‘Big rebound’ in SVG’s economy in August

The economy of St. Vincent and the Grenadines saw a “big rebound” in August, Prime Minister Ralph Gonsalves announced on Wednesday, even as he cautioned that a rebound is not a recovery.

Speaking on NBC Radio, the prime minster gave a recap of the economic performance up to July, saying that for the first three months of the year — before the onset of COVID-19 — revenue had increased year-on-year by 9.5%.

In April, economic performance was “even-steven”, in that it was just slightly down compared to last year.

In May, the government collected 20% less revenue than in May 2019, while in June, there was “a recovery of sorts”.

“We collected 8% less than June 2019. In July, we came back even-steven — July to July.

“And then in August, we had a big rebound in August. Notice I’m saying a rebound, not a recovery because you have to watch this month by month, day by day, week by week. And you have to manage it carefully. It’s easy for a man to talk — man or woman to talk who don’t have this responsibility,” the prime minister said.

“And in all of this difficult period, we ain’t late with your money, you know, you public servants, the teachers, the nurses, the police men and women, the doctors etc., etc.,” he said. 

Gonsalves said that the data for September would become available early this month.

He, however, said that cumulatively, from Jan. 1 to Aug. 31, the government collected more in revenue and grants this year — EC$402 million — than 2019, when the figure was $388 million, an increase of 3.4%.

“When you look at revenue, out of the total revenue and grants, it went up by 1.1% compared to last year at the end of June. That’s $374 [million] up to the end of August last year to $378 [million] by end of August this year.

“And in terms of expenditure, that’s revenue, we have 16% more spending, from $441 [million] at the end of August to approximately $512 million for this year, up to the end of August.

“And out of that total expenditure, current expenditure, that is to say what keeps the plant ticking over, paying salaries, paying the bills as they come, to keep the government going, that went up by 5.2%, from $404.6 million to $425.6 million.”

The prime minister said that capital expenditure has gone up significantly, by 126%.

“Capital expenditures, roads, bridges, sea defence, buildings and the like, that went up from $36 million at the end of August last year to $86 million dollars to the end of August this year — 136%.”

Regarding the current account balance, the prime minister noted that expenditure has increased mainly because of capital expenditure, adding that this is a good thing from the standpoint of job creation.

“Because expenditure has gone up significantly, and the revenue has gone up marginally, we have a larger current account deficit, up from $31 million in 2019 to $47 million. And we are financing that with some very, very soft loans. So I just want to mention that,” Gonsalves said.

He added:

“August was an exceptional month so far because we move from the revenue and grants from $37.3 million at the end of August last year to $56 million this year — by the end of August. I’m talking the August month, and the actual current revenue moved from $36 million to $42 million. So, but notice, I’m not calling that a recovery. I’m just calling it a rebound.

“Because one swallow does not a summer make, to use a British expression, but if you’re in Colonarie, you would say not because yo’ see garlin (a cattle egret) ah river, it mean rain ah come,” the prime minister added in the Vincentian vernacular. 

He said that Kingstown’s attempts to raise EC$28 million as a three-month loan at 4% interest on the regional government securities market was oversubscribed by $13.5 million dollars.

“But because it was so oversubscribed, we got a lower interest rate than what we went in for  — so we got it at 1.9%,” the prime minister said.

“What this tells you is that investors, short-term investors in this case, are having confidence that you’re holding things together. So the NDP (New Democratic Party) may say that people don’t have confidence, but man and woman with their money and the companies with their money, they’re voting with their money.

“They’re saying we have confidence that you going be alright. There’re several other countries who have gone on the regional government securities market, who can’t meet their target, who fall short and who not getting this kinda interest — 1.9%,” the prime minister said.

“No, you can’t sneeze at this. But there are all sorts of reasons apart from how we handle COVID and the way in which we have been transforming the economy in this very careful kind of a manner, but transforming it nevertheless.

“When historians come and look, they will talk about the socio-economic transformation of the economy and society of St. Vincent and the Grenadines from 2001 to now, which socio-economic transformation is still ongoing, deepening and broadening…

“We have created more actual jobs now than in 2001, though the population has gone up far less and the number of jobs that we have created and the number of jobs which are in the offing immediately,” Gonsalves said.