Nothing transformative about economic thrust – Friday

WITH THIS COUNTRY’S debt sitting at over EC$2 billion — just over 98 per cent of its GDP — opposition leader, Dr Godwin Friday is not convinced that the government’s economic thrust for the upcoming fiscal year reflects anything “positive” or “transformative” to move the economy forward.

The 2022 Estimates of Revenue & Expenditure, amounts to EC$1.3 billion, were presented in Parliament on Monday, December 13 by finance minister, Camillo Gonsalves.

This is a 9.6 per cent increase over the approved budget for 2021. Gonsalves said financing for the 2022 budget is expected to come from current revenue of about EC$677.6 million and capital receipts of approximately EC$651.8 million.

The finance minister also noted that as of the end of September 2021, the total public debt amounted to $2, 083,671,265 — a 13.1 per cent increase over the total disbursed outstanding public debt for the comparative period in 2020.

“We also have a situation where the debt to GDP ratio has climbed from 85% last year — used to be down in the 70s — to 98.1% of GDP. So the debt is pretty much the size of our economy,” Friday said during his contribution to the debate on Monday. “… the situation that we have here is one that is untenable. What it says is that the government — if you have 41, 42 cents on every dollar paying debt, you have a debt to GDP ratio of 98%. You don’t even need a document from anybody to tell you that you’re in serious problem. That is evident, by itself.”

According to figures presented by Gonsalves in the House of Assembly, the total domestic debt amounts to $525.4 million as of September 31, 2021.

It reflects a decrease of 1.6 per cent or $8.7 million when compared to the same period in the previous year.

The external debt stood at $1.558 billion, an increase of 19.2 percent or $251 million when compared with the external debt as at the end of September 2020. The main drivers of this increase in the external indebtedness of the Government are: the supplemental financing to the second Reform & Resilience Development Policy Credit of $135 million; the second Fiscal Reform & Resilience Development Policy Credit, which we call the CAT-DDO…of $54.0 million both from IDA; the Caribbean Regional Digital Transformation Programme, $3.9 million; the OECS MSME Guarantee Facility Project, $2.7 million; the Regional Disaster Vulnerability Reduction Project, $27.3 million; and the Human Development Service Delivery Project of $5.9 million.

The opposition leader questioned the government’s source of financing the 2022 budget, particularly since he holds the view that the debt situation means there is little room for this administration to borrow anymore funds.

“…Where are the funds going to come from? Where is the plan? We need a plan for productive investments to support local businesses, farmers to get the economy going again, and creating jobs, and then tax revenue for the government. So if you don’t have it, as it set out here — at least it’s not specified — and the borrowing situation looks very much foreclosed, where’s it gonna come from? Taxes?,” Friday questioned.

He also said that, “the people of this country can’t afford any more taxes. They have been longsuffering over the past year and a half, two years”.

“And some just simply have been suffering. They can’t afford any new taxes. So what it suggests to me is that the budget or the estimates, as a numbers have indicated — and we will study them more closely with time, but what is evident is that the estimates as presented as…the architecture of the government’s economic thrust for the next year doesn’t point to anything that is positive, transformative, or suggesting that there is going to be some serious movement or effort to move the economy forward,” Friday said.