An SVG Green Party mathematician and political academic is concerned that a potential SVG economy collapse is the reason for the ULP government cover-up in the 2007 Budget Address. The 2007 Budget Address tried to cover up the real extent of public debt to GDP ratio. It claimed that the figure was 84.5%, possibly because the IMF had said it needed to be below 85%.

The 2007 Budget Address understated the level of public debt. Of the 5 components given in the 2007 Budget Address for the rise in public debt in 2006, only 4 of the components had a figure given. If we assume the hidden fifth component was an average of the other 4, then it is EC$ 27.35 million. Also, we need to factor in the debt owed by the ULP government to VINLEC, EC$ 21.7 million. With these 2 figures the real minimum public debt to GDP ratio is 88.4%. It could be more as the ULP government is not truthful to the nation on the economy.

If we look at the recent history of the Dominican economy, we will see why this should be of concern to Vincentians.

In December 2003, Dominica had to call in the IMF to avoid its economy from collapsing. According to Caribbean Net News it was ‘as a result of shocks to its key sources of foreign currency earnings, mainly tourism and banana exports. Dominica's external debt stock is now over 100% of the country's GDP, a level that is unsustainable….The Eastern Caribbean Central Bank's benchmark is 60%’. SVG’s public debt to GDP ratio is about 88.4% and it is unlikely that the ULP government can borrow more large sums of money without further endangering the SVG economy.

In a letter to the IMF in December 2003 about restructuring the Dominican economy, Dominica stated:

• Public sector reform. We already began the process of reducing wage costs in the 2003/04 budget by reducing wages by 5 percent. We intend to reduce the wage bill by 10 percent over the next two fiscal years mainly through a reduction in the number of positions. We plan to reduce the wage bill by 5 percent during the 2004/05 budget, and by an additional 5 percent the following fiscal year.

• It is proposed to change the statutory retirement age in the public service from 55 to 60 years.

• Tax reform. The main objective is the substitution of the VAT for the consumption tax, the sales tax, the hotel occupancy tax and other minor levies.

In short, the Dominican government either sacked public employees or, made them work for longer for less pay, and also further devalued people’s financial standing by increasing taxes.

Dominica’s economy was vulnerable as it relied heavily on bananas and tourism, just like the SVG economy relies heavily on bananas and tourism. Dominica’s economy was digging a hole to fill a hole, that is to say, borrowing money to pay debt. Is the ULP government digging a hole to fill a hole?

Despite all the ULP government rhetoric we still need to ask, are we heading for the same fate as Dominica given the high public debt to GDP ratio? SVG Green Party is calling on the ULP government to truthfully clarify the situation to the nation.

Don O’Neal  BSc(Hons), MA (Mathematician)

cc:           His Excellency the Governor General          Hon. Prime Minister of SVG
Hon. Leader of the NDP                                   Secretary General of CARICOM
                Secretary General of OAS              British Ambassador to Barbados     
                President of SVG Bar Association     President of SVG Christian Council 
                President of National Youth Council                Media
President of SVG Chamber of Commerce and Industry