National Debt crippling government’s ability to serve, says Opposition
By VonDez Phipps
Reporter-SKNVibes.com
BASSETERRE, St. Kitts – IN response to the allocations given to debt servicing in the 2009 Federal Budget, Hon. Shawn Richards, Parliamentary Representative for Constituency 5 said that the alarmingly high National Debt is affecting the government’s ability to serve.
He claimed that he “has been lobbying all along” for one out of every five dollars received by government to go towards servicing the EC $2.43 billion National Debt.
“Over the years, this government, in an attempt to hold on to power and to buy more time in office, has borrowed billions of dollars, making St. Kitts-Nevis one of the most indebted countries in the entire world. It may not have been a bad thing if for all the money, we could have seen some kind of value on the ground in terms of investment.
“Now, because of the high national debt, the Federation is not equipped to ride out the current international economic storm. What that means in real terms is that the government now has less money to spend on education, healthcare and job creation because it is now payback time.”
He referenced a lack of basic necessities in the hospital and schools, which are expected to be provided by the government and stressed that it is not surprising because “when you have a debt of such magnitude, it’s certainly as it has been doing, affecting the government’s responsibility to those in need of them”. ~~Adz:Right~~
“According to the Director of Audit Report, at the end of 2006, the public debt was approximately EC $941million. It also states that this reflected an increase of some EC $417 million or 44.27% over the previous year. That for me is puzzling. The Report also states that the recurrent revenue stood at EC$416 million. There are questions as to what those additional monies were used to do. In the essence of transparency, some sort of explanation is needed as to how the EC $416 million -almost half of the amount that the debt was up to the previous year in 2006- was added to the debt in one financial year.
“That, in my mind, warrants an explanation because the debt increased by almost half of what it was prior to that year. This does not even include the Bank Overdraft which was some EC $279 million. At the end of the day, it is the tax payers of the day who would have to repay the debt.”
Richards stressed the need for proper economic management without which the “economy will be unable to absorb economic shocks, and be less resilient to natural disasters”. He recommended that the government seeks to strengthen its tax collection mechanism and actively pursue a policy of waste reduction.
The Eastern Caribbean Central Bank suggests that in terms of monetary policy within the Organization of Eastern Caribbean States (OECS), the benchmark for National Debt is that it should not exceed 60% of a country’s GDP; over that may indicate mismanagement of the economy. The Federation’ National Debt to date stands at 177.4% of the nation’s GDP.
