BASSETERRE, St. Kitts – WITH the nation’s debt escalating to a historic high, Prime Minister Hon. Dr. Denzil Douglas has declared his government’s position regarding the issue of Public Debt, calling it a “main priority”.
His recently expressed concern for the state of affairs as it relates to the EC 2.43 billion national debt came as stark contrast to 2004 when Douglas, then Minister of Finance, said at a public political gathering: “Dey cum talking stupidness bout Public Debt. Public Debt me a**!”
Now, four years after, with the Ministry of Finance no longer within his portfolio, Dr. Douglas says the nation’s debt is an issue his administration has been concerned with for some time.
“The debt matter is important. I believe that it is well known that the government has been committed to fiscal adjustment and debt reduction and we have done this is a number of ways. We also continue to ask for assistance in the strengthening of our debt management capability by providing the necessary support expertise within an appropriate debt unit.”
The Prime Minister has since outlined three key policy issues that his government intends to “continue to pursue” with the aim of reducing the National Debt - restoring fiscal and debt sustainability; fostering growth to enhance competitiveness, and mitigating all of the vulnerabilities facing the nation at this time.
“We have closed the sugar industry; we have been very specific in introducing the flexible fuel pricing mechanism; we have moved to ensure that market-based property taxes have been the hallmark of our tax reform policy to date. Also, we have also strengthened our tax administration; we have been meeting policy conditions for our first disbursement of our loan from the [Caribbean Development Bank] CDB and also to give us the ability to receive a few million dollars in Euros from the [European Union] EU sugar grants that are available.”
Prime Minister Douglas has however, stated that the country’s debt situation has improved “over the last four years as [it has been] reduced by some 20 percentage points”.
On the other hand, during his first Budget presentation on December 16, 2008, Minister of Finance Hon. Dr. Timothy Harris said the national debt had actually increased.
“Over the last year, there was a 2 percent increase in the national debt raising the figure to EC$2.43 billion. This level of indebtedness does not provide us with the fiscal policy space that we would like or the agility to manoeuvre in times of turmoil. The magnitude of the National Debt remains a serious constraining factor on the nation’s fiscal response.”
Despite Douglas’ claim that national debt figures are down, he warned citizens that the financial situation remained dire.
“Of course, let me not in any way make you feel unnecessarily comfortable without giving you what the reality is. The reality is, after that very robust picture that we’ve seen over the last four years, we are now at the cross roads. Why? Because the world has changed dramatically upon us. The global financial crisis is here and though we continue here in St. Kitts Nevis to prepare ourselves for the worst, we do not know what it will be.”
In 2009 Budget, the government revealed an 11-point plan to reduce the national debt, with the understanding that it may take many years before the figure reaches an acceptable level. The plan included a definite commitment on sale of lands and other strategic privatization to amount to EC$50 million to EC$100 million per year.
Other details of this plan related to expenditure control, improved efficiency and productivity and elimination of waste in government ministries and departments, and will attempt to implement Tax Reform Measures including further consultation and a decision on the implementation of VAT.
