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Once again, in his political boondoggle, Gonsalves has hit another home run, the home run of the fiscal year.
According to independent sources, the government of St Vincent and the Grenadines (SVG) owes EC$15 million to its National Insurance Services (NIS). Interestingly, some sources are suggesting that the government borrowed this money to fill a vacuum that could have been avoided if the country had progressive economic development. Coupled with this, the government either neglected to make payments or do not have the money to repay the loan obligations.
Furthermore, PM Gonsalves in his failure to meet daily economic demands has decided to borrow EC$15 million from the NIS to repay the NIS. This is an indicator of poor economic conditions and political instability. Also this move has confirmed the majority’s — including the opposition’s — claim of a retracting economy, one that cannot sustain itself. For me, this is an irresponsible and uneducated act — one that is extremely difficult to even comprehend.
Accordingly, the roles of the NIS is to assist in securing and enhance the quality of life for the insured members, providing a cushion for its members who suffer contingencies relative to loss or reduction of income and providing a social safety net for Vincentians at home and in the diaspora. Certainly, the misuse of the NIS funds could affect the future of those insured, like alcohol disrupting the chromosomes of an unfertilized egg.
More so, once a government borrows money it has to repay it with interest and any associate cost — this it the normal debt financing policy that all lending institutions mandate. The government may resort to borrowing if the revenue collected through taxes and other sources is not adequate for government spending. This in itself is a form of fiat creation of money allowing the government to obtain cash through borrowing, rather than printing. However, the government generally issues the money created in the form of treasury securities.
More so, debt financing means that the money must be repaid over a period of time, usually with interest. These loans are often secured by some or all of the assets of the company, or, in the case of the government, by securities, as lenders commonly require some form of guarantee in the case of default.
Additionally, the capacity to repay the loan must be justified in the loan package. Normally, lending institutions require two sources of repayment: cash flow and secondary source, such as collateral.
The big questions here — is the NIS a lending institution and what is the loan agreement?
Note that this money could be traded, but will seldom be spent of goods and services as the government has an obligation. In this capacity, there is an anticipated increase in inflation for the same reason that the national wealth has increased at a rate lower than if the government had printed the money and increased the money supply.
In my opinion, these scenarios fully described what economists term as “unproductive debt”. More so, internal borrowing is a significant part of the national debt and certainly it does not assist the productive capacity of the economy; instead it creates an extra debt hole for taxpayers. All Vincentians should know that in the present case the unproductive debt cannot be liquidated and certainly the interest and the principal amount incurred may have to be paid from alternative sources of revenues; hence, taxpayers are expected to pay more tax or face the possibility of being laid off or accept salary cuts. There is no doubt that this move would become a burden on the community.
Additionally, borrowing from a source to repay the source in many cases, not withholding SVG’s situation, often shows a sign of extreme weakness in the economy, or this could mean that the country has a bad credit history and high debt. Furthermore, endless efforts were made to link this Gonsalves’ financial invention to economic or even mathematics theories with no avail. However, after careful analysis of this new borrowing mechanism, only two scenarios seemed to surface.
On the one hand, the government owes EC$15 million to the NIS only if the government borrows the new EC$15 million and returns the entire EC$15 million to the NIS – it owes the NIS EC15 millions plus interest. However, if this is the case then it does not make any economic or mathematical sense to borrow and pay off the entire sum at once.
On the other hand, if the government follows the principles of debt financing, then it will owe EC$30 million dollars plus interest to the NIS. Also, this scenario does not add any worth to the accounting books of NIS.
To show that this analysis is not an empty, worthless perception of the status quo or an impulsive critic of Gonsalves, it is necessary that I share some recommendations:
Ideally, the government could adapt several techniques in repaying its loan. Considering the county’s high debt, daunting economy and the already sky-high taxes, pursuing austerity measures and external borrowing are not options. However, and although the country is already experiencing high unemployment and exacerbating poverty, the government should cut salaries across the board starting with the prime minister, CEOs, general managers and line managers, which could prevent the government from laying off workers at the bottom of the hierarchy.
Despite the PM’s decision against economic citizenship he might want to create collateral in the form of selling lands to foreign investors for developmental purposes.
