December 15, 2006

Eustace says disaster coming

Calling the ULP administration wicked and irresponsible, Opposition Leader Arnhim Eustace laid into the budget, zooming into St Vincent and the Grenadines’ growing $1.062 billion national debt.

The debt grew by $99.9 million as of September, 30, 2006.

“Disaster is coming,” said Eustace, as he said that the budget was prepared by economic novices.{{more}}

He lamented that the debt has grown by $502 million in five years up to 2005 under the Unity Labour Party, at a rate of about $100 million per year. He compared this to the New Democratic Party’s (NDP) record of $371 million between 1984 and 2000 at a rate of $21.2 million per year.

“I have good reason for concern,” Eustace said.

Eustace painted a picture with several statistics which he said showed evidence of fiscal irresponsibility by the ULP administration. He referred to the International Monetary Fund’s prediction that the Vincentian economy will gradually decline from the 2005 rate of 5.3 percent to 2.5 percent in 2010.

“The institutions responsible say that government will have declining growth under the current policies,” he said.

He also charged the government for taking loans from commercial institutions at too high an interest rate and with short repayment terms. This, Eustace suggested, is because the Ralph Gonsalves administration did not want to subject itself to the close scrutiny from traditional international lending agencies.

During his budget presentation Prime Minister Ralph Gonsalves said that the projects that his government had undertaken, which are responsible for the increasing public debt, were very important ones for social and economic development.

Among these projects were the Lowmans Bay Power Plant project costing more than $33 million, $11.4 million for the Windward Highway Rehabilitation Project, and $25 million for the Special Roads Project.

A further $40 million was sourced through a bond issue on the regional Government Securities Market. These funds were used to finance the redevelopment of the Arnos Vale Sporting Complex, the Correctional Facility, and the Secondary School Expansion Programme.

He however had stated that his Government is aware that it was important keep the debt manageable.

“Government is cognizant of the need to maintain a sustainable debt position and to keep debt serving costs within manageable limits,” Dr Gonsalves said.

Loans are expected to account for 50.2 percent or $89.7 million of the financing for the Capital Budget for 2007.

He reiterated that the Ottley Hall Project, which a commission had been set up to investigate, accounts for in excess of 25 percent of this country’s external debt. Consequent upon a recent ruling by the Privy Council, the commission will resume hearings soon.