Almost two-thirds of the debt owed by PetroCaribe St. Vincent has not been entered into the government’s public debt statistics, the International Monetary Fund (IMF) says.
The IMF, however, said on Monday that it has included the total figure in its projection.
The IMF, which on Thursday concluded its Article IV consultation, said that at the end of January 2016, the debt of PetroCaribe St. Vincent to Venezuela stood at EC$183 million or 8.7 per cent of GDP.
However, only EC$71 million of the EC$183 million is recorded as government debt.
“The other EC$112 million (5.3 per cent of GDP) has not been entered in the government’s public debt statistics, but is included in IMF projections,” the IMF said.
Under PetroCaribe, Venezuela’s oil initiative with several Caribbean nations, countries import oil from Caracas and pay for a portion upfront and keep the remainder as a low-interest 20-year loan.
The loan monies are used to fund social programmes.
The IMF, however, said that due to lower oil prices, PetroCaribe financing flows have declined considerably more recently, and are expected to be reduced further in 2016.
The government has said that it owes EC$140 million under PetroCaribe, a figure which the opposition has doubted.
The opposition New Democratic Party has repeatedly accused the government of hiding the PetroCaribe debt.
However, the figures quoted by both the government and the IMF are significantly lower than the almost EC$1 billion quoted by Bank of Nova Scotia, which the NDP says it is inclined to believe.
The IMF noted that SVG’s public debt has increased steadily since 2008, adding that the Government has committed to reduce it through fiscal consolidation.
The public debt rose from 57 per cent of GDP at end of 2008, since launching the EC$729 million international airport project, to 74 per cent of GDP at end of 2015.
The 74 per cent of GDP takes SVG’s debt ratio up to the median for Eastern Caribbean Currency Union (ECCU) countries.
The IMF noted that this is taking place during a challenging period of global economic financial crisis and damage caused by three natural disasters in 2010, 2011 and 2013.
It said the PetroCaribe agreement has represented an important financing source for the government.
In presenting the Budget in February, Prime Minister and Minister of Finance, Ralph Gonsalves, said that preliminary figures show that at Dec. 31, 2015, the total outstanding public debt stood at $1.566 billion.
The figure was 76.9 per cent of the nation’s gross domestic product (GDP) and a decrease of 0.3 per cent when compared to the debt of EC$1.571 billion at the end of December 2014
The IMF said St. Vincent and the Grenadines has committed to reducing its public debt to 60 per cent of GDP by 2030, in line with the agreement among ECCU countries.
Gonsalves said in his budget presentation that the ratio of public debt as a percentage of GDP has risen moderately, which compares favourably with other member countries of the ECCU.
“Still, we intend to arrest this trend once the period of high capital expenditure associated with the airport and disaster rehabilitation tapers off, within the context, too, of an expanding GDP,” he said.
Now, what in heaven’s name could be the rationale for such an exclusion? Would Government want its corporate taxpayers to be running two sets of books? One set for the tax man and another set for the reality check?
Jeannine, there are actually three sets of books, the last one being the true but hidden account of our nation’s finances.
Yeah, anything dealing with finance, monetary measures, economics or money in general in SVG are a mystery to all; possibly all in government included. It may be because often records are not really kept or the two-sets of books…even three, seem to be a normal thing for SVG government. Who could possibly keep track of all those loans on top of loans?
1. Though the IMF does some good work, its generous lending programme only encourages profligate countries like St. Vincent and the Grenadines (SVG) to spend beyond their means knowing the IMF is always there to bail them out.
2. Unfortunately, the IMF is not allowed to do independent financial audits of all relevant government records but merely regurgitates the data that governments like that of SVG give them from which they make often pie-in-the-sky projections. This can be seen in claims about the still unfinished Argyle International Airport which has no hope of seeing any international carriers making regularly scheduled flights before early 2018 at the earliest (if they ever make any international flights at all given that the airport is bound to be a huge white elephant) and would never carry enough agricultural produce to fill a single cargo plane.
3. If the IMF carefully perused and cross-referenced the financial ledgers of countries like SVG, they would get a far different picture of the true economic picture than that gleaned from the sanitized figures given to them by the government. The PetroCaribe discrepancy is only the tip of the iceberg.
4. The IMF also fails to take account of the huge underground economy in poor countries like SVG: marijuana production, sale, and export; money laundering; the informal barter economy; etc.
High time for the IMF to do a top-to-bottom housecleaning and restructuring of their own operations.
Well, I suppose it could be argued that if the IMF would straighten themselves out they might be better placed to genuinely help their “clients”. ? Perhaps?
Very informative, thanks c-ben. I was always wondering why the IMF projections were always wrong.
Remember Gonsalves inherited a bad hand when he took over from the NDP there was a $300 million and some in debts.
Today he has created a new record what he says is more than $1.5 billion, Eustace believes it is more like $2 billion. Whatever it is, it is a disgrace and a figure that without industry, exports or jobs for our people we will never be able to repay.
He is encouraged to borrow by PetroCarib,CBC, IMF, EU, World Bank and all those organisations by giving him more and more, and even then he go’s on international scrounge tours to load us up with even more debt from Iran, Iraq, and any other nasty kind of states he can hook us into, and to top it all even now from Arab funds.
The pretense that we in some way owe a debt of gratitude to the Venezuelans and the Cubans is in the scheme of things is somewhat amusing if it was not so tragic.
Tragic is right. The whole setup with Gonsalves’ devoted political entourage and the dogged support he attracts in his ranks speaks of stories yet to be told. May not be a question of who all “naar tun back” but who all don’t know where to tun.