BASSETERRE, St. Kitts, August 5, 2010 - For the benefit of non-locals and young Kittitians and Nevisians who may not know, the term ‘guava season’, when used in our neck of the woods, means hard times.
We are in ‘guava season’ right now and it promises to remain this way, even get worse, for some time to come, before it ends.
As the International Monetary Fund (IMF) said in its 2009 Report on St. Kitts & Nevis: “…while strong fiscal and structural adjustment could place debt on a downward trajectory, debt will remain at uncomfortably high levels over the medium term…(leading to) a debt-to-GDP ratio of 140% by the year 2014.”
Do I need to remind us that we are presently in the year 2010?
Remember, it was a debt-to-GDP ratio of 120% that pushed Greece into its present difficulties.
And here is what the IMF meant by “strong fiscal and structural adjustment”:
(a) The Government has to sell off its land and other assets in an amount not less than 3% of GDP annually. (I will come back to this point because it is very revealing);
(b) VAT must be introduced in 2010, as well as personal income tax;
(c) Tax concessions must be curbed;
(d) Corporatize the Electricity Department in 2010. (What the IMF really wants is for us to privatize it, taking it completely out of Government’s hands);
(e) Cap the public sector wage bill by sending people home and freezing increments;
(f) Finance capital expenditure by funds from the European Union’s Sugar Grant (which will be around EC$30-50 million annually for the next 4-5 years. (This Sugar Grant, put simply, is a mechanism of the EU to help sugar producing countries in their quest for economic transformation); and
(g) Enforce the Finance Administration Act by lifting efficiency and transparency in statutory corporations.
Between now and 2014, there will be much economic and social suffering and loss in our Federation.
What caused all of this? Damage from hurricanes, the global economic crisis, and fiscal mismanagement by Dr. Douglas.
First, the hurricane damage. While much of the expense was legitimate, I, for one, still want to get more details.
I understand that a company named ‘Horizon’ might have been involved in what would have been massive claims settlement arrangements. Questions will have to be answered on this so that the people of this country can be assured that this process took place totally above board.
I am not accusing anyone of anything. I am simply stating that this story is not yet fully told and that it needs to be.
Secondly, the global economic situation speaks for itself. But the truth is that when this situation arose, our economy was already in trouble.
And thirdly, fiscal mismanagement. Where do I start?
The failure to implement a revenue regime to mirror our GDP growth over the years, thereby opening up a gap between revenue and expenditure, and throwing us into annual and accumulating deficits?
And that failure putting Government in a position where it cannot even provide steady electricity, keep the roads in good order, install modern drainage and sewage systems, maintain Government buildings and Springfield Cemetery, etc., even to the point where, in addition to its normal debt servicing obligations, there is over $35 million worth of bills sitting on somebody’s desk in the Ministry of Finance, past due and waiting to be paid?
And that’s not all, because during the first four months of this year (2010) Government’s primary surplus was $24 million. Now remember, it is from the primary surplus that debt is paid down. However, for the said first four months, our debt obligations were over $50 million.
So the National Debt increased by at least $26 million during that period, which means that the indicators are pointing in the wrong direction, and that desperate and drastic measures are unavoidable.
Do I speak about the colossal waste of the people’s money by Government on rent, on travel, on overseas missions and apartments and personnel? Or about the packing up of the public service with over 6,000 employees, because of the failure to provide sufficient economic stimulation to the private sector for it to provide those jobs?
Do I speak about the astronomically high cost of inefficiency and of ‘dead’ offices and departments which need to be closed down?
Do I speak about the Prime Minister’s belief, bolstered by advice from close friends, that it was better for his ego and for his political agenda to borrow money from the National Bank at high interest than to go to the IMF which had been throwing up red flags since around 2000?
What about the stubborn refusal to tighten up on British American and the financial/insurance sectors over the years (even now), thereby allowing a situation to arise in which the people of St. Kitts & Nevis will lose over $120 million of their hard earned money in the worst financial catastrophe ever to have hit this country?
(And the irony of it is that the man who allowed this to happen, despite cautions, continues to lead this country, while a man who was integrally involved in it now sits in Parliament!)
Where do I start? I won’t. I’ll leave it there.
You know that we’re in ‘guava season’. And if you don’t know it today, you will soon know it. Because you will feel it!
I want to deal with Government lands and VAT.
It is a burning shame that some 5,000 acres of the sugar lands, the lands which Sir Robert Bradshaw stood up in Buckleys Estate Yard in 1975 and claimed on behalf of the people of this country, had to get tied up in the National Bank as security for the Government’s runaway debt.
It is tragic and historic testimony to the failure of Dr. Douglas to carry on and secure the vision and the noble and righteous mandate of Sir Bradshaw to empower the masses through opportunities derivable only from or through access to land ownership.
It is a tragic reversal, abuse and abomination of all of the efforts and sacrifices of the people of this country from slavery onwards to gain their freedom, dignity and their independence, none of which is available if the people have unfettered access to the land.
And we now find ourselves in a situation in which all of that land is tied up with the Bank and it cannot be freed unless the Government pays off its debt to the Bank.
The same Bank in which the Government lost 9% of its 60% shareholding some 10-11 years ago without getting a penny in return, and unknown to the Cabinet until after the fact, because even back then Government did not have the money to maintain its 60% parity and Dr. Douglas could not stop a certain move from taking place at the Bank.
But the Government is simply unable to pay off its debt to the Bank.
Which brings me to the very worst and most shameful and disgraceful part of the matter: the IMF is telling the Government that in order to reduce its unsustainable debt load, in order for the economy of this country to get a fair chance at regaining its health, and in order to avoid further calamity, the Government has to sell of large tracts of its land. And it has to do so fast.
Now who in St.Kitts and Nevis has the money to buy these large tracts of land? Very few, right?
This means that most of these lands which Bradshaw claimed for the masses of this country will fall into the hands of foreigners. And locals will not only lose out, but we will be taken back to the horrible past.
In other words, the best that Dr. Douglas can do to relieve the citizens of this country of the plight, which he brought upon them, is to sell their lands to foreigners, and in the process, to dispossess, disrespect and dishonour them and the legacy of blood, sweat and tears of their ancestors.
That’s disgraceful!
But that’s not all.
Because in addition to robbing the people of their patrimony, he is also throwing VAT, personal income tax, higher electricity rates, and a higher cost of living in their faces.
And having blown up the numbers of public sector workers, and with the elections now passed, he is sending home about 1,000 of them and freezing the increments of those who are kept.
Let me end on the VAT and try to help put an end to the crap that is being peddled that it will result in a 5% reduction in prices.
There are goods which presently bear consumption tax of less than 17%. Some at 5%, others even at 0%. If any of them will now bear the VAT, their prices will increase by at least 17%.
But people are being distracted from other things with this continuing focus on goods. Where the cost of living will go up significantly is in services.
Poor people will pay VAT on electricity in their homes and small businesses. They will pay VAT on services for the first time. This will increase their expenses. That’s all there is to it.
The Government is desperate for money, and it is now going after it, tooth and nail.
The problem is that the people have less money to give, and it will get worse as folks are laid off from both the public and private sectors, as businesses downsize, even close down, and so on.
This is what Dr. Douglas has bequeathed to the people of this country: choking debt, massive unemployment, limping infrastructure, a shrunken economy, widespread lawlessness and disorder, landlessness and a long ‘guava season’.
And so on Friday, August 6, 2010, 65 years to the day after the atomic bomb was dropped on the city of Hiroshima, Japan, killing over 100,000 people, Dr. Douglas will drop the VAT on the people of St.Kitts & Nevis.
