Confronting Vincentian economic challenges of 2015

The views expressed herein are those of the writer and do not represent the opinions or editorial position of I-Witness News. Opinion pieces can be submitted to [email protected].

At the dawn of 2015, St. Vincent and the Grenadines (SVG), like its Caribbean neighbours, faces a more uncertain economic climate than existed at the opening of 2014. Our national socio-economic condition just appears to be rolling down hill like a snowball heading for Hades. For one thing, political and economic realities in Venezuela threaten to derail the ability of that nation to provide energy at concessionary prices under the PetroCaribe agreement to the signatory Caribbean nations.

Another potential problem is an expected negative impact on SVG’s fledgling tourism sector and the Argyle International Airport from warming relations between the United States and Cuba. And, it has become crystal clear to observers that the group of donor nations to which SVG counts in its supposedly “coalition of the willing” has shrunk significantly since it was boasted that the Argyle airport would be built at no cost to the nation. Hence, it becomes imperative for the Vincentian people, not only those who are currently serving in political offices, to face economic realities rather than economic denial and political subterfuge, to confront and solve Vincentian-specific problems. The Vincentian people must embark on concerted domestic responses to develop, evaluate and execute pragmatic strategies aimed at minimising the impact of these economic threats while safeguarding and stimulating the national economy.

Under the late Hugo Chavez, Venezuela developed a grand programme, PetroCaribe, to use a portion of its energy resources to assist its neighbours in the face of escalating world oil prices. Despite criticism from those who saw the Chavez gesture as a sinister plot to entice its neighbours into the support of its Marxist political orientation, there is no denying the fact that Caribbean governments had an opportunity under PetroCaribe to stimulate economic development with the concessionary financing accruing from the programme. The Chavez programme became even more laudable when one considers the case of Trinidad and Tobago, the only energy-rich Caribbean nation, which traditionally uses its oil, gas, and asphalt resources to distinguish itself from other Caribbean economies, without concern for using any part of that wealth to assist in the development of the region.

Therefore, it is with deep sympathies and goodwill that I view the current socio-economic problems in Venezuela and urge SVG to continue in solidarity with Venezuelans regardless of the outcome of PetroCaribe. In fact, our nation would be well-regarded if it can provide actual aid rather than political rhetoric to the Venezuelan people in their time of need — even shipments of Vincy fish and agricultural goods might help. However, in the quest to cast our nation as the greatest beggar of the western world it appears that little attention is paid to the idea of developing our own resources to be able to aid our benefactors in times of need.

Now, much has been debated about the absolute indebtedness of SVG to Venezuela under PetroCaribe. While this is important and must be made transparent for fiscal accountability, there are other aspects of the SVG government’s management of the programme that warrant deeper disclosure and analysis. For one thing, we need to know how the funds were actually used; whether the government has been using funds from PetroCaribe to fund its own political party piggy bank; whether and/or to what extent the funds have been used to finance private sector economic development projects, and if so, what projects; whether funds are being used to finance foreign missions and embassies, and what measurable national benefits accrue from such expenditures; and whether these funds have been used in non-productive political giveaways, political travels, campaign financing, and other such government boondoggles that serve only to hamstrung rather than spur economic development in SVG. Hence, an independent audit of the PetroCaribe programme as it pertains to SVG is necessary so that the citizens of SVG can become informed about how the money for which they are indebted is being managed and spent.

The recent announcement that the government is expanding its hiring of staff to serve in the Ministry of Foreign Affairs at a time when economic output in the nation is stagnant should motivate fiscally-minded Vincentians to inquire how the government plans to fund these hires in the face of strained public finance. Obviously, it is no longer sufficient to plan expenditures based on the largesse of Libya, Venezuela, Syria, and other members of the “coalition of the willing.” We must plan our national expenditures on the realities of our own resources rather than reliance on foreign aid.

At this juncture, I must reiterate my support for the development of the Argyle International Airport. While there has been alleged reports of negligence, inefficiencies, mismanagement and inconsistencies with the planning and implementation of the airport project, fair-minded Vincentians will agree that undertaking the project is a worthwhile economic development venture in the national interest. The nation stands to benefit in the long term from the completion and operation of this essential infrastructural project. Consequently, funding of the airport with PetroCaribe dollars or other financing is fully acceptable.

Having made the foregoing disclosure, it is still questionable whether the nation is getting the highest and best use of PetroCaribe’s concessions. And, as the comrade like to boast: “Only I man” can ring the bell. So go ahead Mr. PM, disclose the pertinent facts in less than three pages. No epistle, please.

In the present state of under-developed private manufacturing sector, absence of research and development institutions, amid a burgeoning government sector, the sustainable benefits of energy imports are less than clearly evident in SVG. In other words, what productive purposes do we put the imported oil and gas to in SVG? Here I must define productive purposes here as those activities that utilize oil and gas in the manufacture of goods such as food, furniture, appliances, fertilizers, chemicals, electricity, medicines, research and development processes, etc. How much electricity do we use in factories, farms, food processing plants, etc. Household uses such as cooking and lighting, non-business transportation and certain government uses are herein classified as consumption rather than production purposes.

