The issue of debt, public and private, highlighted during the recent budget debate needs to be taken seriously by citizens. Most of us may not be able to do anything about it. However, all of us need to have a basic understanding of the opportunities afforded by debt and more so the dangers.
Finance Minister Camillo Gonsalves disclosed that the public debt is EC $2.8 billion. To personalise the debt problem means every man, woman and child is saddled with $25,455. Opposition leader DR, Godwin Friday reminded the nation that the public debt is about 98 percent of GDP. On top of the public debt burden, a private debt is estimated at $1.6 billion to banks, credit unions, businesses and other lending agencies.
Compared with some of our neighbours, as of 2020, St Lucia has a public debt of $4.77 billion or 84 percent of GDP. Grenada’s is $1.9 billion or 71 percent of GDP and Antigua’s is $3.7 billion or 101 percent of GDP. International agencies maintain that a reasonable and sustainable debt is 60 percent of GDP. The USA, UK, France and Germany are the world’s leading debtor nations with the USA indebted for US$29 trillion or 128 percent of GDP.
But debt doesn’t tell the whole story for debt is not all bad. No serious person will conclude that the USA is economically worse off than St Vincent because of its huge debt. Most nations are indebted, but some are in grave danger of contracting or collapsing than others. St Vincent and other countries in the Caribbean are in serious economic straits, and there is no end in sight.
St Vincent, like its neighbours, therefore has serious problems. If not for the growing credit economy, citizens would be worse off. Even with access to credit, many still find it exceedingly difficult to survive. With national unemployment above 25 percent and youth unemployment over 40 percent, we get a greater appreciation of the problems families find themselves in. With poverty pushing up to 40 percent, the nation’s economic condition is stark.
With an increasing debt burden, the state finds itself with less money to spend on education, health, infrastructure development and security. Since we pay the debt, especially to foreign economic concerns as they become due, the government has less than 50 cents from each dollar budgeted to spend on essentials. This explains why there are complaints that money allocated to ministries and departments is not forthcoming each year.
The debt problem has been made even more acute with the eruption of the La Soufrière volcano. Money has to be found to rebuild after the destruction of our agriculture and infrastructure. Compounding this situation is the fallout from the coronavirus pandemic. The economy continues to suffer as commercial activity has come to a virtual halt since 2020. Tourism, on which we depend heavily, is only now staggering back to life. As Deputy PM Montgomery Daniel said, ‘what can we do’ to get out of this challenging situation?
The situation is so depressed that it is inconceivable to ask citizens to tighten their belts. Begging is now very commonplace among young and old. More and more people are defaulting on small loans and are brought to magistrate court by creditors to enforce payment. The entrepreneurial spirit of our people is literally oozing out of their pores as many find ways to make ends meet. Young men and women can be found all across town selling something. In every village and town, there is some small-time economic activity.
Increasingly more of us depend on friends and relatives abroad for assistance. This is evident from the long lines at the Western Union and MoneyGram outlets. But that’s not enough. Social prostitution is rife as increasingly young men, and women sell themselves to survive.
Praedial larceny is at an all-time high. Farmers and other landowners are not enjoying the fruits of their labour or property. Daily, young men are seen with buckets of fruits that they sell to vendors.
Crime is high and rising. Kingstown is now a laundry. Corruption of the private and public space is accepted and justified. Because of its open borders and expansive seascape, St Vincent remains a transshipment point for illicit drugs. Somebody is making lots of money, and it is not the people.
Frustration is rising. Employment on cruise ships has fallen off with the pandemic. Our young people are increasingly looking to migrate to make a better life. Covid restrictions have placed a damper on such plans. Something has to give soon if we are to avoid a social explosion.
Barbados PM Mia Mottley has blamed a ‘faceless few’ for pushing the world towards a climate catastrophe, thus imperilling small developing states like ours. Months before, at the UN General Assembly, she lamented that rich countries gain access to financing much more effortlessly and on better terms than developing nations. The faceless few are recognisable and well known. Mottley was afraid to name them for fear of retribution.
Unless there is a radical restructuring of the legal, financial and economic architecture of the trading and banking system, countries like ours will not see the kind of development that we dream of. The system is rigged unfairly against developing countries.
Our politicians may express concern about the growing public and private debt each year, but lip service is all it will be. Debt has now become our lifeline. Without it, SVG will stagnate further and choke on itself to a slow and painful death.
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