Government estimates current account deficit of EC$20m

The government of St. Vincent and the Grenadines has estimated a deficit on the current account of $20.50 million for 2010.{{more}}

Prime Minister Dr Ralph Gonsalves, in presenting the Estimates on Tuesday, said the deficit is mainly as a result of “the weakening of current revenue collections in 2009, which dampened revenue growth expectations in the 2010 fiscal year.”

He also said that although strenuous efforts were also made in 2009 to curb spending to “moderate the impact of the revenue decline on the fiscal situation,” government still had to take into consideration the need to provide “much needed stimulus to the economy” and to “enhance the social safety nets in an effort to protect the gains made in reducing poverty.”

Addressing Parliament on Tuesday, Gonsalves, who is also the Minister of Finance said that in 2010, there will be several essential new initiatives, the cost of which exceed the current account deficit by over $5 million.

Had these programmes not been included he said, there would have been no deficit on the current account. He however regards the programmes as essential and is optimistic that as the economy improves, actual recurrent revenue will exceed the estimates.

Gonsalves cited programmes such as student support services, pre-primary education, a crisis centre, the Banana Services unit, an Oxygen Production Plan and the Modern Medical Complex, which he said would cost the government over $5 million.

Transfers to the Social Welfare Department, the University of the West Indies, BRAGSA, the SVG Community College and Retiring Benefits account for a total of $8,554,228, while the 3 per cent salary increase, the appointment of Graduate teachers in primary schools and new posts in various government departments add another $2,830,328 to the recurrent expenditure for 2010.

These programmes, transfers, new posts and salary increases in the public service will cost the government a total of $25,170,482, which exceeds the current account deficit by more than $5 million.