After all, Gonsalves can ask for assistance from leaders he is closely associated: Iran, Cuba and Venezuela or the intergovernmental organisation, ALBA.
Although, these phenomena will be unpopular and could cost the ruling party a fourth term in government, it is Gonslaves’ best options.
For me, borrowing from the NIS to repay the NIS just does not make any economic sense!
D. Markie Spring
The opinions presented in this content belong to the author and may not necessarily reflect the perspectives or editorial stance of iWitness News. Opinion pieces can be submitted to [email protected].
Why is Marie Spring hurting the NDP’S chances at the next elections? “Cut salaries”, “austerity measures” and “lay offs” are buzz words the voting public abhors.
If the goal is to win the next election, Markie is aiding and abetting the ULP.
You are a VERY INTERESTING “vincy person”! Hope my pal Markie replies and clarifies.
Steve,
Markie does not have any reason to clarify what he meant. His thoughts are laid out for all to see. As for me, what I would like to see is for many of the writers to be more aware and cognizant of what they are putting in print.
Ask Markie to commence a campaign and use the implementation of salary cuts and austerity measures as his main campaign tool, and I know he will not get one vote.
The thorn in the NDP’s side is how to campaign. Why cant his advisers sit Eustace down and tell him to omit “Salary Cuts” and “Austerity measures” from his vocabulary? These words are being constantly twisted by the ULP to their advantage.
Do not argue with me about the possibility that layoffs, salary cuts and harsh austerity measures may be the order of the day in 2 to 3 years times. The only price at stake is to win an election! And a politician will never win in SVG, or anywhere, touting “Salary Cuts” and “Austerity Measures”. Rather, Ralph Gonsalves constantly teases Arnhim into a debate over the benefits or lack thereof of austerity measures, and Arnhim, up to this point, is smart (not wise) enough to avoid the argument, but he is using the words every time he opens his mouth.
So when the bell is rung and everyone is on mark and ready, the NDP may once again finish last in the race. They are losing ground because of what they SHOULD NOT be saying.
Can fifteen men gather in a room and come up with some political strategy. Oh, please tell these men to give Nice Radio a rest and hit the dirt roads! Lynch (bless his soul) was mostly successful because he did not have to meet any voter personally. I am not saying he was not likable.
Speaking about personality. Please tell the cocky doctor to respond to his first name and warn the other doctor that you cannot play mass and afraid of powder.
Oh Fifteen men! One last point. Please, please warn the NDP to keep their messages in sync. Have regular meetings and decide on the party’s responses to current issues and questions. A great band sings and plays in harmony! Members must articulate these responses and build upon them, not trying to look smart and venturing off point into irrelevance.
A-hem
Yes, Ralph Gonsalves is going backward economically. When you mention this to his worshipers they always have one of two replies: “It’s bad everywhere.’ or, “It’s very complicated.” (Ralph himself used this one in his Opinion piece in this week’s newspapers). Of course it is not bad everywhere. Many countries are experiencing a boom, not just Chile, Germany, Australia, Singapore, Myanmar, ect… The fact is that Economics can be very simple if you remember: ALWAYS BRING IN MORE MONEY THAN YOU SPEND!!! This seems to have escaped Ralphie. I believe the official figures are that SVG spends 11 dollars for every 1 dollar it earns! This means Ralphie has to resist looking for loans and instead….create PRIVATE SECTOR jobs! How is that done?….He has to create FINANCIAL incentives for people to work. At present the only opportunity for most Vincentians is to either THIEF or set-up a plywood table in Kingstown and sell plastic jewelry or edos. The author is correct taxes are too high, duties are too high, this in turn drives other prices higher. Ralphie says he is against Austerity. well….. raising taxes IS Austerity!!!! Ralph has imposed more Austerity on SVG than any leader at any time in history, including the colonial days!…VAT tax, Environmental tax, Bottle tax, Pick-up your package at the Post Office tax, ect… Poor Eustace wants to cut the un-needed programs and close the offices of Ralphies retired Fat Cats with the Sweetheart salaraies, doing jobs that are not needed, but are instead rewards for serving the ULP. I guess to Ralphie, these Fat Cats getting their pay is more important than the future of average Vincentians.
