“There are no new tax measures in Budget 2022.”
This was, essentially, Minister of Finance Camillo’s Gonsalves’ comments on fiscal measures in the EC$1.33 billion budget he presented to Parliament today (Monday) for approval.
The minister said that his government will this year revise taxes on the importation of vehicles, which could be higher than what a consumer pays for the automobile.
Gonsalves parented the fiscal package as the COVID-19 pandemic drags into a third year and two of his fully vaccinated cabinet colleagues will miss the debate because of their own COVID-19 infection, amidst a spoke locally.
“In light of the enormous challenges that we faced in 2021 and due to the uncertainty surrounding the pandemic and its potential impacts on inflation, tourism and the pace of the global recovery, it is difficult to forecast either the revenue gains or the socio economic impacts of any such measures,” the minister said.
He said that the EC$1.33 billion fiscal package represents a 9.6% increase over the approved 2021 budget.
The 2022 resource envelope is made up of EC$727 million in current expenditure, amortisation and sinking fund contributions of EC$204.9 million and capital outlays of EC$397.5 million.
It will be financed by current revenue of EC$677.5 million and capital receipts totalling EC$651.8 million.
Relative to 2021, the increases in the overall budget are mainly attributable to current expenditure increasing by 4.1%, capital expenditure increasing by 25.2%, current revenue increasing by 4.7%, amortisation increasing by 4.4% and sinking fund contributions remaining flat, Gonsalves said.
“In summary, the outlays on this side of the budget, including amortisation and sinking fund contributions are as follows: compensation of employees — EC$354 million dollars; pensions — EC$60.3 million; other transfers — EC$134.7 million; interest payments —EC$74.1 million; goods and services — EC$103.9 million; amortisation of EC$182.9 million and sinking fund contributions of EC$22 million,” he told lawmakers.
Caution amidst COVID among MPs
The debate is slated to continue on Tuesday at 9 a.m. when Opposition Leader Godwin Friday will be allocated four hours to respond to the budget.
The debate generally lasts through Friday before the fiscal package is put to a vote.
Ahead of the presentation of the budget Monday afternoon, Prime Minister Ralph Gonsalves indicated that he is prepared to call out all his MPs, although two of them have COVID-19 to ensure that the fiscal package gets parliamentary approval.
Friday had rejected the prime minister’s proposal that MPs be allowed to phone in their vote.
He said that the rules did not provide for phone-in votes, adding that the prime minister’s application was premature.
On thecapital side of the budget, the government’s strategic priorities are to create jobs and invest in key productive sectors to drive growth while simultaneously shoring up gains in the main social sectors, the finance minister said.
The allocation by functional classification are: general public services —EC$22.6 million; public order and safety — EC$7.3 million; economic affairs —EC$177.3 million dollars; environmental protection— EC$71.3 million; housing and community amenities — EC$22.6 million; health — EC$24.4 million; recreation, culture and religion — EC$6.9 million dollars; education — EC$29.4 million; and social protection — EC$35.6 million.
The sources of financing for the budget are: domestic receipts — EC$105.2 million, made up of capital revenue of a million dollars and loans of EC$104.2 million; external receipts of EC$546.7 million, made up of grants of EC$69.7 million, loans of EC$211.6 million and other receipts of EC$265.4 million.
“Taken at a glance, Budget 2022 has a current deficit of EC$49.5 million and an overall deficit of EC$376.3 million,” Gonsalves said.
He said there is current revenue of EC$677.5 million and current expenditure of EC$627 million, resulting in a current account deficit of EC$49.5 million.
“You add grants of $69.7 million and capital revenue of $1 million to get net funds available for capital expenditure of $21.2 million, less capital expenditure of $397.5 million, which will be financed by external loans of 211.6 [million dollars], local loans of 104 [million dollars], other capital receipts of 265.4 [million dollars], from which you then subtract amortisation of 182 million [dollars] and sinking fund of 22 million [dollars].”
2021 about ‘extraordinary challenges, … extraordinary people’
The finance minister told parliament and media audiences that 2021 was “about extraordinary challenges, and the extraordinary people who rose to face them”.
He was delivering the budget at the end of a year in which 83 people in St. Vincent and the Grenadines died of COVID-19 and the nation’s volcano, La Soufriere, erupted explosively displacing more than 20,000 people for months.
