Financing the international airport project – an uphill struggle

Tue June 11, 2013

When Prime Minister Dr Ralph Gonsalves presented his road map for the construction of an international airport at Argyle on August 8, 2005, he admitted that the course upon which the country was about to embark was not for the faint-hearted. After all, it is the largest single capital project ever undertaken in our country.{{more}}

The Prime Minister’s admission has turned out to be correct. The construction of the airport is indeed a herculean task, with serious financial and economic implications. In 2005, the project cost was estimated at EC$480.6 million (US$178 million), but the latest estimate is in the region of EC$648 million (US$ 240 million).

In 2005, when the roadmap was laid down, neither PM Gonsalves nor the rest of us would have predicted the catastrophic downturn in the world economy, beginning in 2008, the very year that earthworks on the project commenced.

The earthworks are the single most costly part of the project, estimated in 2005 at 38 per cent of the cost of the project. The Prime Minister said then that both the Cuban and Venezuelan governments had agreed to partner with the government of SVG to do the earthworks, “substantially as a grant”.

The partnership of these two Spanish speaking countries has been crucial to the completion of the earthworks in these economic circumstances. The Government and people of St Vincent and the Grenadines continue to be grateful for their assistance, especially when concessional funding and grants are so hard to obtain. However, it is only reasonable that our country has to shoulder its share of the burden. In addition to the sale of State lands, our government has had to access concessionary loans, in order to ensure the airport’s completion.

Last Friday, a Supplementary Appropriation Bill, which allocates EC $204,799,800 to continue work on the project, was passed in the House of Assembly, not without heated debate on both sides of the House. The Bill has also generated much public discussion.

The funds appropriated for continuing the work on the airport include money from three loans which were recently negotiated. Thankfully, these loans have very low interest rates and allow for a few years’ grace period before repayment commences. Still, it must be admitted that we have had to borrow far more than we initially envisaged for this project.

There is no doubt that the construction of the airport entails great sacrifice at the national level. To our credit, the vast majority of Vincentians support the Argyle international airport project and, we dare say, are prepared to make reasonable sacrifices to ensure its completion.

We, however, as citizens, also have a responsibility to ensure that the project is executed in an economically responsible manner. The Prime Minister himself is aware of this, as when he presented the 2005 road map, he made it clear that the project could not be financed entirely by borrowing, because this would leave us with little or no capacity for other worthwhile development projects.

Therein lies the root of any misgivings among citizens about the degree to which any debt incurred may impinge on our ability to keep the rest of the ship afloat. The Argyle airport now accounts for a significant portion of our public sector debt. It is the right of citizens to express concern, and questioning the financing of the project should not be interpreted as being unpatriotic or against the airport.

The concerns being raised are valid, especially in these economic times, when so many of our neighbours are defaulting on their debts. At the same time, it is imperative that we do not pander to all sorts of petty excuses for not completing this project, whose finish line is in sight.

We encourage all Vincentians to continue to support the project, but also to be vigilant to ensure that no unreasonable risks are taken, and that the funds procured are used prudently. We hope that the latest financing obtained will indeed place the project in the final completion phase.