That’s right, Markie. The NIS is not a lending institution. It is not a lender of the last resort. We need to get that straight, clear and untwisted. And should the coffers of the NIS become a resource under extremely difficult conditions, it should not be so only with the compliant nod of a hand-picked Board. Cha!
Markie, Anansi-esque Gonzi-nomics shows false comrade far-far “garne” . . .
A fair analysis, though followed by radical recommendations, on the part of Mr. Spring. Gunzi-nomics was worse than twisted Anancy maths. This regime Gonsalves-ULP measure is as economically stupid as that melt-down irrational idiocy that Communistic Ralph puked on that Black female Jamaican journalist in Grenada, about business NOT being run to make a profit —- in relation to the viability of LIAT.
In essence, Markie, this type of Governmental contrivance, based on my youthful study of the YOULIMO communist party of SVG in-house IDEOLOGICAL JOURNALs, is a bare-faced, brash, arrogant LENINIST application. A corrupt Marxist-led regime, BANKRUPT, bereft of any insight or economic sense engages in HIGH DAYLIGHT BANK ROBBERY, politically ‘covered’ – – – AND CALLING IT ‘FISCAL’ or ‘ECONOMIC’ POLICY.
And, we can expect him to trot out the young, disgraced ‘economist’ SQUEALER (a la ANIMAL FARM) to most dishonestly say EVEN IN A WHOLE ARTICLE that ‘THE WHITE MAASA COMRADE IS RIGHT’! Every thing that the communistic “napoleon” say is RIGHT. Napoleon is ALWAYS right. A sorry, SAD state of affairs.
Dey practice HIGHWAY ROBBERY in the exhorbitant, excruciating, near-criminal INCREASES IN PASSPORT FEES – – – hot on the heels of SHOCKING, FLABBERGASTING OFFICIAL CORRUPTION AND THIEVERY by regime functionaries WHO HAVE SO FAR BEEN ‘protected’ by various POLITICALLY CONTRIVED SCHENANIGANS, MAMAGUY AND TOM-FOOLERY.
Dey BUN DOWN THE SECTION OF THE FINANCIAL COMPLEX BUILDING, then we hear call for a re-do of the ANNUAL CENSUS – – – at whose expense?
Now, with the UNINVESTIGATED SUPPOSED LOSS OF THE CENSUS RECORDS we are are hearing self-serving calls for TAMPERING WITH THE ELECTORAL LIST for myriad ‘ratinal’ reasons.
EVEN after this UTTERLY CORRUPT REGIME apparently violated the lawful REPRESENTATION OF THE PEOPLE ACT – – – then RAN POST-HASTE to improperly CHANGE THE LAW to protect that UNLAWFUL VIOLATION.
Tthey unlawfully violating this nation and people – – – ALL HOW!
WHY SHOULD I CIVILLY CO-OPERATE WITH A WOEFULLY CORRUPT REGIME THAT WILY-NILLY FLAUNTS THE LAW, HATES OUR SVG NATIONAL INDEPENDENCE CONSTITUTION AND REPRESENTATION OF THE PEOPLE ACT, UNETHICALLY CHANGES THE LAW even back-alley-style on EARLY SUNDAY MORNINGS, AND FURTHER FAILS IN THEIR BOUNDED DUTY TO PROTECT THE CENSUS RECORDS which are absolutely critical to the electoral process???
To “co-operate” in this opportunistic exercise of SUPPOSEDLY ‘revising’ the electoral list is but YET ANOTHER EXAMPLE OF BEING DUPLICITOUSLY TAKEN IN BY THE MORALLY AND POLITICALLY BANKRUPT REGIME and their communistic “Commandante Uno”.
The lawful REPRESENTATION OF THE PEOPLE ACT, second in importance to our SVG NATIONAL INDEPENDENCE CONSTITUTION, has sufficient safeguards and procedures measures written in it in order to adequately update or properly “prune” it. Let us allow the law to properly operate. As an example, let us RETROACTIVELY repeal that WUTLISS early sunday morning ‘parliamentary’ VIOLATION AND OUTRAGE, and re-instate the POLITICAL CULPRITS TO STAND THEIR LAWFULLY REQUIRED TRIAL.
