$28,742)… and it comes down to $EC$1,293 (US$479) per minute.
“I do this very deliberately because it is important that our people understand that when we talk about debt service … you have to take taxpayers’ money every month, every week, every day and pay it [on the national debt].
“In the 45 minutes in which I have to speak, do you know how much debt we have to pay? EC$58, 203 (US$21,556)!”
He said with the proposed EC$149M (US55.2M) borrowing in 2010, the national debt could increase to EC$1.430B (US$530M) by the end of this year. (Follow I Witness-News on Facebook)
Eustace said it appeared that the EC$237M (US$88M) provision could not cover incremental and salary costs, especially with the proposed addition of 170 new posts to the public service.
He also questioned an EC$11M (US$4M) reduction in allocation for goods and services, saying that “as the financial squeeze takes hold” Gonsalves’ government was unwilling to cut spending in other areas.
“But that is a crime,” he said, adding that the poor are most affected by such reductions. “Look for something else to decrease. Not that!”
“On what basis is this justified,” Eustace asked, saying that ensuring that the county’s hospitals gets the good its needs should be a “priority”.
“You hear the myriad of complains we have about the hospital – lack of drugs and so on. We [are] decreasing [spending on goods and services?] That has no meaning!” Eustace said.
Protest & support
The NDP leader, whose supporters picketed the parliament building on Tuesday, expressed support for governments plan to meets it obligation to an entity that would replace the cash strapped British American Insurance.
Some government supporters also donned placards in support of their administration.
“I believe that it is absolutely necessary to have that. That I see as a priority. That I see as a need, not a want, and I give support to that particular project.
He however said because of “the profligate way” in which the ULP administrations have spent over the past few years, SVG has lost a level of independence in making contributions to its projects from its revenues.
“We have become totally dependent on outside sources,” he said.
“I think we need to have another look at this estimate and I hope that when we meet next week Monday and the Prime Minister outlines his budget we may see something that generates more confidence — not only on the part of those in this honourable house but confidence on the part of our people and confidence on the part of the private sector of this country.”
Gonsalves, who is also Minister of Finance, told Parliament earlier on Tuesday that the 2010 estimates reflect a 20 percent increase over last year’s figure. Recurrent expenditure accounted for EC$610.17M (US$226M), an increase of EC$55M (US$20.4) or 9.9 percent more than 2009. (Follow I Witness-News on Facebook)
Current expenditure for 2010 was predicted to be EC$523M (US$193.7M) and amortization EC$87M.
Capital expenditure for the 2010 fiscal year was estimated at EC$303.3M (US$112.3M) an increase of 53.7 percent or EC$106M (US$39.3M) over last year’s spending.
The budget debates are slated to begin next Monday, Jan. 25.