Opposition Leader Godwin Friday has called on Finance Minister Camillo Gonsalves to tell Parliament whether the government is borrowing to pay its debt.
“Is it that they are floating bonds to raise the funds to pay the debt?” the opposition leader said on Tuesday as he led off debate on the EC$1.85 billion budget for 2025.
“I hope that the minister will have the courtesy to explain this because … the way he’s presented it in his budget here, it creates more confusion,” he said.
Friday noted that the EC$1,849,341,997 budget includes a current deficit of EC$5.6 million.
At the same time, Amortisation — the money to pay back loans — and the Sinking Fund — the money set aside to pay off bonds, etc. — is EC$698.6 million.
The opposition leader pointed out that the overall deficit is EC$639.9 million, adding that it is important to look at how the figures are presented “to see if they are credible and whether the budget is based on a solid foundation…
“If the foundation is flawed, then everything else that comes after that is equally flawed,” Friday said, adding that it worsens the problem.
Friday said that over the years, the opposition has pointed out “a big hole in the budget” as regards Other Receipts.
He noted that Other Receipts is EC$280.5 million in 2025 and was EC$215 million last year and around EC$198 million in 2023.
“Just like the budget gets larger, the hole that we call capital receipts also gets larger,” Friday said, noting that the government never meets its Other Receipts targets.
He noted that this year’s figure is 15% of the total government expenditure, even as the government does not know where it is coming from.
“If you put it as a percentage of capital expenditure, which is where it’s intended to be spent, it accounts for 40% of capital expenditure,” Friday said.
“So, where’s the rest of the money coming from? … So, it’s quite clear that is unrealistic and the question we ask ourselves here after years, ‘Why do you put it in the budget?’”
He said that a CEO who runs a business in this way would be fired, adding that he has been urging the people to fire the government for a long time now.
Finance Minister ‘compounds the confusion’
Friday, however, said that in trying to explain the situation, the finance minister “compounds the confusion”.
He said that in the Budget Address, the finance minister summarised various aspects of the funding that the government will receive and how it’s going to be allocated.
“… Other Receipts is receipts — money coming in. I’m asking, we are asking, where do you expect to get it from?”
He noted that the finance minister said in his Budget Address: “Other Receipts represent (i) the financing for capital budget for which the source of funds is yet to be determined; (ii) financing of the amortization; (iii) sinking fund contributions, and (iv) the modest current account deficit.”
Friday, apparently responding to a comment from the finance minister from across the floor, said, “Man, a deficit is a deficit; the deficit is not receipt.”
The opposition leader further noted that in his address, the finance minister listed Unidentified Capital Financing as EC$33.2 million; Amortisation — EC$215.4 million; Sinking Fund Contribution — EC$22 million; and Current Account Deficit — EC$5.6 million.
“That adds up to $276.2 million. It does not even add up to the $280.5 million that we say is for Other Receipts,” Friday told Parliament.
“So even the figures that it presents here don’t add up to the amount. I mean, you may say that’s a … whatever the explanation. … the point is, that is what is presented, and it doesn’t quite add up.”
The finance minister had said in the Budget Address that during the period of the preparation of the budget, negotiations for funding for several capital projects were ongoing.
“… it would therefore be premature to identify a given funding agency as financing project A or project B, although there is a strong likelihood that the funding may come to fruition during the fiscal year,” Gonsalves had said.
“As funding arrangements are concluded, the finances raised will be accounted for on the basis of their source, be they external loans, grants or local loans,” he had further told Parliament.
Friday noted that the finance minister did not say that the funding would definitely come to fruition.
“It’s a strong likelihood. So, strong likelihood it may not,” he said, adding that, historically, the government has not received more than 5% of its Other Receipts targets in one year.
He said that the amount was pushed up during a year when the country was impacted by a disaster, adding, “But that’s unusual.”
Director of Audit raises red flag
Friday said the Director of Audit usually comments on this in a report, but these are behind schedule, with the most recent audit report being for 2021.
The opposition leader said that while the finance minister had said that the other receipt may come from “external loans, grants or local loans”, according to the categorisation in the Estimates, capital receipts are supposed to come from local sources.
“So, what we have here is a situation where it appears that what the minister is presenting is saying that this is how we come up with this number for capital receipts, because we take these things into account and we put them together, and this somehow balances the budget.
“But it’s not a source of revenue. A deficit is not a source of revenue. Amortisation is not a source of revenue. It’s not a receipt.”
Friday said Gonsalves had said that Capital Receipts is made up of Amortisation, “which means that that has to be paid at some point.
“If it has to be paid, then the money has to come from somewhere,” the opposition leader said.
“The money can’t come from Amortisation. We say, putting it in there the way he did, it’s confusing, obviously, but that is simply to say, this is how it’s comprised. That is what the funding will go for. But where does it come from to pay Amortization? And Amortisation is paid all the time. The government can’t default on its debt. It cannot default on its debt, so it has to pay that money.
“So, the minister has a duty to explain where the money comes from to pay the Amortisation.”
Friday then asked whether it is a fact that the government is floating bonds to pay the debt.
He said that when bonds come due at different times, the government has to have the money somewhere to pay.
“… you can’t go back and borrow to pay something else, which seems to be the practice you’re doing.”
Responding to a comment from across the floor, Friday said, “You should not. That’s true. Correctly, you should not. You should put aside that money to pay it.
“… and I ask the question as to whether those funds are there on paper or they are actually in the account that is supposed to be set up to pay this money over the course of time. And I ask this question, not idly. I ask it because the Director of Audit in the most recent report pointed out that, in fact, it does not happen, or it has not happened in some instances.”
‘Very telling’ audit report
Friday said that the report is “very telling”, noting that the minister speaks to the Parliament about fiscal responsibility.
“Well, what we want, more than anything else when you’re dealing with the people’s money, is honesty.”
He noted that the Director of Audit said in the 2021 report that “Sinking Fund Contribution of $22 million was provided for on the recurrent expenditure and the estimates of revenue and expenditure for the financial year 2021. However, this amount was not deposited to the sinking fund investment account. The only inflow to the sinking fund investment account was interest received…
In financial years 2019, to 2021, contribution to the sinking fund has not been made in accordance with chapters 253, and 254, of the laws of St. Vincent and the Grenadines. Consequently, during the financial year 2021, funds from the fiscal reserve to ECCB (Eastern Caribbean Central Bank) account were utilised to repay the principal on a bond. Should this practice of non-contribution to the sinking fund persist, the government may encounter difficulties sourcing funds to discharge its financial obligations as outstanding bonds reach maturity.”
Friday commented:
“It is instructive for us to see behind all of the big talk that they give and explanations and sleight of hand that they give to try to bamboozle people and to get away from their reckless behaviour in the management of the finances of the country…
“That’s a hell of a hook in the gill of the people of this country.”
The lies of the ULP when presenting and debating all of their tongues should caught for for the misleading information that is now a feature of the government presentation.and debate of the budget.
Interestingly for many years the ministers have not debated the budget. They give no account for the millions of taxpayers money under their charge.
Let us hope that the 2025 budget is their last the ULP is presenting.