By Kenton X. Chance
St. Vincent and the Grenadines has a debt to GDP ratio of 77 per cent. How then did it end up on a list of more than 20 countries, including Greece, that are said to be wrestling debt crises?
Prime Minister Ralph Gonsalves told the media this week that is was “plain wrong” for the Jubilee Debt Campaign to include SVG on its list of “countries currently in government external debt crisis”.
Gonsalves, who is also Minister of Finance, noted that SVG has a lower debt to GDP ratio than fellow CARICOM nations, Barbados, Antigua, St. Kitts, and Dominica, none of which made the list of “countries currently in government external debt crisis”.
And that is the question that Leader of the Opposition Arnhim Eustace is also asking.
He told I-Witness News on Thursday that SVG’s debt under PetroCarice, Venezuela’s oil initiative with several Caribbean and Latin American countries, could be the answer.
Gonsalves has told Parliament that Kingstown owes Caracas EC$140 million under the oil pact.
But a report from the Bank of Nova Scotia said that SVG holds 3 per cent of an EC$27 billon debt to PetroCaribe — some EC$900 million. Gonsalves has dismissed the report as inaccurate.
Speaking on the latest debt crisis listing which was reported on by several reputable international media outlets, Eustace told I-Witness News on Thursday:
“Let’s face it, some months ago, we raised the issue of how you deal with the PetroCaribe debt and the Bank of Nova Scotia, which is no fool-around organisation, estimated our PetroCaribe debt as 3 per cent of the debt under PetroCaribe.
“At that time, you were looking at a figure somewhere in the order of EC$27 billion, which makes the 3 per cent somewhere in the order of 900 million.
“And we raised the question why is the PetroCaribe debt not being reflected in our debt schedule in the Estimates.”
Eustace said that some EC$60 million of the debt is reflected in the Estimates of Income and Expenditure.
“What has happened to the balance of it?” said Eustace, an economist, who doubted the accuracy of EC$140 million that Gonsalves had told lawmakers the nation owes.
“That s not true. This thing is hidden between the two companies they have there dealing with PetroCaribe matters. We can’t have 3 per cent and it be 100 million,” Eustace told I-Witness News.
Told that the Prime Minister has said that SVG’s debt to GDP ratio is 77 per cent, Eustace told I-Witness News:
“If that is the case, if as we say here our debt to GDP ratio is 77 per cent — the accepted level, everybody knows, is 60 per cent — how did we then get into this schedule?
“They miscalculated our debt or did they take the PetroCaribe debt into consideration? That is the question I want to find out. Did they take the PetroCaribe debt into consideration, which our government is not taking into consideration?” Eustace told I-Witness News.
He said if the EC$900 million that the Bank of Nova Scotia says SVG owes PetroCaribe is taken into consideration, the ratio would increase to about 117 per cent of GDP, making SVG a “heavily-indebted country”.
“So I want to know the basis of the report: what all they took into consideration,” Eustace said.
Addressing the media this week, Gonsalves said that the debt crisis report has “some factual basis and then it also has some incorrect assessments and it has wrong judgements”.
He pointed out that the report says that a country that doesn’t have a debt problem has a debt to GDP ration of 30 per cent or less.
Gonsalves asked where such a country exists.
The report said that a country already in a debt crisis has significant net debt (more than 30 per cent of GDP), and high current government external debt payments (more than 15 per cent of government revenue).
Gonsalves pointed out that the Eastern Caribbean Currency Union (ECCU), of which SVG is a member, has established a debt to GDP ratio target of 60 per cent.
He said SVG has 60 per cent as a medium target to 2030 but will meet it before then.
He noted the omission of countries such as Barbados, Antigua, and St. Kitts from the list of “countries currently in government external debt crisis”.
“It’s just wrong,” he said of SVG’s inclusion.
Gonsalves said that Director General of Finance and Planning Maurice Edward has also said that it is “just wrong” to include SVG on the list.
The Prime Minister quoted the public servant as saying people are not interested in truth and will believe what they want to.
Gonsalves said he asked Edwards to write the authors of the article and give them “the facts”.
“I am glad that Jubilee is writing about this thing. I hope what they do they lend their voice, in the councils of the world to the extent that they have a voice to lend in the councils of the world, to say there should be debt relief for countries as part of the financing for development…
“They can ask, as we have been asking, for new criteria in relation to measuring countries which are supposed to get soft loan, concessionary loans — other than using GDP per head that they look also at vulnerability, because that is of importance to SVG,” he said, noting that the country has had five natural disasters since 2010.
He said the SVG’s debt situation is manageable and that the country has a debt management programme in place to achieve the targeted 60 per cent before the ECCU deadline of 2030.