Eustace raises questions about $185m in ‘unreported’ debt

Leader of the Opposition, Arnhim Eustace, has accused the Ralph Gonsalves administration of not being upfront about the national debt, saying that EC$185 million has suddenly been reported under the nation’s external debt.

In presenting the EC$976,943,437 Estimates of Income and Expenditure for 2017, Prime Minister Ralph Gonsalves told Parliament on Monday that the national debt as at Sept. 30, 2016, was EC$1,683,712,229.

This is 11.9 per cent higher than total debt for comparable period in 2015, Gonsalves said.

Domestic debt was EC$585.3 million, falling by 8.4 per cent or EC$53.5 million, when compared to the domestic debt for the same period for 2015.

External debt was EC$1.1 billion, an increase of EC$231.9 million or 26.8 per cent compared to 2015, Gonsalves, who is also Minister of Finance told Parliament.

He said the changes in the domestic debt resulted from a net disbursement of EC$24.24 million in government development bonds and treasury notes over the period, leading to an 8.3 per cent increase in this category of domestic borrowing.

Among other things, domestic loans recorded a decline of EC$74.4 million or 36.3 per cent.

This reduction was due to the reallocation of EC$67.5 million PetroCaribe loan to the external loans.

Gonsalves noted that his government had passed the PetroCaribe Bill and “as a consequence, certain things had to be done,” Gonsalves said.

He said 80 per cent of the increase in external indebtedness or EC$185.2 million is related to the sum owed to PDVSA, which are now accounted for as the public debt.

“And you know we had transferred those which were local for domestic debt into this. Hitherto, these amounts here not included in the debt numbers.”

But this was Eustace’s point of contention.

The former opposition leader said he expects differences of opinion to arise during the debate of the Estimates.

“This is a difference of fact, not opinion,” Eustace said. “Why has our debt increased? What is it that we have done? What new projects have we financed to lead to any significant increase in the external debt of our country?”

Minister of Health, Sen. Luke Browne, rose on a point of order, saying that the external debt did not increase by EC$185 million “in the way in which he is describing.

“As the prime minister said, there was an adjustment in relation to PetroCaribe that brought that portion into the equation. It was accounted for elsewhere before.

“If you would attend the Finance Committee meeting, that probably would have been brought to your attention then,” Browne said in an apparent jab at Eustace, who defeated him in the past two general elections to remain MP for East Kingstown, a post he has held since 1998.

But Eustace said that the debt, which he described as “a crying shame”, was never reported to the Parliament.

“They are trying to bring it in now. You are just bringing it to account. Have you paid any of that debt?”

Browne then rose on a point of clarification, saying a fraction of the PetroCaribe debt was reflected in the Estimates.

Eustace, however, said that in the Estimates, there is an item “Financing by Petróleos de Venezuela S.A.” of EC$185,230,736.

“That is the debt I have been referring to that has just come in to the account. And please note that as of December 31^st, 2015, for the same item, it was EC$10 dollars.”

He said that debt was also EC$10 on Dec. 31, 2013 and 2014.

“So it just came into the account. This ole talk; don’t bother with that. What you are saying is not true. It was not here before. The prime minister explained that it was introduced. It wasn’t there before.”

Browne argued that Eustace was looking at one side of the debt profile while not looking at the other.

But Eustace maintained that the figure is a substantial amount of the national debt that lawmakers did not know about.

“The prime minister, when he spoke today, while this does not say PetroCaribe per se, it is the debt from Venezuela and that is an issue that is still being debated in this country. This debt has not been recorded before.”

Eustace said that that debt accounts, in part, for the increase in amortisation and debt service, “which we didn’t have before”.

He said the issue is a serious one. “It goes to the heart of what information we give to our public,” Eustace said, adding that it also relates to the information that lawmakers are asked to analyse and debate in Parliament.

“It is easy to make flippant comments and dismiss it. But it has a price. It has a price. You have to pay for it, and you weren’t paying for it before. So it has increased our debt payment. This is nothing to be flippant about because it raises the question, ‘What else is there like that that we don’t know about?’ That is the question that it raises,” Eustace said.

Eustace said the parliament has an obligation to report clearly to the country what its financial obligation is.

“Where else in the world you find debt unreported for a long time. Millions of dollars in debt in a small country — 185 million dollars not reported?” Eustace said.

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