January 26, 2007

Debt relief wonderful news


The announcement last week Wednesday that the Ottley Hall Marina debt had been reduced from EC$167 million to EC$16.2 million was greeted almost matter of factly here in St. Vincent and the Grenadines.

It was perhaps overshadowed by more sensational news of events which took place during the previous week. But for this country, the debt relief is wonderful news. A reduction in our public debt by $150.8 million, bringing the debt down from EC$1,062 million to $911.2 million comes as a great relief.{{more}} Congratulations are in order for PM Gonsalves and his team from the Ministry of Finance.

At a meeting of the Monetary Council of the East Caribbean Central Bank held here in St. Vincent and the Grenadines in July last year, a benchmark of 60 percent debt to GDP ratio was recommended for this country. As at September 30, 2006, our debt to GDP ratio was way above that, at 84.5 percent.

The debt forgiveness means that we are a lot closer to the recommended level. 12.5 per cent taken off the debt to GDP ratio means that we are now at 72 percent. The debt to GDP ratio is a measure of a country’s debt in relation to its gross domestic product (GDP). By comparing what a country owes and what it produces, the debt to GDP ratio indicates the country’s ability to pay back its debt. The higher the debt to GDP ratio, the less likely the country will be to pay back its debt, and the higher its risk of default.

We hope that this improvement in our debt situation does not cause us to relax and embark upon unessential borrowing. We doubt this would be the case, as in the 2007 budget address the Prime Minister said that one of the aims of the Government was not only to restrict the public debt and bring it as close as possible to the bench mark level, but to keep it there.

This development also means that less of the revenue raised from taxes etc., will have to be used to service debt. Even though no payments were actually being made on the Ottley Hall debt since the ULP administration came to office in 2001, the debt was still on the books, and there was no guarantee that our creditors’ stance on our non-payment would not have changed sometime in the future causing them to demand that we recommence repayment.

The Leader of the Opposition, the Hon. Arnhim Eustace must almost be as ecstatic as the Prime Minister with this latest development as the issue of the national debt has been of extreme concern to him. He has spoken about it at every available opportunity. He too played a role in the debt relief having been successful in reducing the Ottley Hall debt by $30 million in 1999 when he was Minister of Finance.

Worth the investment

In October last year, and now just this week, two different persons were charged in connection with three murders committed well over a year ago. The victims were three women: Lakita Duke, Mable Pollin and Veronica Frederick who died between August and December 2005.

The two men charged with the murders had been previously questioned by police in connection with the crimes but were released owing to insufficient evidence. But now, the results of DNA tests done on samples taken from the murder scenes have linked the men to the crimes.

This is good news as it means that we are one step closer to ensuring that justice will be served in these brutal crimes. More broadly, these arrests send a clear message to those contemplating such acts, that the space in which they are operating is narrowing. Up until this recent development, the steadily growing list of unsolved murders gave one the uneasy feeling that a murder was unlikely to be solved in St. Vincent and the Grenadines unless there were eye-witnesses to the crime.

We have been told that these DNA tests are costly. We feel however, that the result is well worth the investment.