Friday sits before a promise and austerity

Prime Minister Dr. Godwin Friday. must be feeling quite a bit of frustration and disappointment with the International Monetary Fund (IMF), given the advice his government is being offered on moving forward.

Dr. Friday’s New Democratic Party (NDP) had campaigned with promises including a reduction of Value Added Tax (VAT), increased employment opportunities, the setting up of a Development Bank, and embarking on a Citizenship by Investment (CBI) programme. These were popular promises which saw favour with the Vincentian voters and contributed in some way towards the party’s massive 14-1 rout over the Unity Labour Party which after 24 years had begun to lose favour with the populace.

However at the conclusion of its 2026 Article IV mission to St. Vincent and the Grenadines, the IMF through its Mission Chief Sergei Antoshin cautioned that the nation was at high risk of debt distress, with debt reaching 113% of GDP in 2025 and projected to reach around 145 percent by 2030. He therefore advised against creating a new national development bank due to these fiscal pressures.

The IMF commended the fact that despite the external shocks suffered in recent years, the country’s economy has shown great resilience. This was, ironically, a backhanded compliment to the Dr. Ralph Gonsalves-led administration which Dr. Friday has just replaced.

The IMF boss did not exactly offer advice with which our Minister of Finance would be comfortable. The IMF says that starting the bank would entail upfront capitalization and ongoing fiscal costs that SVG can ill afford.

Instead of a new bank, the IMF is urging the government to strengthen existing systems, such as the Eastern Caribbean Partial Credit Guarantee Corporation, to improve credit access for small businesses.

Another area of advice coming from the IMF is the need to replace old diesel generators which are used by VINLEC, with solar energy to reduce energy costs and build economic resilience against oil price volatility. This must be of concern to the finance minister as promises to reduce the unpopular fuel surcharge had also been proffered during the election campaign.

The IMF was not too enthusiastic either about the government’s plans to embark on the Citizenship by Investment Programme (CBI) at this time. It has been expressed in many quarters that the CBI programmes have long seen their best years and should not be looked to for providing the kinds of returns they have for our neighbours in the OECS.

Dr. Friday, however, has proposed to implement what he termed a “home-grown economic stabilisation programme” that will ensure that we have national ownership of the recovery journey on which his government is embarking,

This clearly signals that austerity will be forthcoming to the nation, which would, naturally, work against the government’s campaign promises.

The prime minister stressed that his government was prepared to do what is necessary in a way that is going to set SVG on a path towards fiscal responsibility, but also one that generates growth in a way that is both responsible and sustainable. It is a big challenge that this new administration faces. He promised that any adjustment programme must be socially fair, particularly in the face of high oil prices and inflation, and that the burden will not be borne by the most vulnerable.

That is the great challenge which lies before the first-time Prime Minister. Whether he and his government can manage to make the impending pain more bearable is anyone’s guess.