Central Kingstown MP, St. Clair Leacock has noted the significant increases in the amount of money needed to repay the debt every five years since the Unity Labour Party (ULP) came to office in 2001.
Leacock said that in 2000, debt servicing was $52,000,681, meaning that with the population being around 100,000, every Vincentian “owned” about EC$500 of the debt.
“… at $1 billion the last cycle, every Vincentian was owning about $10,000 worth of that cycle debt,” Leacock said.
“Now, we are owning about $20,000 worth of that debt,” Leacock said and outlined the ways in which the government generates revenue through taxes.
“My prediction is that the VAT may well have to reach 20% under this government if you leave them there, that’s what will happen because they have to find the money somewhere,” Leacock said, noting that the ULP remains opposed to citizenship by investment.
He said that between 2005 and 2009, St. Vincent and the Grenadines (SVG) needed EC$491 million for debt servicing.
That figure reached EC$1.4 billion between 2020 and 2024.
The opposition lawmaker said he anticipated that with additional borrowing to fund the new port in Kingstown and a new hospital in Arnos Vale, the figure could reach $2 billion by the time of the next general elections, constitutionally due in February 2026.
Leacock said the debt situation is so grave that the government operates like a drunkard who credits rum from one village shop and then moves on to do the same thing at another even as he is unable to pay the first.
Leacock further likened the debt situation to a non-swimmer in a large tank that is constantly being filled with water.
“And it soon gets to the point that … it’s in your nostrils, and you’re underwater and you’re drowning,” Leacock said on Monday on New Times, the New Democratic Party’s radio programme on NICE Radio.
“But that’s what’s happening in St. Vincent and the Grenadines with the debt. … It’s climbing. It’s climbing. It’s climbing. We are drowning in debt. We are drowning in debt, but we’re, in many cases, unaware, some of us are unaware, of how acute that situation is.”
He made the point that between 2005 and 2009, the second ULP administration spent EC$491 million servicing the national debt of SVG.
However, from 2011 to 2015, that figure had increased to EC$663 million.
Then between 2016 and 2020, the country spent EC$1.022 billion on debt servicing.
“Imagine that. That’s almost double the previous administration,” he said.
“So in in every five-year cycle of the government, now you’re beginning to see that the debt jumping by nearly $500 million just to service in the debt.”
Leacock said that between 2020 and 2024, the debt servicing had risen to EC$1.4 billion.
“They’ve added nearly another half a billion…” he said.
“And on this trajectory, this is more than likely at the end of 2025, if the government runs their full term, that the amount of money that’s paid to service debt will be close to $1.7, $1.8 billion. “That’s the relevance of the debt that we’re going to add on this week.”
On Thursday, the government is slated to ask Parliament to authorise the borrowing of hundreds of millions of dollars.
“In other words, we are getting to the point in St. Vincent and the Grenadines, that the business cycle, every business cycle, is adding so much to the debt that the country is at the point at which we can’t pay for it,” Leacock said.
He said this is evident in the audit report in which the Director of Audit says the country is not servicing its debt to the government of Trinidad and Tobago.
“You see evidence in the audit reports as well where money comes in from the government, from a bond issue … and the money from the bond issue is to pay off another debt.
Gov’t like a drunkard with bad credit record
“So, this is like the man who trusting (crediting) rum in the village. And he owe Miss James for things, and you get money, but you move up to the shop above, and he trust there. And then when he can’t pay, he go to the shop above and just give everybody a little piece and he moving around.” Leacock said.
He said that in business, this is known as kiting and could involve borrowing money from a series of financial institutions with each loan to repay the previous.
“… because that’s what’s happening and it’s happening with a lot of the debt that they have, especially with debt by places like National Properties. They’re taking loans to pay a loan. That’s what happened.
“And you have to take a loan to pay a loan because the tax revenues of the government is not generating enough revenue to service government debt.”
He said there are situations when the government borrows money from the National Insurance Services and floats a bond, instead of the money going back into the Consolidated Fund, as the law requires, it goes straight back to NIS.
“So it never passed through the government,” Leacock said, adding that once the government is subjected to a forensic test, “you begin to see where, when you don’t have money how you have to begin to manipulate the system to cover yourself”.