Yes, OWN THE JAIL.
IF THE R.P.A. is NOT working, is because the CIVIL SERVICE OFFICIALS AND WORKERS, even the parochially politically appointed ones, ARE NOT BEING ALLOWED TO DO THEIR PROFESSIONAL WORK.
I find it thoroughly OBSCENE that almost every time we hear of SOMEONE “GOING TO RESIGN” or “NOT GOING TO RUN FOR POLITICAL OFFICE AGAIN” – – – that we invariably ALWAYS HEAR IT FROM THE COMMUNISTIC PM first!
In keeping with Satanic LENINISM and LENINIST ‘principles’.
The person directly involved ALMOST NEVER make that initial statement of intention.
THAT, to my Vincy country bookie mind SOUNDS VULGAR, OBNXIOUS AND OBSCENE.
Let the person TALK THEIR OWN MIND AND INTENTIONS, themselves, DAMMIT.
Is ONLY ONE MAN ALLOWED TO TARK IN THIS STATE ANYMORE?!
WHERE went our national decency, self-respect and CHARACTER???
I thoroughly RESPECT and ADMIRE the current office-holder in the position of management of the ELECTORAL department. Always have. But, IF she were to tell me that that IDEA or SUGGESTION of the newly proferred “cutting” of the Electoral List came initially from her – – – THEN, for the first time in my acquaintance with her, I WILL NOT BELIEVE HER.
There is a certain political bogos person WHO TRIES TO DETERMINE WHAT WE MUST THINK AND SAY in this SVG – – – AND stll goes further in INSULTING OUR NATIVE VINCENTIAN INTELLIGENCE by publicly making FALSE CLAIMS on our behalf. Obscenity never done, where this thoroughly CORRUPT political administration is concerned. The underhanded practice of LENINISM is becoming more and more evident.
Hence, the “communistic” [Senator Baptiste], leader IN KEEPING with ARROGANT despotic LENINIST ‘principles’ DICTATES TO AND FORCES THE N.I.S. TO LEND HIS BANKRUPT REGIME MILLIONS OF DOLLARS when that CORRUPT ADMINISTRATION is NOW RENEGING ON OTHER LOANS in the millions of dollars to that same NIS.
WHO runs the NIS?
Is it the Communistic pseudo-comrade?
The DEAD-BEAT BORROWER goes to the CREDITOR and FORCEFULLY DEMANDS YET ANOTHER LOAN in the MILLIONS OF DOLLARS – – – or else?
WATCH WEY WE HARD-EARNED NATIONAL INSURANCE MONEY GOING, AND HOW EY GOING!!!
Of course, Markie Spring, the SVG National Insurance ‘Scheme’ is DEFINITELY NOT BEING RUN LIKE A BUSINESS [ a la Ralph Gonsalves, dateline Grenada], or like any kind of BUSINESS. Nay, it is a gigantic political-ideological PONZI-scheme AS MANY VINCENTIAN NATIONALS ARE WAKING UP TO SEE QUITE PLAINLY.
Welcome to GONZI-nomics and the MARXIST-LENINIST ‘social orientationist’ ANANCY MATHEMATICS. And look out for the politically-bought mathematician . . . . er . . . . ‘economist’ to come online to once again joining the nastily castigated “internet crazies” in PUBLICLY, SHAMELESSLY BLEATING that his ‘scientific socialist’-advocating call-me-comrade-too is “right”. What a disgusting, inept regime.
E-mail contact: [email protected]
When they;re done raping the NIS of the people’s money, the best thing to do, is sell the majority shares to another country, and move on to the next financial institution, and so on , and so on until the country is broke, does svg get the point. wake up, we have the power to change the course of which this country is heading. It time for a change. Have you ever thought about a coalition govt. Give the green party a seat, and livin things up for the better.
,money borrowing from a non lending organisation is a big joke and the NDP is still in there comfort zone sitting on there asses waiting until the time run out to saddle up there horses.If it was the other way around it would ah be hell and powder house.