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.
Ralph Gonsalves asks “Where does such a country exist?” Well Ralph, Singapore, Norway, etc… OH! wait! Not only do these countries have 30%, they have so little debt, they are beyond zero% These are called “Creditor Nations”. There are more, I believe Chile is also one of them. I do not have the time to go around proving all the deceptions Ralph Gonsalves feeds us. Ralph has proven he is an idiot in finance and Economics. As more and more Ralphtards and Gonsalvozombies begin to wake-up, and find out that you can’t spend, borrow and tax a country into prosperity, the people will vote-out the satanic deception we have all been governed under the past decade and more. The only way to create prosperity is to make and export products that others want to buy. This includes: create an environment where the Private Sector can have a need and desire to hire workers. But “Labour” is not taken seriously by Ralph Gonsalves, that word is only the name of a political party. To be honest, Ivan O’Neal and Arnheim Eustace are the real leaders of the real Labour parties.
Ralph believes that as he continues to raise taxes (Austerity), the price of labour goes up which makes the price of our products go up and why would someone want to pay more for anything from SVG, (to include Tourism) when they can buy and go elsewhere for the same thing and a much lower price.
Please see:
International Man: “Benefits of an inefficient Government”
This is about St Vincent and Ralph’s turd: Liat
I wish Mr Chance would please post the above article on his site.
Great reporting, Kenton.
Anyone who travels around the Caribbean surely knows our economy — and the debt level reflected in our level of living and well being — is not what the government says it is.
As for taking into account “natural disasters,” our biggest disaster is the debts incurred by a foolish economic (but clever political) decision to build an international airport.
Our statistical unit lacks indepedence from government interference. Hence, I question all economic data coming from this regime.
More than 12 years ago when Gonsalves announced his famous “Petro Caribe” bonanza I cautioned that something was wrong: How can Venezuela, a country whose per capita GDP was only slightly higher than ours offer us such generous terms? I knew it had to be a mirage. Now the chickens are coming home to roost. SVG cannot escape responsibility for these massive debts ran up the MNU boys.
As consumers we paid the full cost of oil and then some at the gas pumps and Vinlec bills. BUT the Government did not pay its full bill for that oil. NOW we must pay again for the same oil we already paid for.
I still maintain that Gonslves is a good Word-Smith, but cannot count and has no idea what he is doing as Finance Minister. And it might be worse than that.
Now the rest of us will have to bear the costs of OUR mistakes in re-electing him twice over. Like the people of Greece who thought they would let their Government lie their way through but now must suffer retirement monies reduced by 60% and civil servants taking home half of what they have been accustomed, we will suffer similar troubles. NIS will run out of money like NCB did. But Gonsalves will wait until after the elections to admit his many failures. AND
the rest of us will bear our grind.
This all should have been avoided if we paid attention.
A major problem with Gonsalves is that he is that he is in love with words, and the use of words, rather than with reality and facts. If he will spend less time trying to be master lawyer and playing with language, and more time on laying out matters fully and truthfully, things would be much better for all of us in the sense that we will understand much more what we are really dealing with. I simply have no faith and trust in what that man says. I really don’t . St. Vincent’s debt situation is not 77% of GDP, ( which in any event is too high) given the slow down in growth experienced over that past few years, thus a stagnation if not decline in real GDP, while borrowings increase. Gonsalves likes to quote what Maurice Edwards is supposed to have said, because Maurice cannot come before the public and say it himself. So Gonsales can attribute anything to Maurice. But knowing Edwards as I do, I can just hear him “steupsing” and dismissing Gonsalves with his characteristic laugh, saying ” Gonsalves have his mouth to say what he want to say. All yo’ don’t know Ralph?” The ECLAC Study is available on the ECLAC site. I invite all who are interested to access it and read it for themselves, and not to have this interpreted by the tongue and brain of Lawyer Gonsalves.