SVG’s public debt stands over EC$1b

This country’s public debt now stands at EC$1.19 billion.

Prime Minister Dr. Ralph Gonsalves made the disclosure on Tuesday, January 19, 2010, while presenting the Estimates for the fiscal year 2010.{{more}}

According to Gonsalves, as at September 30, 2009, the public debt had increased by 10.2 per cent or 75.4 per cent of GDP at market prices when compared to the year ended December 31, 2008.

The prime minister said the increase is attributed mainly to a EC$90.81 million or 18.0 per cent increase in the domestic debt. This is also a result of a EC$19.27 million or 3.3 per cent increase in the external debt.

To service this debt in 2010, it is estimated that EC$149.10 million or 30.0 per cent of Current Revenue will be required.

Gonsalves told the nation as the public debt profile matures, it is expected that amortization will increase in the medium term. However, the Government’s debt management strategy is crafted to take into account this phenomenon.

While amortization rises, the prime minister said the cost of the debt remains low. In 2009, the interest rate on the public debt was 4.0 per cent.

The prime minister is also optimistic that the revenues collected in 2010 will improve and the government will also be quite flexible in cutting costs in some areas. Hence, the recurrent expenditure will be serviced.

Opposition Leader Arnhim Eustace, a trained economist, does not see things the way the prime minister does.

Responding to the prime minister’s presentation of the Estimates, Eustace said if St.Vincent and the Grenadines continues along the path it is going, it’s just a matter of time before it will be in the hands of the International Monetary Fund.

He stated that in 2009, the approved recurrent expenditure was EC$565 million and EC$227 million on the capital side, bringing the total estimated expenditure to EC$792 million.

Eustace said the Estimates for 2010 exceed that of 2009 by a total of EC$121 million.

He questioned whether the state has the financial capacity to implement what is on paper.

According to Eustace, the state’s revenue declined as early as 2009, yet the expenditure continues.

To this end he said the total revenue projected is EC$502 million, but the Government expects the current expenditure including amortization and sinking funds to be EC$610 million. There therefore exists a cash deficit of EC$108 million.

“History, Dr.Gonsalves will not forgive you, Honourable Prime Minister,” said Eustace.

The Opposition Leader said St.Vincent and the Grenadines has lost its independence.

“You have to borrow because you have no money in the recurrent budget,” he emphasized.

Eustace said to service the public debt, the state will have to pay EC$12.4 million a month, EC$3.1 million per week, EC$620,838 every working day, EC$77,000 per hour, and EC$1,283 per minute.

“That’s what our debt is costing us,” said Eustace.(HN)