KINGSTOWN, St. Vincent – Both the International Monetary Fund (IMF) and the regional money market have confidence in the Unity Labour Party administration’s ability to manage this country’s debt, according to Prime Minister Dr. Ralph Gonsalves.
Gonsalves made the assertion in Parliament on Friday as he said that his government’s four tranches of EC$75 million in 90-day treasury bills were over-subscribed last year.
He made the point as he quoted the IMF as saying that the local public debt “is projected to revert to a sustainable trajectory over the medium term and the external debt distress remains moderate”.
While the fiscal situation has been deteriorating in recent years, the government has stepped up fiscal consolidation measures, both on the revenue and expenditure fronts, the IMF further said.
“These, along with projected improvements in economic prospects are expected to improve the fiscal situation and reduce the public debt-to-GDP ratio to 52 per cent by 2021,” the IMF said of the debt-to-GDP ratio, which is currently less than 70 per cent.
“I ain’t saying that you know,” Gonsalves said, adding that on the issue opposition legislators “present half truths and twist things which are being said out of context”.
“Not only is the IMF saying there is no distress in our debt situation, that it is moderate, the market also thinks so,” he further stated as he spoke of the treasury bills sold last year.
“All of our offerings were over-subscribed on the regional government securities market,” he further stated, adding that his government, on average, paid interest of below 4.5 per cent.
“[The 4.5 per cent] interest rate [is] better than what anybody else in the Currency Union is getting, than what Spain is getting and Italy is getting for their similar short-term 90-day money. And we will see what we will get when go in March for $40 million in 10-year bonds when we go on the market,” Gonsalves said, adding that Europe, countries pay above 7.5 per cent interest on treasury bills and
Gonsalves said that when Opposition Leader Arnhim Eustace was Minister of Finance under the New Democratic Party administration, this country paid 6.5 per cent interest on the instruments.
“That’s what the market is saying about what we are doing here in St. Vincent and the Grenadines. … And the people ain’t taking your money to buy the treasury bills if they think you would not be able to service the treasury bills and if you are not managing the economy sensibly,” he said.
As at Sept. 30, 2011, the public debt was $1.2 billion, 0.7 per cent lower than in 2010.