BASSETERRE, St. Kitts – AS the nation counts down to tomorrow’s (Mar. 23) 2010 Budget, local economists and commentators are concerned about the allocations toward issues of national interest at a time when debt servicing and economic tightness pose significant threats.
Private sector accountant and social commentator Schneidman Warner told SKNVibes that matters of education and national security should be top priorities for the government and must therefore be reflected in significant allocations. He also stressed the need to deliver on budgetary promises regarding social projects.
“One would hope that in light of the rather concerning matter of violent crimes, more resources would be allocated to the police department. One would also hope that in light of the problems we are having with our young people, that education and some of the other social problems will be addressed,” he said.
Previous budgets, according to Warner, promised a drug treatment centre, a centre for women affected by domestic abuse and a new prison, all of which were not delivered upon for one reason or the other. And, while he hopes that these social initiatives will be actualised, Warner remained doubtful that the necessary funding would be available for such projects.
“It will be a very difficult task to find the funds for these. It is already anticipated that the amount of money to be paid to service the debt could be as high as EC $200 million. We also expect that government revenue will be less than last year. Even if the revenues for this year are exactly the same as last year, it would be unrealistic with the shrinking resources to be able to meet the funding for these programmes,” the accountant continued.
Against the backdrop of a shrinking economy with debt servicing being a burden on the nation, Warner expects that Value Added Tax (VAT) will be announced, with details included as to the current taxes that would be replaced by the consumption tax. Little or no mention, he said will be made of the rate of taxation as the government is still discussing the finer details.
Similar concerns were made by financial consultant Vernon Harris and he called for the government to be upfront and forthcoming with information regarding the national debt. He argued that the government has an overwhelming task at hand in trying to meet debt servicing obligations while at the same time providing basic services to the nation.
“The daunting task facing the Government in the 2010 [Budget] is how to service an unwieldy national debt of EC$3billion with a debt service ratio of 186 % of GDP, which consumes 47 cents out of every dollar collected ($188 million in 2009). Together with the civil servants wages and salaries of 32 cents per dollar collected, very little is left with which the Government can provide national security, health, education and social services,” Harris asserted.
Harris, who frequently writes articles on the local economy, was sharp in his criticism of the current administration, noting that an examination of successive budgets of the Government reveals “no attempt at economic management or an understanding of the harsh realities facing this Nation”.
According to Harris, this budget must therefore address rising unemployment especially amongst the youths, reduction in investment at all levels of the economy, rising prices, balance of payment deficits and challenges developing a local productive sector of the economy – problems he anticipates will persist throughout 2010.
At this time, it is unclear whether additional stimulus packages will be rolled out by the government and, if so, in what areas they will be launched. However, as revealed in the Throne Speech delivered by the Governor General HE Dr. Sir Cuthbert Sebastian on March 10, consumers can expect VAT to be introduced later this year.
The Budget, which is normally presented in December, was delayed as a result of the dissolution of the National Assembly last December and the general elections in January.
