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arnhim eustace 2 e1321864968189
Opposition Leader Arnhim Eustace (File photo).

KINGSTOWN, St. Vincent – The response to an EC$40 million government bond last month suggests a lack of confidence in this country’s financial situation, Opposition Leader Arnhim Eustace said Monday.

The EC$285,000 oversubscription, according to Eustace, was “a signal that things are declining, not improving.

“… we must tell the public the truth on these matters,” the former minister of finance said.

He suggested that he would ask when Parliament meets on May 31 for answers about who bought the bonds.

The Ministry of Finance said the government’s 10-year bond issue, auctioned April 27 on the Regional Government Securities Market using the primary market platform of the Eastern Caribbean Securities Exchange, was oversubscribed by EC$285,000.

A competitive uniform price auction methodology was used and the closing rate was 7.5 per cent. Three licensed intermediaries placed 20 bids, ranging from EC$10,000 to EC$10 million with an aggregate value of EC $40,285,000, the Ministry said.

But Eustace, an economist, said that while the bond was “technically” oversubscribed by EC$285,000, it is not something that the government should brag about.

“… I won’t describe that as oversubscribed because that is less than one per cent over the amount of money you are looking for,” he said during his weekly radio appearance.

“So, you just barely went over the mark,” he further stated.

“… I want to know who took up the bonds. … Did the business that is issuing the bonds take any? If so, how much did they take?”

Eustace also wants to know how much of the bond was bought by local and foreign entities.

“I want … Prime Minister [Dr. Ralph Gonsalves] to tell the nation that,” he said, adding, “… Technically, it is [oversubscribed] but it does not mean anything significant. It means that things are tightening for us also.”

He said the response to the bond was not bragging rights but was “something to examine and see what we can do to improve our financial performance so that when you put out a bond issue … people will come to buy it and you will have more people buying than you need”.

Eustace made the point as he also spoke of St. Kitts and Nevis’ inability recently to pay its bonds issue.

He said the situation in the fellow Eastern Caribbean Currency Union economy and local financial circumstances have implication for investor confidence in the sub-regional bloc, the Organisation of Eastern Caribbean States (OECS).

“I raise these issues because as the financial situation in any of our countries deteriorates, we have to look at the impact that is going to have on investor confidence … in the OECS as a whole and what does it mean for our currency in the future, for the value of the E.C. (Eastern Caribbean) Dollar.

“These are very, very serious questions. … We have too many deficits and too large a deficit. And I am saying to the people of St. Vincent and the Grenadine this morning, I don’t like it and I want more information so I can set your mind at ease not only in the case of the St. Vincent bond but in the case of the other OECS countries.

“… We need to come clean and clear with the people of this region as to exactly where we are and what steps we are taking to correct it. And that’s a major concern of mine,” Eustace said.

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