KINGSTOWN, St. Vincent – Lawmakers late last night approved the estimates for an EC$793.9 million budget in 2012 in the absence of opposition parliamentarians, whose leader said that the document was “683 pages of much the same”.
Arnhim Eustace, in his contribution to the debate earlier yesterday, said this country is in a position of “major fiscal deficits” that the estimates cannot fill.
But he and other members of Parliament from his New Democratic Party did not wait around to hear Prime Minister and Minister of Finance Dr. Ralph Gonsalves’ response to their criticisms of the estimates, which Gonsalves siad are “fashioned to respond to the current economic circumstances” and the “strategic path” which his government has chosen.
“It (the estimates) is 683 pages of much the same as we have had for the last five years. And it is that that has led us to our current condition,” Eustace said.
“The estimates of 2012 are not fundamentally different from that of 2011. How will these estimates contribute to the revival of economic growth for St. Vincent and the Grenadines? These are some of the questions that we have to ponder, ” Eustace told lawmakers.
“One searches these estimates in an effort to discern a change in policy, an approach by government to resuscitate the economy as the nation clamour for positive growth and for jobs. … Mr. Speaker, I don’t see the substance in these estimates that will move us in that position,” Eustace said.
“That is why the estimates are so important and at this time,” he further stated, adding that lawmakers must “pay great deal of attention” to them.
“Through it, we should be able to discern, Mr. Speaker, government policies to get us out of this negative position,” he said.
He added that he is unable to discern the government’s approach to reducing “our debt burden and achieving primary surpluses”.
Eustace further said “… one would expect, coming out of this document, to form an opinion as to whether, the estimates, as presented, will contribute to growth in the future and what way will it contribute. And that is the context in which I wish to place this debate on the estimates.”
Eustace acknowledged the impact of natural disasters and the international economic crisis on the local economy.
He, however, said that it is the fault of the Unity Labour Party administration that action was not taken to militate against the impact of external economic factors.
“That’s why we are where we are today, approaching a fourth consecutive year of negative growth, with major deficit which we cannot fill and even these estimates can’t fill,” Eustace said.
“That is not the fault of the international community. It is our fault — the fault of government of the day because action was not taken when it should have been taken.”
Eustace reiterated that this country is the only one of the 32 nations in Latin America and the Caribbean for which the International Monetary Fund has projected negative growth this year, potentially the fourth in a row.
He asked why was his country is in this position, noting that the 31 other countries also faced the same economic crisis.
“What is so different about us? What is the special factor that affects us in St. Vincent and the Grenadine that we have been unable to do what the other countries have done?” Eustace said.
Eustace, an economist and former prime minister and minister of finance, said that there was nothing wrong with an overall deficit.
He, however, said that while deficit of 3.5 per cent of a nation’s Gross Domestic Product is generally accepted internationally, nations are expected to have a surplus on their recurrent budget.
“I have been saying that year after year. People say, ‘Man, that is doom and gloom talk.’ But the reality is that is expected of us as a nation, that the basic things we do, in terms of recurrent expenditure, including wages and salaries, must be funded by ourselves; by the activities that we undertake, by the taxes that we determine and not by others,” he said.
“The days of budget support, which was the norm in colonial times, have gone and it is only in the most difficult circumstances that you can access budget support,” Eustace said.
He told lawmakers that they need “to address our minds” to the economic realities and “frame our estimates in a manner which points clearly to a decision on the part of government as to how we are to get out of that morass.
“On the capital side, we need to see to what extent our capital projects are likely to reduce unemployment, which, according to the IMF, stands somewhere in the order of 25 to 30 per cent of the workforce,” Eustace said.
He said that the EC$913 million budget presented in 2010, hailed, as the nation’s biggest ever, was not sustainable.
“… the reality is, that budget was never sustainable. It was talk,” he said.
Eustace said that in addition to natural disasters and the economic crisis, “poor performance of the government” has contributed to the nation’s financial situation.
He said this poor performance is “characterised by its lack of action to stimulate the economy, as can be seen in its lack of ability to pay off the private sector for goods and services; the inability, even a few months ago, to provide the spraying for bananas; and a number of other areas, where there is, obviously, a shortage of funds”.