KINGSTOWN, St. Vincent – With government accounts registering a deficit during the first seven months of the year, Prime Minister Dr. Ralph Gonsalves says the Ministry of Finance is “holding things together, but it’s tight”.
Prime Minister Dr. Ralph GonsalvesAt the end of July, the overall deficit — both on the capital and current accounts — was EC$53 million (One EC dollar=US$0.37), up from EC$40 million last year. The current account deficit was EC$1.7 million, compared to a deficit of $3.6 million year-on-year and EC$38.6 million at the end of July 2020.
“So the current account, though we are in deficit, the deficit is small,” Gonsalves said on Wednesday as he announced the figures.
He said that the grants received in 2021 — the year in which the La Soufriere volcano erupted — declined this year. Revenue, however, increased by about 0.2 per cent, from EC$381.9 in 2021 to EC$ 282.7 million in 2022.
“The main revenue items are holding — taxes on goods and services like the excise duties, import duties, interest levy paid by the banks. The key revenue drivers they’re holding up pretty well,” the Prime Minister said.
He said the “big drop” in any category of revenue was the absence of the windfall from alien land holding license and stamp duties and property transactions, particularly in Mustique.
At the end of July 2021, this category had generated EC$62 million.
“This year, it’s EC$18 million,” Gonsalves said. “Fortunately, the other items have made up for the difference between the windfall and what you may call the normal number for alien landholding licenses and stamp duty on property.”
He said that in terms of the outturn, current expenditure was basically the same — EC$385 million. Of that amount, employees’ wages and salaries and National Insurance Services contributions accounted for EC$192 million or almost half.
The government paid interest of EC$23 million on the national debt.
The Prime Minister said that capital expenditure amounted to EC$63 million, “a little down from last year”, adding that some of the figures were yet to come to account.
“We’ll be able to say — maybe in another couple of months — what is happening there. There are some big items which are to come to account. The long and short of it is that we’re holding things together, but it’s tight,” he said.
Reiterating that the government could not afford to adopt proposals made by Opposition Leader Godwin Friday earlier this month to reduce the cost of living, Gonsalves pointed to other assistance his administration was already providing.
He mentioned the money the government is giving to 5,400 people affected by the eruption of La Soufriere volcano, the EC$3 million road cleaning programme, scholarships, “the strengthening of the social safety net overall”, EC$900,000 for arrowroot farmers, the excise tax waiver of $1.50 per gallon of gasoline and $1.05 per gallon of diesel and the waivers in relation to VAT on electricity.
“The IMF came down last week…. They want to know how long I’m going to keep these measures in place to help people. I tell them it was three months and I had to extend it again. And, of course, naturally, they are saying ‘you have to be very careful and also on’.
“I said, ‘yes, but we have an acute judgment on this thing. We are between prudence and enterprise. We are balancing. We are not being reckless but we’re easing the pain in particular ways as the public seeing’,” Gonsalves said.
