Public debt increases by $131 million, bringing it to $1.51 billion

The Public Debt of St Vincent and the Grenadines, estimated at $1.51 billion as at September 30, 2014, increased by $131 million or 9.4 per cent during the one-year period between September 2013 and September 2014.{{more}}

And according to Prime Minister Dr Ralph Gonsalves, the increase was mainly on the external debt, which moved from $775.9 million as at September 2013 to $882.7 million in September 2014, an increase of 14 percent.

The public debt at at September 30, 2014 is the equivalent of 77.6 per cent of GDP.

The Prime Minister made these disclosures on Wednesday, during the presentation of the 2015 Budget. He said the increase in external debt during 2014 was mainly attributed to loan financing for construction of the Argyle International Airport and draw-downs on loans used to finance rehabilitation and other responses to the several weather-related disasters which have impacted the country over the last few years.

During this one-year period, total disbursements from Alba Bank, Bank of Nova Scotia and the CARICOM Development Fund for the airport project, exceeded $110.0 million.

In relation to the rehabilitation and other responses to the several weather-related disasters, there were disbursements of $17.6 million under the IMF’s Rapid Credit Facility, $6.2 million from the World Bank for the Regional Disaster Vulnerability Reduction Project and $2.30 million from the Caribbean Development Bank for Hurricane Tomas Rehabilitation.

The domestic debt on the other hand, increased by 4.8 percent and stood at $631.2 million at the end of September 2014.

“One of the major issues with the domestic debt is the increase in payables which we have experienced over the last few years. Most of these payables related to amounts due to statutory corporation and state owned institutions and to regional organisations. Of the $69 million in outstanding payable at the end of September 2014, approximately 60 percent was due to public sector bodies and regional institutions, 25 percent to the local private sector and 15 percent to the foreign private sector.

The Prime Minister said government is cognisant of the adverse impact which such a level of payables is having on both public and private enterprises and has been taking measures to substantially reduce this debt.

He said servicing the public debt will cost $166.79 million in 2015, including loan amortization of $101.49 and contributions to sinking fund of $12.7 million.

“This means that debt servicing cost is expected to account for 31 percent of current revenue in 2015, higher than we would wish it to be. It is therefore of utmost importance that we further develop strategies for proper management of the debt to permit us to reduce servicing costs and identify any risks inherent in the public debt portfolio.”

The Prime Minister said outstanding public debt is projected to reach $1.64 billion or 82 per cent of GDP in 2015 before gradually declining over the medium term, as there will be no new external borrowing in relation to financing completion of the Argyle International Airport after 2015. He said total public debt is expected to decline to 68.4 percent of GDP by 2020 and reach the Eastern Caribbean Central Bank’s target of 60 percent by 2024.