The rise ‘and fall’ of SVG’s national debt

In one of our previous pieces, we presented on the indebtedness of the country. In this piece, we look at the overall rise of the national debt.

Cato’s (SVG Labour Party) 1981-82 budget amounted to some EC$127 million. This was reported to be EC$25 million more than the previous year. His 1982-83 budget was reported to be EC$144.8 million. Responding to the 1981 budget, then Leader of the Opposition, Randolph Russell, who was once a Minister of Health in Cato’s government, criticised the $127-million-dollar budget.

One Guyana Chronicle edition of 1981 reported Russell as having an issue with Cato’s proposal of a 40% salary increase for public servants over three years. In the same budget, Cato proposed 50 and 25% increase on liquor and vehicular licenses, respectively; and Russell thought that this tax increase would nullify the pay increase to public servants that was presented in the very same budget. Essentially, giving with one hand and taking it back with the other hand.

Mitchell’s (NDP) 1984 budget was reported to be EC$150.8 million, 5.3% or EC$7.6 million more than the previous year.  $53 million was allocated for capital expenditure. Covering the story on Mitchell’s budget, one editorial in The Vincentian of 1984 wrote:

“…Mitchell’s promise of an A-level college, agricultural instruction and the teaching of other skills in our schools and the general improvement of education and the expressed determination to raise the level of functional literacy to 100 percent from less than 60 percent is heartening. So is the declaration of war on malnutrition. The other notable aspect of Budget Day was the absence of the leader of the opposition Milton Cato.”

In this same budget of 1984, CANA news reported that Mitchell had also abolished a 3% Traders Tax, instituted to by the Cato administration.  

Gonsalves’ (ULP) 2002 budget was EC$419.5 million, which was EC$18 million or 4.15% less than the previous year, 2001. This year — 2024 — budget amounted to EC$1.6 billion.

While we thought it interesting to draw reference to budget presentations of the previous administrations, our focus here is a look at the rise of the country’s public debt, while we challenge you — the public — to try to justify it.

Quoting Prime Minister Gonsalves from the Dec. 4, 2001, parliamentary session:

“Then what about the debts which we have been left, $640 million, the Leader of the Opposition then Prime Minister has left for me, $640 million national debt, including the Ottley Hall debt which will be about $140 million with the subordinated loan. That is what is left, you know.”

Searchlight reported on Eustace’s response to the 2007 budget:

“He said that during his New Democratic Party’s (NDP) 17 years in power, the debt grew at an average of $21 million per year, while under the Unity Labour Party (ULP), this number has ballooned to an average of $100 million per year. He noted that the NDP’s debt average, which is considerably lower than the ULP’s also included the debt incurred for the failed Ottley Hall Marina project.”

Based on Eustace’s numbers, it means the NDP — in 17 years — added $357 million thereabout to the national debt; and if the Ottley debt was indeed $140 million as reported by PM Gonsalves in 2001, it therefore means that the NDP only truly added about $217 million to the country’s debt, considering the Ottley debt was forgiven.

For context, the NDP’s debt perhaps included projects like the cruise ship berth; reclamation site with the main government building; A’ Level college; Sion Hill intersection; Kingstown market; traffic lights, Campden Park port; Cumberland hydro plant; to name some that come to mind. The Cato Government had an expenditure in 1983 of over US $3.4 million to expand the Kingstown port, as reported by CANA news. Of this amount, the government put up US $595,000 towards the project.

The same article referenced above by the Searchlight in 2007, reported the national debt at EC$1.162 billion at the end of September that year. This essentially represents a net increase of EC$662 million between 2001 and 2007, not including Ottley Hall shipyard debt since it was forgiven that same year-2007. Can you think of the gains of the country between those years to the tune of EC$662 million? If it matters, VAT was introduced in May 2007.

Budget 2015 reported the national debt at EC$1.51 billion at the end of September 30, 2014. Essentially, this represents a net increase of EC$348 million over seven years (2007-2014). Can you think of the overall gains of the country during that time?

Budget 2020 reported the national debt at EC$1.7 billion at Dec. 31, 2019; an overall increase of EC$190 million over the five years 2014-2019.

From the 2024 estimates, total debt as at Sept. 30, 2023, stood at $EC 2.5 billion. EC$726 million owing to domestic creditors, and EC$1.7 billion in external loans. Altogether, an overall increase of EC$800 million in 4 years (2019-2023).

The numbers we presented here were reported either by the media or by the records of the Parliament. Some have argued that the national debt could be way more than what is reported, as in a case where in 2017 when Eustace questioned the sudden appearance of an “unreported” amount to the tune of EC$185 million. We also have not included any amount added to the debt during this year — 2024. For example, any amount not reported for the 650-million new port listed by PM Gonsalves in his 2024 independence address, or any amount for the new hospital; or any amount borrowed for disaster response.

Some of the explanation or justification you may hear regarding the level of indebtedness may include terms like “climate change response” or “disaster response”, or even “inflation”. Some may even argue that you cannot just look at the public debt overall, and that it must be looked at in terms of the GDP and the government’s ability to repay. However, as members of the general public that owns this debt, and whose responsibility it is for repaying these amounts, can you justify EC$2.5 billion plus in debt? Do you feel content with what is being left for your children and grandchildren to repay? Can you justify 650 million dollars on a new port?

We look forward to what comes in Budget 2025. Perhaps what it entails will ease the dig of the hook in your gill.

Observer