By The Government has fallen behind in its payments to creditors. It’s in default. In arrears.
Who owes this debt? Dr. Douglas? Yes, he does, but not he alone. Although it went ballistic under his hands, the debt is owed by every single man, woman and child in this country. And we’re being made to pay, with the harsh increases in taxes, electricity, etc. which are killing us and which will only get harsher.
I wouldn’t be surprised if he doesn’t pay for electricity, water and other services at his home. But we have to. If this is so, then it’s time he felt our pain, and paid like the rest of us.
He lied to us over the last three years when he said repeatedly that although the debt was high, we were making our payments on time. And his lie remained a well kept secret until the International Monetary Fund (IMF) busted it wide open in its 2011 Article IV Report on St. Kitts & Nevis, published only last month, when it said that between 2008 and 2010 there was an accumulation of arrears of about $180 million.
And reports indicate that since the end of 2011, the arrears have climbed to over $200 million, out of a total national debt of $3 billion.
That’s $200 million worth of debt which the Government can’t pay. Because it doesn’t have the money.
Even with the introduction of VAT, with the increase in Housing and Social Services Levy and the Environmental Levy, with the freezing of increments and of hiring in the public sector (wink, wink, nudge, nudge), with the retiring of public servants who were 55 years old (wink, wink, nudge, nudge again), and with the corporatization of electricity and the murderous rise in electricity rates, the money is still not sufficient.
Somewhere along the line somebody may have forgotten that looking to generate more revenue in a contracting or stalled economy isn’t only a challenge, but it could also deprive local consumers of the cash which they need in order to keep spending levels sufficiently high, and businesses of the financial oxygen which they need to stay afloat and grow, and in the process, to grow the economy.
And with the Government sucking in all of this money (leaving little or none available for projects that can stimulate activity, or even for basic maintenance), the economy could further contract, or remain stalled, or grow only very slightly.
Unless, of course, the Government is looking to foreign entrepreneurs to provide the economic growth, which means that local enterprises, and local workers, could be further marginalized and disempowered, and the banking system and the Social Security Board (SSB) deprived of funds.
(Aren’t we worried enough about the goings on at the SSB? Three cheers for Mrs. Sephlin Lawrence, the Director, and to all the other good people at the SSB!)
And if that is to be the case, then we might see some economic growth, but accompanied by little or no local value added, and little or no enrichment and empowerment of the local population, which would be a shameful and unacceptable return to the colonial paradigm.
It would be more than odd if the prime minister is heard making the case that with our sub-regional, regional and international trading and other commitments, his government has to be transparent in allowing easy access to foreign capital, and in certain cases, labour, into our economy, while our very own are pushed into the sea.
Especially as we know that transparency isn’t the prime minister’s forte anyway.
It would also be interesting to see if those same foreign entrepreneurs (some of whom are, and will be, enjoying life free of VAT, payroll benefit contributions, and other obligations which their local counterparts face) and foreign workers will be used as a source of finance and votes (in some cases, again) for the next election.
Meanwhile, the Government owes tens of millions of dollars to local suppliers for goods and services rendered. The suppliers are being choked out. Things are so bad that some of them have allegedly refused to issue credit to Government, a situation which could push the leadership even further into the arms of non-local suppliers who might be willing and able to help out.
All the more so given the fact that the Government is having great difficulty delivering its basic services.
Its officers write up credible projects, and its departments have critical needs, but there’s no money. The Coast Guard vessels need fuel, but there’s no money. Police vehicles need parts, but there’s no money.
Security agency personnel need a top up in their pockets, while police officers who were getting certain allowances have now lost them, and civil servants (with one or two very special exceptions) face a freeze in increments for the next few years. No money.
School children need books, but there’s no money. Where are the SELF books? Could it be that the laptop gifts to school children were a decoy for the phasing out, or the downsizing, of the SELF program? And, by the way, how many of those laptops have ‘mashed up’, or gone missing, or are simply not working? I’m told that informal surveys are indicating a figure of about 25%. If this information is accurate, it means that already, in just a couple of months, a loss of $1 million from the $4 million laptop project investment has been realized. A formal analysis has to be done. This could be another disaster.
Hospitals and health centres need money for medication and other things. But there’s no money.
The roads are in deplorable condition, and the electricity supply is a failure, but there’s no money.
Of course, there’s money for people to crisscross the globe every minute in search of God knows what. Are individuals accumulating free miles on American Airlines for themselves when it’s the taxpayers who are paying for their tickets?
There’s also money for certain offices to be prettied up at the cost of $50,000.00 each, or to buy fancy cars, totally unneeded, for big shots, but there’s no money to deliver basic services on a proper and sustained basis.
And with so much being owed to local suppliers, and arrears building up, their tight cash flow situation gets even worse, and the economy suffers more.
Already, layoffs have taken place. Sad to say, more will come very soon, and we will also see businesses closing down, unable to survive what appears in prospect to be a long guava crop, increased unemployment, and all of the negatives that follow.
And it seems that the prime minister has even more expenses in store for us. So don’t be surprised if in a few months you’ll be paying $100.00 or more to license your dog (what is it now, $2.50?), and paying a lot more for LPG (cooking gas), and for other licences, just to mention a few measures.
Because he desperately needs money and because the Government is getting deeper and deeper into default territory. Deeper and deeper into arrears.
Indeed, in addition to the defaulting with local (and other suppliers), I’m told that the Government has defaulted on interest payments to some bond holders, and that the debt consultants are negotiating a ‘haircut’ with the bond holders.
If this is true, it would be interesting to know if the National Bank Group of Companies and the Social Security Board (SSB) are among those bond holders.
If the National Bank and SSB are to take a ‘haircut’, we must be fully informed of all of the details of it, and also of all of the implications and repercussions for both institutions, especially because: (i) SSB has over $600 million in the Bank; (ii) we own SSB; and (iii) through the Government, we also own 51% of the Bank.
Perhaps this situation will now give us a clearer understanding of the rationale behind the IMF’s introduction of the Banking Sector Reserve Fund (BSRF). You’ll recall that the BSRF is designed to assist, and soften the blow to, any local bank which might encounter liquidity challenges. And if the Bank and the SSB are to take a ‘haircut’ with Government Bonds, then there may be liquidity challenges, and the BSRF could kick in and help the Bank.
But who would assist the SSB?
When will we open our eyes? When will Sam Condor and Timothy Harris take a much-needed stand and bring sanity to the situation and hope to the nation by sending the man packing?
I have to say that these two gentlemen are also in ‘arrears’, in the sense that (at least in my opinion) they should have taken a stand long ago. They owe this to the nation, and in quick time. If they don’t ‘pay up’, I have no doubt that the people and history will condemn them to the Dr. Douglas file.
Enough is enough. Too much debt, and now for the past three years, arrears. And more arrears! The Government can’t pay its bills. It can’t even pay for evaporated milk. Imagine, since World War II, the Government has been buying evaporated milk for distribution into the local market to ensure that poor people could get the milk at an affordable price.
The practice still continues today.
However, here we are on Monday, 24th October 2011, with the poor people unable to get evaporated milk.
And this is so, I’m told, not because the price is too high, but because the Government owed a large sum of money to the milk suppliers. I hear that an agreement has finally been reached and that shipments will now come. But this is where we’ve reached.
How much more absurd can this get? What other evidence do people need to come to the obvious conclusion about the leadership of this nation? No integrity in public life law, no freedom of information law, no law and order, no electricity, no jobs, no transparency, possible compromises of our major institutions, no money, and now, no milk.