“… we once again pay tribute to the heroes of the COVID pandemic, both seen and unseen, including those involved in the rollout of our vaccination programme. Without all of them, we would not be where we are today: planning for the resumption of safer times.”
But Gonsalves was also speaking weeks after his government gave letters to hundreds of public sector workers who did not take a COVID-19 vaccine, as mandated by law.
The government deemed the workers to have abandoned their jobs, even though some of these workers continued to work up to the day that they received the letters.
“We also honour the thousands of people from all walks of life, who opened their homes and their hearts to those displaced by the volcano, who helped to evacuate villagers, who spent months in kitchens cooking for strangers, who loaded trucks with supplies or prepared food packages, or shovelled ash off of a neighbour’s roof,” the finance minister said.
“Gratitude is a must,” Gonsalves, a reggae lover and part-time DJ said, echoing Jamaican singer Koffee.
“We thank you all sincerely for your selfless patriotism and we thank Almighty God for his enduring mercy, strength and the numerous blessings that we have counted one by one, even as we endured our fiery trials,” Gonsalves said.
He noted that Monday’s budget speech — his sixth since taking over the finance ministry from his father — had been anything but brief.
“But, like Buju Banton once sang, we could go on and on, and the full would still never be told. There is much more to be highlighted and explained,” the minister said.
He added that the other government ministers and senators “will add details to this outline of our response to challenging times, and our plans for future prosperity”.
Shaped by pandemic and volcano
Gonsalves said that the fiscal package is “unambiguously shaped by the recent and continuing challenges of the pandemic and the volcano.
“But it is also fuelled by our determination to recover quickly, build resilience and accelerate our developmental transformation.”
The goal of his government in 2022 is “to protect people from COVID, to respond to the social and infrastructure toll of volcanic eruptions, to pursue fresh initiatives that can accelerate our economic recovery, and to continue transforming our economy by creatively tackling foundational challenges”.
A return to pre-pandemic, pre-volcanic eruption levels of development is “an insufficiently ambitious target,” Gonsalves said.
“Before COVID and La Soufriere struck, the government was impatiently pursuing far grander goals. We will not be satisfied with reaching any milestone that we have already passed on our developmental journey. The status quo is not enough. We want more and better for every citizen of St. Vincent and the Grenadines.”
He said that that is why the budget “embraces the opportunities amidst the uncertainties of the coming years.
“We expect to grow this year and we will use that growth as a springboard to transformational development in these fundamentally transformed times. We will not apply pre-pandemic paradigms or pre-volcano verbiage to the novel viruses, novel challenges and novel opportunities of 2022.
“We will adopt fresh initiatives and pursue them with fresh vigour in the interest of the Vincentian people. Of course, what has worked in the past will not be cast aside, but reimagined to address the challenges of a different era. The revolutions continue,” Gonsalves said.
He said that his government will reinvigorate the “housing revolution” by constructing hundreds of new homes for victims of the volcanic eruption and Hurricane Elsa and residents nationwide in need of more secure shelter.
“We will refresh the education revolution by spending 10s of millions on the rehabilitation of schools and the reform of education in the post COVID era. We will revitalise the wellness revolution with fresh medical facilities, modern equipment, and reformed administrative structures.”
This year, the government will also “strengthen institutions and further entrench the principles and expectations of good governance.
“And we will deliver a revolutionary rebirth in tourism, agriculture and the blue economy.”
He admitted that none of this will be easy.
“The threat of COVID and the impacts of La Soufriere are not past events, but lived realities for every Vincentian. immediate pressures can obscure your vision for the future and compromise your ability to plan for it. But this government’s vision is clear:
“A safe and healthy population, a rebuilt and improved infrastructural capacity, an inclusive innovative and educated society, a sustainable climate resilient environment, a government where the wellbeing and upliftment of people is at the heart of every single policy, programme and project. the slings and arrows and hurled stones, whether metaphorical or literal, will not deter us. Throughout history, any people faced with a collective challenge must contend with the naysayer, the defeatist, and those who opportunistically attempt to sow seeds of division in the tiniest fissures of a united front.”
The debate continues on Tuesday at 9 a.m.