…as SVG projects economic growth
BASSETERRE, St. Kitts - THE Government of St. Vincent and the Grenadines (SVG) is projecting significant economic growth for the year 2023, and it is expected to be felt in the pockets of citizens and residents as well as business owners.
As part of a new EC$1.4 billion Budget passed in the territory’s National Assembly last week, the Government will be passing the benefits onto civil servants and the country as a whole, which will promote increased salaries and a decrease in taxes.
Camilo Gonsalves, Minister of Finance, explained that based on the economic projections from local and international partners, the Government would have more monies available, and that would be passed on to the citizens.
“When we found out that all of the projections said that our economy was going to grow this year, in 2023 and then grow further in 2024, we said that if there is growth happening in light of all the challenges we are having with inflation, the war in Ukraine an all of these things pushing prices up, we should share some of that growth,” he noted.
The International Monetary Fund (IMF) is projecting that the territory is expected to see a six percent growth rate this year, compared with the five percent seen last year, and a further increase of 4.8 percent in 2024.
As a result of those projections, the Government invited the various workers unions to discuss where a multi-year agreement was agreed to.
“...we have a little extra money and we would like to be able to share that little extra money not just with you, but partially with the government workers of St. Vincent and the Grenadines. And we negotiated a three-year deal. So the workers will get an increase this year,” Gonsalves said while speaking on MARNIN' SVG.
Meanwhile, even though the workers will see the salary bump, there were concerns of the increase being taxed; but the Government has moved the needle of the income tax threshold.
“So you get a salary bump and also you get a reduction in your taxes. And also the threshold, because everyone makes a certain amount of money. And if you make more than that, they will start taxing the extra. And so we have raised the threshold so that there is an extra $2,000 of your salary that wouldn’t be taxed,” stated Gonsalves.
So what does this mean for the government revenue base?
According to the Finance Minister, the changes are expected to cost the Government approximately EC$25 million. But that is expected to be offset by increased spending and taxes.
He said that based on the projections, there would be more money in the areas of tourism, agriculture and construction which are expected to offset the changes.