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arnhim eustace
Leader of the Opposition, Arnhim Eustace. (File photo)

KINGSTOWN, St. Vincent – Prime Minister Dr. Ralph Gonsalves has admitted that his government sold the National Commercial Bank (NCB) because of cash flow problems, contrary to his statements to Vincentians, Opposition Leader Arnhim Eustace said on Monday.

Eustace said that Gonsalves made the admission to governors of the Caribbean Development Bank (CDB) meeting in Trinidad last month.

Gonsalves’ Unity Labour Party administration last year sold 51 percent of the NCB to East Caribbean Financial Holding Company Limited of Saint Lucia.

To facilitate the sale, the government borrowed EC$100 million from the CDB to pay off state loan at the NBC.

“We are confident that it is the correct policy,” Gonsalves said last year, adding that the sale was “for the better of St. Vincent and the Grenadines”.

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He further said that when the bank was sold it was “bigger, better and stronger” than when his administration came to office in 2001.

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However, Eustace, speaking on his New Democratic Party’s (NDP) programme on Nice Radio on Monday, quoted from Gonsalves speech at the CDB governor’s meeting in Trinidad in May.

In the speech, Gonsalves, who, in his capacity as minister of finance, is a governor of the CDB, said SVG has benefited from the CDB’s rapid response in the approval of two loans during 2010.

He was speaking of the Financial Stabilisation Loan to assist the government in the divestment of the NCB and the Hurricane Tomas Immediate Response Loan to assist in the cleanup operations after the onslaught of Hurricane Tomas.

“[The Financial Stabilisation Loan] aided in dealing successfully with the liquidity problems at the NCB and in reducing our debt servicing costs,” Gonsalves said at the meeting, according to a statement on the CDC’s website.

“We know now, that the assistance of the CDB in this special case PBL, not only averted the collapse of the NCB, but provided stability to the financial sector in St. Vincent and the Grenadines, and by extension, the Eastern Caribbean Currency Union,” Gonsalves further said in the statement.

Eustace said that while Gonsalves told Vincentians the sale of the NCB was a “master stroke”, the sale resulted from the ULP government’s “failing in meeting its debt”.

“…And he is admitting here that that the … $100 million loan averted the collapse of the National Commercial Bank,” Eustace said, adding, “This is his speech. This is not a secret document.”

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Eustace, who is also a former finance minister, said that Gonsalves also told the CDB meeting that the Vincentian economy had contracted in 2010 — for a third consecutive year.

“This is the first time that I see him admitting that there was negative growth in 2010. … When he did the budget and so on [in January], he would not have had the figures for 2010. Now, he has the figures for 2010. There are three consecutive years of negative growth. [This has ] never happened in the history of St. Vincent and the Grenadines since our independence,” Eustace said.

“But when we (the opposition) talk about it, [Gonsalves says] we are talking about doom and gloom but when he says it, it’s not doom and gloom. He is admitting here to negative growth right up to 2010. He probably [didn’t] put in the 2008 [figures] because he’s ashamed,” Eustace further said.

“I am reading from what he said. … This is the reality of our country St. Vincent and the Grenadines,” Eustace said, adding that in Gonsalves’ view, “it is not good politics to [tell people the reality].

“Fool the people all the time. Fool the public; don’t tell them the truth. If you don’t know the truth, they think things are good. But, I know a lot of people feeling the pinch right now so they know it’s not good. But he will come here and make all sorts of statements in his press conference and so on,” Eustace said of Gonsalves, adding that Gonsalves’ statements were different “when he has to go and face the economic and financial elite of the region”.