It is certainly not sufficient for us to point to the value of energy imports and Venezuelan concessions to SVG as a “great benefit” to the nation without specifying and quantifying such benefits. We need to take the necessary steps to highlight the net benefits accruing to our national welfare from these expenditures and related indebtedness. For it is the entire nation and not a select few party insiders who are on the hook to repay these loans.

Another thing, we need to evaluate whether the availability of “cheap energy” to SVG has resulted in inefficient energy consumption habits in the state. Have we increased our oil consumption just because of its availability, rather than adopting energy conservation practices? And we must know if and how the availability of oil at concessionary prices has impacted negatively on the national search for domestic alternative, environmentally sustainable energy sources. These questions might not be easily answered in the absence of any national studies to measure the benefits and costs of annual energy imports. Yet in a nation that boasts of an education revolution, one must question why the educational resources are not being employed in such essential national research.

Now it is quite timely and refreshing to read that the Leader of the Opposition has demanded that the PM provide information on the status of SVG’s geothermal investigation started a year ago. According to I-Witness News: “SVG is partnering with Icelandic firm, Reykjavik Geothermal and the Bill Clinton Foundation to explore and exploit geothermal energy along the country’s volcano, La Soufriere.”

Related: Geothermal power plant on track for 2017 completion, PM says

But what is unacceptable is the PM’s response: “there are funds that the government of SVG is shortly to receive, adding that these are “very low interest monies which will enhance the government’s equity inside of the project … Barring some extraordinary challenge which may arise, we should be having a production of 10 megawatts by the end of 2017.” Haven’t we been down that road before? At the minimum, the Leader of the Opposition needs to be at the table when such nationally important agreements are negotiated … not being confronted with vague statements when he inquires.

With the potential disruption of the PetroCaribe programme and its concessions, SVG stands to lose a cheap source of development funds, possibly being confronted with higher interest rates for energy purchases, and/or being required to use a larger percentage of its GDP to repay any renegotiated Venezuelan loans. This situation requires a clear unambiguous statement from the Minister of Finance and his team of economists and financial analysts, detailing how we plan to move forward. As my friend Pouie like to say: “Please, no spin, doctor”.

On the other hand, the normalisation of relations between Cuba and the United States of America is generally expected to impact negatively on the tourism sector of other Caribbean destinations in the near term. However, where there are dangers, there can be positive opportunities. Needless to say, the unfinished state of the Argyle International Airport puts SVG at a greater disadvantage than many if not all of its neighbours. Additionally, we are hamstrung by the lack of leisure and hospitality assets even if we had opportunities to exploit a US-Cuba-SVG tourism connection. Hence, in a heated market for North American and European visitors, SVG might be very low on the totem pole and be pushed further backwards in the international tourism market than under the status quo. Inquiring minds would like to know how the Minister of Tourism and his team of CEOs, globetrotters, and leisure and hospitality experts plan to confront and transform this situation to the national benefit.

Both the public and the private sector in SVG are faced with unanticipated economic challenges in 2015. These problems call for a deeper analysis and understanding of the state of the national economy. The usual cursory economic ranting will do nothing more than to aggravate the situation. And, rather than panicking to prescribe half-baked schemes as potential solutions, SVG needs to embark on a difficult educated journey to secure its economic future.

Now it is easy for someone to come to the nation and say: we have foreign friends who are “willing” to bear our economic burden. Because of my charisma and ability to portray SVG as a ‘poor ting’ to the world you can rest assure that the world is eager to aid my government. But to paraphrase an old saying: “Don’t put yo pot pon de fire and wait for your neighbour to fill it with food”. In other words, solutions to our economic problems should not be hinged on the deployment of an army of beggars overseas in search of foreign aid. We must cut out the nonsense of fooling the gullible with the idea that only one person in the nation holds all the answers to our problem — having been down that road to our detriment. And, we must unite in the idea that only by fostering a truly inclusive society, wherein our people’s skills, knowledge, abilities and self confidence are marshalled to produce goods and services to meet our needs can we foster the redemption and security of our blessed Hairouna.

Consequently, to create a sustainable Vincentian economy we need to take an inventory of our national resources and consider our options. Among the considerations must be tax reform, developing and implementing a relevant education system, making bold movements toward private sector development, stimulus and support; reducing the size of the public sector — this is not the time to increase public sector payrolls; provide honest and respectable leadership to motivate our people, especially the youths and young adults to take on the challenges of self-reliance; institute transparency and accountability in public finance; and resolve to destroy the negative influences of nepotism, cronyism, political paternalism, sycophancy, poor planning, slipshod decision-making, poor leadership and incompetent management that breed poverty, violent crimes, praedial larceny, inefficient agricultural production, said disrespect, helplessness, and other ills that work to undermine our Vincentian society.

May God save us from the demons and excesses of this perilous time. And may God smile on our homeland in 2015 and forever.

Vinci Vin Samuel

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].