By E. Glenford Prescott
The government of St. Vincent and the Grenadines is subtly introducing austerity measures on its citizens as a result of an agreement with the International Monetary Fund (IMF), says Opposition Leader, Arnhim Eustace.
Eustace made the assertion during his weekly radio programme on Monday as he reviewed the recent disbursement of a US$6.4 million loan to SVG from the IMF to assist with rehabilitation following the December 2013 floods.
He said that prior to the loan being given, the government had agreed to certain conditions.
These conditions, Eustace further said, do not bode well for the country, and in particular its workforce.
Eustace said his concern is based on a release from the IMF, following the approval of the loan.
The release outlined the financial status of the government with regards to the public debt.
“Rehabilitation and reconstruction spending is expected to widen the fiscal deficit this year. Mindful of the high and growing public debt, the authorities have reiterated their intention to rely mainly on grants and concessional resources to finance the recovery,” the release said.
“At the same time, they will step up their efforts to mobilise budgetary resources by increasing revenue collection, containing the wage bill, and reducing transfers to state-owned enterprises,” the release further stated.
Commenting on the release, Eustace said that when interpreted, the language used points to a very bleak picture.
“You have got to study this language and what it is saying is that the government has agreed to contain the wage bill and this can only mean no new hiring, little or no promotion, and no salary increase. In other words, they are imposing a wage freeze on the civil servants,” he explained.
He said this is more obvious based on the fact that there has not been any salary increase for the last three years.
Eustace, an economist and former finance minister, urged the government to “come clean” with the Vincentian public.
“The Barbados government is sending home thousands of workers, and in St. Lucia, the government is meeting with the unions to institute a cut in salaries.
“These are tough decisions and these governments are prepared to deal with them head on. But here we are playing games by making out that everything is hunky-dory. They must tell the people the truth,” Eustace said.
He said that the actions taken in Barbados could have a positive effect on stabilising its currency since calls could be eventually be made for a possible devaluation if there is no turn around.
Eustace said that the reducing transfers to state-owned enterprises means that monies to BRAGSA, the SVG Tourism Authorities and the University of the West Indies will have to be cut and this will also create problems since those entities and in particular BRAGSA require government funding to carry out their operations.
“You have BRAGSA, which carries out government work, and already not getting enough funds to do that the government is now agreeing to cut those funds even further to satisfy the agreement which they have made with the IMF.
“And if the Tourism Authority is involved in the promotion of the country, they too will suffer. So this means they will do less things and they will employ less people.”
He said that the government failed to exercise financial prudence and this will have a negative impact on the standard of living of the citizens with monies being borrowed to finance the airport, which, Eustace said, continues to push the national debt “through the roof”.
He accused Prime Minister and Minister of Finance Minister Ralph Gonsalves of “playing politics with people’s lives” and trying to blame the NDP for his shortcomings.
Eustace further accused Gonsalves of “being out of his depth when it comes to handling the country’s economy”.
“You cannot be borrowing loans to pay salaries. These types of loans must be used to do projects and salaries and wages must come from your taxes. When you don’t have financial discipline as a government, you will get involved in spending that do not encourage growth and leaves your economy stagnated.”
Eustace said that while the ULP criticised his NDP government for operating a surplus, the ULP has now promised the IMF that it will seek to achieve a surplus as well.
Eustace cited the IMF release to support his view.
The release said: “Looking ahead, the authorities remain committed to securing a sustainable fiscal position. To this end, they intend to generate a primary surplus of at least 2 per cent of GDP in the medium term to ensure that the debt-to-GDP ratio is put on a declining path.”
Eustace said that among priority for the government must be the country’s import-export ratio since for the first six months of 2013, EC$472 million were imported to this country as against EC$59 million exportation.
He said that the high cost of electricity must also be addressed if local businesses are to be competitive in their field of operations.