Opposition missing Eustace’s ‘guiding hand’ — PM

According to Prime Minister Ralph Gonsalves, the parliamentary opposition is missing the “guiding hand” of former opposition leader Arnhim Eustace — an economist who quit politics last year in the face of  declining health

“It is evident to me thus far, that the opposition has missed the guiding hand of the honourable Arnhim Eustace,” Gonsalves said in parliament on Tuesday as he responded to opposition arguments on the EC$1.2 billion estimates that lawmakers approved, paving the way for the Budget Debate on Monday.

“What I heard thus far from the principal speakers on the opposition side has been very underwhelming and a lot of contradictions and confusion and a lack of understanding of reality,” said Gonsalves, who had previously rubbished Eustace’s idea on economics.

Eustace, 76, a former prime minister and minister of finance, did not seek re-election in November, having served as MP for East Kingstown since 1998. 

Gonsalves said that in the absence of Eustace’s guidance, the opposition had displayed “an elemental disregard” of what the budget says this year as well as last year.

He said that opposition lawmakers had spoken “as though they are completely oblivious to what has happened last year from March 11th onwards,” the prime minister said.

He was referring to the day that the World Health Organisation declared a coronavirus pandemic, which was also the date on which St. Vincent and the Grenadines recorded its first case of COVID-19, the illness caused by the coronavirus.

“They say they recognize it, but it’s as though they go to the church and they see the statues and you do a genuflection before them, but it doesn’t really mean anything.”

The 2020 approved estimates of expenditure showed about EC$2 million less than the approved estimates for current revenue, “which means that on the face of it, there was a surplus budgeted last year,” the prime minister said.

“Then COVID came; we had a supplementary budget on April 7; then what happened? The estimates had to be revised, expenditure increased to $709.3 million from $678 [million] and current revenue was revised downwards from the approved estimates of 680 [million dollars] to 605 [million dollars] — by some $75 million.”

Gonsalves said that this meant, therefore, that the approved estimates plus supplementaries had a deficit on the current account budgeted at about $100 million.

“But we had made the point that there are items in the approved estimates which we will not spend and that they were re allocated into the supplementary so that even though the revenues while reduced in the actual implementation of the approved of the revised estimates, you will have a better fit so that you will not end up with $100 million in the deficit,” he said.

He said that in 2020, on the current account, there was “a decline depending on who you take it from, whether you take it from IMF or our own persons, [we] have just under 5% decline, contraction in the economy or whether you take it from the ECCB, which is about contraction of 3%”.

He said that the relatively small decline was because of the way in which his government managed the COVID pandemic and the economy in 2020.

“… our revenue numbers remain basically stable in relation to 2019,” Gonsalves said, adding that where the government spent more, it made up for it with grants and soft loans.

“In 2021, it is explained that this would be a difficult year,” the prime minister said, adding that in the first quarter of 2020, government revenues increased by 9.5 because of the very good first three months in tourism.

“For instance, in the first three months of last year, 100,000 cruise ship passengers came to St. Vincent and the Grenadines; land-based tourism and yachting tourism, they were fairly buoyant,” Gonsalves said.

He said the first quarter was followed by sharp declines everywhere in the region, but in St. Vincent and the Grenadines the decline in terms of revenues was far less than in every other country in CARICOM, except Guyana, noting that the southern American Caribbean nation is a now rich-oil country.

Gonsalves said that the contraction of the Vincentian economy was far less than in every other CARICOM nation except Guyana

“While our revenues held, is because you went up by nine and a half in the first quarter. In April our revenues fell by 20%. It began to be stabilised in June, in July; increased in August, in September and so on it went like a yoyo.”

The prime minister said that there are two reasons for this, the first being that his government did not lock down the country as the opposition was urging.

“They must be embarrassed by the speeches they made on April the seventh,” he said, adding that the opposition had been calling for “draconian Chinese methods” –a term the prime minister himself has coined.

The second reason for the performance of the Vincentian economy is that its economy is more diversified and less dependent on tourism, Gonsalves said.

He, however, noted that as a percentage of GDP in SVG, tourism is about 21-22% and employment about 23% compared to Antigua, which is about 50% in both categories.

The prime minister noted that in St. Lucia and Bahamas the portion is even higher.

“And Barbados with tourism plus international finance in Barbados, that’s what they depend upon. Of course, they have had a challenge with international finance,” Gonsalves said.
He said that whereas his government revenues remained basically stable, expenditure increased significantly.

“The recurrent expenditure increased by about 6-7%. I don’t have the final number at my hand here and the capital expenditure by about a number around 50%. When the numbers are all finally in, it would more than likely be more than 50%, resulting, clearly, in a deficit on the current account.

“But a deficit on the current account in number 30 something million dollars, not 100 [million] which would have been, on the face of it, in the revised Estimates Of Revenue And Expenditure because of the way we manage on the fiscal side and the way we manage on the COVID side, and the way we manage on the macroeconomic side,” Gonsalves said.