Economist Arnhim Eustace said the budget was fraught with inconsistencies, half-truths, fake analysis and heavy deficit without clear indications of financing.
He said the counter-cyclical policy adopted by the Dr. Ralph Gonsalves government eight years ago was an indication that the economy has been in trouble since then.
He noted that this year’s budget had the largest deficit on the current account — EC$108M (US$40M).
“I regard this budget as a fraud perpetrated on the people of St. Vincent and the Grenadines. I am ashamed. The people of St. Vincent and the Grenadines do not deserve this,” Eustace said.
He said every major subsector of the economy had declined since 2008, adding, “We are twiddling on the brink of bankruptcy.”
The former finance minister, who was also Prime Minister for five months under a New Democratic Party (NDP) administration, said the Gonsalves administration has every year devised “a new vice to place Vincentians under further distress”.
Among these vices, he listed victimization, fear, nepotism, betrayal, saying, “and now, money laundering is beginning to raise its head in relation to the government of St. Vincent and the Grenadines”.
He was referring to US$1M (EC$2.7M) in cash “government officials and their acolytes” deposited in the government’s account at the state-owned National Commercial Bank.
Gonsalves, in response to a question from Eustace in Parliament last week, told legislators that information had been leaked from the bank and he would not “dignify mischief nor unauthorised breaches of confidentiality.”
“I know that despite the bluffing, the Prime Minister is concerned about the matter. What I want him to do is to clear the air so that the image of this country, as if an image could breathe, would breathe clean air,” Eustace told legislators on Tuesday.
He further said that the 2010 budget could not stand on its own. (Follow I Witness-News on Facebook)
“I didn’t think that any minister of finance would have the testicular fortitude to bring such a document to Parliament….
“[The Prime Minister] has brought this country practically to the brink of collapse. But the Prime Minister does not listen. He listens to himself,” Eustace said.
He said the budget making process had been reduced to an exercise in arithmetic “with tinkering here and there and you try strike a balance”.
Regarding the national debt of EC$1.19B (US$400M), Eustace said that for the first time in the nation’s history domestic debt was higher than external debt.
Gonsalves in his budget speech on Monday said that there would be no commercial borrowing this year.
Eustace said that while the lending terms of external financial were more favourable, the government avoided them to evade their oversight of loans.
“I think we should re-examine this issue because our payment are already high. Why are we moving in that direction? What is the benefit?” Eustace said.
This year’s budget is EC$162.6M (US$60.22) or 21.7 per cent higher than the approved estimates for 2009 and the government will run a current account deficit of EC$20.5M (US$7.59M).
Gonsalves said this “manageable amount” was needed to safeguards the gains made in poverty reduction and the “education revolution”. (Follow I Witness-News on Facebook)
The Prime Minister also said he was removing the Value Added Tax (VAT) on wheat and raw chicken imports as well as packaging for agro-products.
The only increases this year would be a 20 per cent hike in the fees for citizenship, residency, and work permits respectively, with exemptions for persons who become citizens by marriage.
Gonsalves described the fiscal package as the “most challenging” since his ULP came to office in 2001 and said his administration was focusing on the productive sector with a view to bringing relief during the hard economic times.
On Monday both NDP and ULP supporters gathered in the capital as Gonsalves presented the budget.
The NDP highlighted the “major issues confronting the nation” while government supporters came out in solidarity with the government. The opposition said it would continue its picketing throughout the budget debates this week.
The NDP has described the ULP administration as a “lame duck government”. Pundits say that the ULP will go to the polls this year to seek a third term in office, although elections are not due until March 2011.