Eustace: 2012 Estimates ‘much of the same’

Leader of the Opposition, Arnhim Eustace says that he does not believe that the 2012 Estimates of Revenue and Expenditure will be able to move this country forward.{{more}}

Eustace, in his contribution to the debate of the presentation of the 2012 Estimates in the House on Tuesday, December 13, said that based on a report from the International Monetary Fund (IMF), this country was identified as the only one of the 32 countries in Latin America and the Caribbean projected to have negative growth, and that there was nothing of substance contained in the Estimates to move the country from that position.

“It is 683 pages of much the same of what we have had for the past 5 years, and it is that that has led us to our current situation,” Eustace explained.

The Leader of the Opposition said that he based his analysis of the Estimates within the context of the present economic and fiscal situation.

“These are not easy times, and to my mind, the Estimates for 2012 are particularly important in light of our economic and financial performance,” he said.

According to Eustace, this was done deliberately as he felt it had become the norm for persons to view the document on examining the numbers and not as much emphasis was placed on what the figures meant in terms of improvement within the economic performance.

“We are debating these estimates at a time when this country has undergone three consecutive years of negative growth, 2008, 2009 and 2010, and we are poised for a possible fourth year,” Eustace contended.

The current performance contained a number of negatives, Eustace further contended, including the government’s inability to pay wages on a timely basis, shortages of goods and services, private sector debt, debt to GDP ratio among others.

“These are realities and we have to address our minds to them and frame our estimates in a manner which points clearly to a decision on the part of government as to how we get out.”

On the capital side, Eustace said that government needed see to what extent capital projects were likely to reduce unemployment.

But according to the Opposition Leader, part of the exercise over the past 5 years was to talk about the biggest budget ever, as was in the case in 2010, when the government set expenditure at $913 million.

“The reality is that the budget was never sustainable, it was all talk,” he said.

He further explained that while Hurricane Tomas and the floods of April this year and the international financial crisis were all contributing factors to the poor economic performance, the government needed to be blamed also for its failure to discuss and analyze actions to stimulate the economy.

The government of St Vincent and the Grenadines was restricted in what strategies it could deploy in terms of monetary policies, as it belonged to one common Currency Union headed by one common central bank.

“If we want to stimulate the economy for instance, St Vincent on its own cannot deal with issues of interest rates without taking into account the other countries,” Eustace explained.

“So, effectively, we in St Vincent and the Grenadines cannot utilize monetary policy on an individual basis to stimulate our economy,” he continued.

This, therefore, meant that the government was restricted in terms of providing that stimulus to the economy and according to the opposition leader meant that policies adopted needed to relate to the fiscal situation.

“And, therefore, what we do about the estimates becomes very critical for the development of our people and our country.”

“That is why now at this particular time in our history we must pay particular attention to the Estimates. We should be able to discern government policies to get us out of this negative position,” Eustace said.

He again blamed the government for the poor fiscal performance.

“That is not the fault of the international community, it is our fault – the fault of the government of the day because action was not taken when it should have been taken,” he contended.

“Nobody doubts the impact of the economic crisis, nobody doubts the negative impact of the weather but what is it about us that we alone out of 32 countries cannot find a way to get out of negative growth?” he questioned.

According to Eustace, the country was now in an era of deficits and for the country to come on a path of economic growth the government needed to look at the way it was dealing with expenditure.

“There is nothing wrong with an overall deficit, it is generally accepted worldwide that an overall deficit of 3.5 percent of Gross Domestic Product (GDP) is acceptable,” he said.

But on the recurring budget, revenue needed to be greater than the expenditure Eustace reasoned.

“I have been saying that year after year but people say that is doom and gloom talk – the reality is that is what is expected of us as a nation that the basic things that we must do must be funded by ourselves,” Eustace said.