The public debt of St. Vincent and the Grenadines (SVG) has risen to EC$2,856,977,932 — 93.6% of GDP — as of Sept. 30, 2024.
The figure was 16.9% more than in the same period of 2023.
Finance Minister Camillo Gonsalves told Parliament that as of Sept. 30, 2024, there was an increase in external debt by EC$232.6 million or 12.9% when compared to 2023.
Domestic debt accounted for 27.8% of the total of $786.5 million and there was external debt of EC$2.04 billion, representing 72.2% of the total.
Debt service for 2025 is estimated at EC$358.2 million or 39.5% of the current revenue, made up of interest payments of EC$120.8 million, amortisation of EC$215.4 million and sinking fund contributions of EC$22 million
Gonsalves and Opposition Leader Godwin Friday have offered differing views on the nation’s obligations to its debtors.
While Gonsalves outlined an initiative that he said would continue to impact positively the debt burden in 2025, Friday noted that the national debt will cost EC$358.1 million in 2025.
Presenting the Estimates of Revenue and Expenditure for 2025, Gonsalves said on Thursday, that the total domestic debt, which amounted to EC$818.5 million as of Sept. 30, 2024, increased by 28.2% or EC$ 179.9 million when compared with the domestic debt for the same period in 2023.
He said the external debt for the period stood at EC$2.04 billion, an increase of 12.9% or EC$232.6 million when compared with the external debt of the year-ago period.
The addition to the external dead includes loans from the Caribbean Development Bank (CDB), namely, the Port Modernisation Project, EC$16.1 million; the School Improvement Project — EC$16.1 million; and the Disaster Risk Reduction and Climate Change Adaptation Project — $19.5 million,
The CDB loans also went to the National Disaster Management Programme for Hurricane Tomas — $22.3 million; the Sandy Bay Sea Defense Resilience Project — $5.4 million; the Improving Responses and Resilience of the Health Sector Project — $8.5 million; and the Strengthening Response Recovery and Resilience in the Health Sector Project — EC$12.6 million.
From the World Bank and the International Development Association, the government borrowed EC$48.9 million for the Volcano Eruption Emergency Response Project, EC$33.3 million for the Caribbean Regional Digital Transformation Project, $8.6 million for the SVG Unleashing the Blue Economy Project, and, EC$28.5 million for the Human Development Service Delivery project.
During the period under review, the government borrowed $45.4 million for the Port Modernisation Project and $67.5 million for road rehabilitation.
SVG also borrowed EC$26 million from the CARICOM Development Fund for hotel development.
The minister said debt from Taiwan is EC$45.4 million for port modernisation and $67.5 million for national roads rehabilitation project.
Gonsalves told lawmakers that an initiative that positively impacted the nation’s debt service in 2024 and will continue to do so in 2025
He said that in response to the impact of Hurricane Beryl, SVG was the first borrowing country to receive debt suspension forbearance from the World Bank under the climate resilient debt clause.
The bank launched this clause in early 2024 as part of its Crisis Response toolkit to support countries most vulnerable to natural disasters.
“Under this initiative, we’re able to amend some of our existing and new loan agreements with the World Bank to include these climate-resilient debt clauses, which automatically allow for debt service deferral for a period of up to two years once certain criteria have been met whenever there’s a natural disaster of a certain magnitude,” Gonsalves said.
He said the initiative has resulted in an estimated EC$8.1 million in debt service forbearance from the World Bank for the next two years.
Meanwhile, leading off the debate on the estimates, Friday paid attention to “the looming” EC$2.8 billion national debt and the debt servicing requirement of EC$358.1 million this year — 36% of current revenue.
“That’s 36% of every dollar that the government earns in taxes and non-tax revenue is being used to service the debt,” the opposition leader said.
He said that when salaries and operational expenses are deducted from the remainder, “there’s very little left for doing anything else.
“Even sometimes to pay the government’s part of counterpart funding on certain capital projects that are needed for the development of the country, we have to go out and borrow them. So, Madam Speaker, it is a matter of concern.”
Friday said that some people say that citizens should not be too worried about the national debt.
“We understand that is passed on to the next generation. If it is not functioning or yielding the return that the investment is intended to bring, then it becomes a yoke around our necks and those of future generations. Or, as some would put it, a hook in the gill. I don’t know if it’s of the people or of those of us in the opposition here, now and when we form government.”
The opposition leader was echoing a term used by Prime Minister Ralph Gonsalves, who had said that the loans from Taiwan to SVG constituted a hook in the gill of anyone in SVG who would want to end Kingstown-Taipei ties.
“But, it is a matter of serious concern. The debt is now 93.6% of GDP. Some people understand the impact of that. Others may not.”
He noted that the Eastern Caribbean Central Bank recommends a debt-to-GDP ratio of 60% as being manageable.
“And of course, you will tell me that the exigent circumstances we’ve had, the disasters and so forth, but we still have to take note of our borrowing, our ability to repay, and to ensure that we manage this in a way that is prudent and that we will be able to maintain our payments going forward without imposing unreasonable hardships on our people, and that is already beginning to take effect,” he said, anticipating the government’s response.
“The debt servicing, as the minister mentioned, is now EC$120.7 million that is for interest and charges $358 million in total. It has increased dramatically over the past several years, and if we do not manage it, it will become a most serious problem that is a millstone around our next and other future generations,” the opposition leader told Parliament.
Later on Monday, Gonsalves is slated to present the budget to Parliament for approval. Friday will lead off the Budget Debate on Tuesday.
The question here to ask ourself are this debt giving us both short an long term on our investment, is it also giving our social economic wellbeing a purchasing power to acquire more resources that in tern will bolster our income and pay off high interest debt reforming and restructuring our struggling economy.