Salaries will buy less amidst COVID-fuelled inflation — Finance Minister

Vincentians will see that their wages and salaries are paying for less than they did a year ago, because of higher prices as a result of the COVID-19 pandemic, says Minister of Finance, Camillo Gonsalves.

Gonsalves said on WE FM that St. Vincent and the Grenadines can only have “some sense of normalcy in our internal economy, in our trade relations, and in our tourism economy, if we get some sense of normalcy with a vaccine, and with COVID. 

“And until we do that, we’re going to be in serious trouble,” he said on Issue at Hand.

“And I want to say also, to our friends who work in the labour movement, because of COVID internationally, globally, there are increases now in inflation, there are increases in the cost of shipping things, increases in the cost of delivering things to St. Vincent. 

“Inflation will increase. And until we can get some sense of normalcy in our economy, we, the government, are not going to be able to give cost-of-living increases in salary,” the finance minister said.

He continued:

“So you will find your salary paying for less than it paid for a year ago. And so it is in your interest, from a salary perspective, to return to normalcy as soon as possible so that the economy can return to growth as soon as possible; so that we can make the adjustments necessary in your salary and everybody’s salary to allow you to have the same amount of money or more to buy things because things are getting more expensive.”

The minister said he has listened very closely to the leaders of the labour movement who are talking about the vaccine.

“… but the vaccine has — and the control of COVID has a very direct relationship with salaries, with the ability of the government to hire new people, and with the ability of the private sector to retain the staff that they have now. And that is going to be the next chapter of this challenge, unless we can get COVID under control,” he said.

The minister was speaking as St. Vincent and the Grenadines is seeking a spike in the COVID-19 numbers, which has seen the number of active cases rise to 602 as of Tuesday, Sept. 21, up from 32 on Aug. 31.

In addition, five people have died of COVID-29 since Sept. 9 — when the first death since May was recorded — bringing the total to 17.

The finance minister noted that Revenue and Grants as of Aug. 31, stood at $474 million, about $72 million higher than last year.

“But a lot of that is money that we received as grant money related to the volcano and so on and so forth,” he said, referring to April’s eruption of La Soufriere.

Another big boost was alien land holding license and stamp duty, mostly generated from the sale of property in Mustique.

Around this time last year, that column reflected EC$4 million compared to $23 million in 2021.

Further, last year, the government had collected, so far, about EC$12 million from stamp duty, compared to EC$39 million in the corresponding period this year.

“So you see right there, that’s almost a $35 million increase just on property sales. And $35 million is almost government paying a month’s salary for everybody. So it’s that significant to us.”

However, on the other side of the ledger, while capital expenditure two years ago has so far reached EC$35 million, it is now EC$105 million so far this year.

“So we’re spending a whole lot more money than we would ordinarily spend at this time of the year. And that $105 is actually a lot higher. But that’s just what the accountants have already brought to book. I suspect the number is closer to $150, $160 million already spent this year, which is significant expenditure. 

“So while our revenue has gone up slightly, a lot of it is due to, again, as I said and grants that we received from the volcano [as relief] and the land sales, our expenditure has outstripped that,” Gonsalves said.