The new port being built in Kingstown will cost the country “as much as” the international airport at Argyle, on which the government spent EC$700 million, says Minister of Finance Camillo Gonsalves.
The US$110 million that the government has borrowed to build the port and the US$125 million loan, US$80 million of which will go to a new hospital, will see the national debt, being almost as large as the economy.
The US$250 (EC$673) million port will reclaim six hectares, spanning from North River to the Kingstown Fish Market by its completion — schooled for mid-2025.
The project is being funded by a US$110 million loan from the Caribbean Development Bank (CDB), a grant of about US$32 million from the CDB-administered United Kingdom Infrastructure Fund, and a US$43 million contribution from the Government of SVG
Gonsalves said on radio on Sunday that the debt-to-GDP ratio will be in the mid 90s by the time the 2025 Budget is presented to lawmakers for approval.
“… that would be an increase from the mid to high 80s at the end of last year,” he said, on Issue at Hand on WE FM.
The minister said the spike in the debt-to-GDP ratio is due mainly to financing disaster response and the port and hospital projects.
“The port is going to be a project that ends up costing as much as the airport, the International Airport and the hospital is going to be $80 million US project,” he said.
“Now, we had always forecast a bubble in the debt dealing with these two large infrastructure projects, and we’ve been very open with the International Monetary Fund and the World Bank, and they’ve all said, ‘We see that bubble, and we see it coming back down after those two large projects are done’,” Gonsalves said.
“So, it’s nothing to concern yourself unduly about,” he said, adding that the “complicating factor” is Hurricane Beryl, which impacted St. Vincent and the Grenadines on July 1, leaving EC$800 million is damage, according to government estimates.
“… we are now incurring debt to fill that $800 million damage hole that we did not anticipate when we embarked on the hospital and the port and some of the larger infrastructure projects,” Gonsalves said.
“Again, though that would be, as you could imagine, a bubble that will then decline because you’ll be borrowing immediately to deal with Beryl. But these are not borrowings that are projected to carry around four or five years down the road.”
The finance minister said the challenge to the national debt will be “repeated blows from climate events.
“The challenge will be if we get another disaster two years from now — and they’ve been coming almost at two-year intervals — … that’s when you start to get into issues of sustainability.”
He said the policy of the Ministry of Finance is not to borrow unless it is on concessional terms.
“So, we don’t borrow money for big projects or for relief projects at commercial rates,” he said. ‘We borrow money at 1% interest, half per cent interest, 2% interest, and we borrow it at repayment terms that are 20, 30, 40, years into the future.”
Gonsalves said the ministry also borrows loans with years of grace period.
“And debt to GDP is a measure that must always take into account the terms of repayment of the debt.”
He said the debt to GDP is a mathematical calculation.
“… but when you talk about the interest rates and when you talk about the repayment terms, it becomes a very serious issue,” he said.
“So, it is more nuanced than simply debt to GDP. But our GDP is currently over $3 billion for the first time in our history, and so our debt ratio would be a number approaching the mid 90s.”
As regards the percentage of revenue used to service the debt, Gonsalves said current revenue as of July was $450 million.
“By way of comparison, in July of 2022 that was $382 million,” he said, noting that the government received EC$70 million more in current revenue than in 2022 and EC$50 million, more than in July of 2023.
“So, the $450 million that we’ve taken in in revenue is a record high in revenue in our history in St. Vincent and the Grenadines,” he said.
He said the loan over that period of time was about EC$85 million.
“… the repayment would have been on a number somewhere around that range, about 85 of that 450,” he said, noting that in addition to revenue, there are grants and “many other factors that come into that”.
With these high figures of money floating around there should be enough for most people to get ahead on. But we know most of what there will be to be earned will go into the pockets of the Elites while the population will keep robbing and killing for the scraps; And ULP will be in power until kingdom come.
We already have a sustainability issue. SVG has low productivity. What are we exporting, a cobtainer of dasheen once a month and two containers of agro product! How can tbis level of production be sustainable. We moved from capitalism to a welfare state under this administration. We have moved from our people being self sufgicient to looking for hand out to feed their kida and send them to school. People can’t take care if their old folks anymore, they are begging to have the elders be placed on poor relief, zero hunger fund and other food programmes.
The ULP is spending more money on projects that don’t show any increase in employment for the youths.
Guess what! When they leave the burden falls on the NDP to repay all those loans. And they would have a hard time doing so.
And you know what: The ULP will blame the NDP when it can’t pay the bills.
This in my view is reckless, poor management of money and careless whisper.
You have spent almost $1.5 billion on these two ports but yet you have not seen no economic growth during the construction phase nor has there been any trickle down effect.
When spending these quantity of money , it normally should circulate a minimum of 8 times in the local economy before leaving .
So in fact we should have seen over15 billion in new money generated for vincention.
But we are still struggling with high unemployment and no economic growth, so it’s clear those money spent are going out of the country and not into the average vincention pocket.