Parliament is debating supplementary estimates of EC$83,980,800, which, if approved as expected, will result in the largest budget ever in St. Vincent and the Grenadines.
The debate is taking place even as lawmakers on both sides express reservations about the government’s ability to implement the EC$995 million budget.
“When I go through the numbers for these supplementary estimates, Honourable Members will see how careful we have been, and the way we are fashioning the expenditure, that I think that we have a reasonable chance of success in implementing the supplementary estimates, in addition to substantially implementing the capital budget in the 2014 estimates,” Prime Minister and Minister of Finance Ralph Gonsalves said in presenting the supplementary estimates on Wednesday.
The supplementary estimates include recurrent expenditure of EC$11 million and capital expenditure of EC$72,980,800.
And, Opposition Leader Arnhim Eustace, in his response, noted that the budget approved in January includes a deficit of EC$116 million.
“I still don’t understand, Mr. Speaker, how this becomes meaningful unless we are going to reduce the size of the 2014 budget eventually,” he said.
In January, Parliament approved what Gonsalves described as an “interim” budget of EC$911 million for 2014.
The additional monies being debated are needed to respond to the December 2013 trough system that claimed nine lives, left three persons missing, and EC$330 million in loss and damage — some 17 per cent of GDP.
In presenting the supplementary estimates on Wednesday, Gonsalves said he was putting on the table, at the outset, the question of the capacity of the government to spend the capital monies in the approved and supplementary budget.
He told lawmakers that the real problem with implementation comes on the capital side.
Gonsalves said that while the EC$257.1 million in capital expenditure approved in January is a big number, lawmakers should bear in mind that it contains EC$100 million for the international airport under construction at Argyle.
Those monies, Gonsalves noted, are especially financed and are managed by a separate, state-owned entity — the International Airport Development Company.
The capital budget is financed significantly by grants and loans, including external, soft loans that are already contracted. “I fell satisfied that we should have a reasonable level of expenditure from the 257 million…,” Gonsalves said.
He further said that capital expenditure is 87 per cent of the supplementary estimates intended to finance disaster recovery this year.
“There is a lot of work still will have to be done – can’t all be done this year or even next year,” he further said, adding that reconstruction could continue into 2016.
The monies will be allocated across four ministries, as follows:
Ministry of Finance and Economic Planning: EC$6.09 million or 8.3 per cent
Ministry of Agriculture: EC$2.8 million or 3.8 per cent.
Ministry of Transport and Works: EC$44 million or 60.3 per cent.
Ministry of Housing: EC$20.09 or 27.5 per cent.
The supplementary estimates are to be financed by grants of EC$31.9 million, a small amount of which will be through World Bank institutions, Mexico, Taiwan, Petrocaribe and the European Union, Gonsalves said.
There will also be external loans of EC$9.7 million, largely from the Caribbean Development Bank, and non-grant monies from the World Bank institutions, the International Development Association and Climate Investment Fund.
Gonsalves said revenue of EC$31.2 million will include monies from the Disaster Relief Fund, special monies from Bank of St. Vincent and the Grenadines, and four years’ advance monies from Mustique Company.
He further said that his government has negotiated just over EC$100 million from the World Bank, which will begin to be disbursed, hopefully, by September.
Meanwhile, Eustace told lawmakers that while he understands the need for the additional spending, he cannot take the approach of simply looking at the details and or the implementation of the estimates.
He said the estimates must be considered in the context of the economy and performance over the last few years.
“Because whatever we do, Mr. Speaker, at the end of the exercise, what we are hoping for is to put our country back and maintain a consistent path of economic growth.”
The former prime minister and minister of finance said the supplementary estimates must not only make repairs to infrastructure and productive sector activity, but must also put the nation back on a path of economic growth.
“I am not addressing it in the way the prime minister is addressing it. For me, that is too limited. I am looking at what does all this mean at the end of the exercise: what does it do for the economy and the people of St. Vincent and the Grenadines, while we deal with this exercise.
“What is in it that we are doing that is going to promote growth? What is going to put us at a different level in a couple years from now, because it takes time for these things to be implemented? These are the questions that bother me, Mr. Speaker?” Eustace said.
He said that while he believes that efforts are being made to deal with the rehabilitation, “we have our eyes focused on the end of this exercise — where will we be? Where will the people of this country be? Where will their standard of living be?”
Eustace noted that the supplementary estimates take the 2014 budget up to EC$995 million, the largest in the nation’s history.
His statement resulted in applause from government lawmakers, but Eustace quickly retorted, “But as so often is the case, Mr. Speaker, large budgets in St. Vincent are followed by a reduction of 200 million or more in the following year. So don’t clap for it; it is a shame.”
Eustace further said that while he has “no difficulty” with the project presented, he is looking at the estimates in a particular way that he thinks they should be looked at.
He said revenue for 2014 was set at EC$520.5 million, and is being increased by another 30 million, even as government receipt is not growing in any significant manner.
Eustace therefore questioned whether what is set out in the budget, along with the supplementary estimates, will be achieved.
“Nothing has been said so far today as to what will happen to those other projects which we may not be able to implement because of the implementation of the recovery measure. … but we had targets in mind when we established the original 911 million [dollar] budget,” he said.
The debate continues at 9 a.m. today, Thursday.