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Commentary: Embattled St Kitts-Nevis PM Denzil Douglas facing no confidence motion
Published on December 19, 2012 Email To Friend    Print Version

By Dr Everson W. Hull

Lost in the national discourse surrounding the December 5 motion for a vote of No Confidence in the Honourable Prime Minister Dr Denzil L. Douglas (the “PM”) and his government is a good faith attempt on the part of the PM to seriously address the long-standing grievances that are articulated in the resolution.

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Everson W. Hull, PhD Econ is a Nevisian. He is a former deputy assistant secretary for policy in the Reagan Administration and former adjunct professor of economics at Howard University. He may be reached at greg111@verizon.net
As is far too often the case, what the nation has been subjected to is a vicious personal assault on the messenger combined with his call to party loyalists, inciting them to shed their blood through violence and mob rule, rather than a moment of serious reflection on those issues that have contributed to the loss in public confidence in his leadership.

His less than persuasive radio response and his steadfast refusal to enter the House of Parliament to respond to the motion has so far, deprived the nation of an open debate on the issues set forth in the resolution.

These issues are of major national importance. Of special significance are those articles that pertain to the PM’s long-standing disregard and neglect of effective management of the fiscal affairs of the country. What may be characterized as an attempt to “grade his own papers”, motivated this author to seek guidance from the World Bank (the “Bank”) in developing an independent assessment of the validity of the Honourable PM’s claims as gleaned from his response to the Motion, as well as his prior year-end budget submissions.

The Bank monitors the performance of its 188 member countries, including St Kitts and Nevis. Each member’s performance scorecard is reported in its World Development Indicators database. The Bank is deemed to be unbiased observer; and is not known to have a party preference in this debate.

The Bank’s performance scorecard presents a radically different picture that is at the opposite polar extreme from the very rosy picture that is portrayed in the Honourable Prime Minister’s very self-serving appraisal. The performance scorecard demonstrates that the purported economic gains claimed by the PM, when weighed against the preponderance of the evidence, appear to be a mere optical illusion.

The Bank’s scorecard validates the claim offered by the very distinguished Nevisian barrister-at-law Theodore Hobson, QC on the Voice of Nevis “Let’s Talk Show” on Tuesday December 11th. The legal scholar noted that the PM’s rosy account of his performance seems fully disconnected from the hardships that he has observed first-hand in his interactions with the masses, in their ordinary walks of life, on the streets of Charlestown and Basseterre.

The scorecard offers several explanations. It shows that, since the all-time record peak performance levels that were attained in the mid-1980s, the federation of St Christopher and Nevis has shown a fairly steady and protracted long-run decline. During 1984 and 1986, the economy advanced at a galloping pace, expanding at double-digit rates of 10.4 percent and 11.7 percent of real GDP, respectively. Since then, the economy has been on a fairly steady decline; puttering along at near-recession levels in 1991, 1998, 2002 and 2003 when economic growth slowed to a crawl, increasing at rates of +0.4 percent, +1.1 percent, +1.0 percent and +0.5 percent, respectively.

In 2007, before the global slow-down set in, the wheels fell completely off the wagon, when the Federation of St Kitts and Nevis recorded its worst, at the time, ever performance, declining at a rate of -4.9 percent. This record was followed by a new all-time record low of -5.6 percent in 2009. With the exception of a momentary uptick in 2008, the economy has effectively been mired in recession over the last five years, falling backwards at a five-year annual average rate of -1.8 percent.

On the road to Greece, only two of the 188 World Bank member countries performed worse over the five-year interval. Greece, which fell backwards at a rate of -2.2 percent, and Antigua and Barbuda, which declined at a rate of -6.3 percent.

With the exception of Antigua and Barbuda, all CARICOM countries performed better than St Kitts and Nevis during the global downturn. Our South American partners -- Suriname and Guyana – emerged at the head of the class, recording healthy five-year expansions of 4.1 per cent and 4.2 percent respectively. In its own peer group, Dominica weathered the storm with a respectable 5-year annual average return of 2.5 percent growth during the global downturn.

In confronting head-on the question raised by Mr Hobson, it is important to examine the question as to how well did the masses fare during the PM’s 17-year tenure. The answer is “NOT WELL”. Per capita gross domestic product is often used as one indicator of the welfare of the citizenry of a nation. Because inflation erodes the purchasing power of each household, the GDP numbers are usually expressed in “real” or constant dollar terms. The World Bank reports that inflation has eroded many of the fictitious gains in GDP that occurred during the PM’s tenure, making the masses worse off.

To illustrate, in 1996, the Honourable PM’s first full year in office, real per capita GDP/Income for St Kitts and Nevis was (EC) $21,623. What, until then, was a robust and steady 20-year annual gain in real per capita income, first showed signs of sputtering in 2006 when the average annual per capita income reached (EC) $25,738. Since then, income levels, as measured by real per capita GDP, have plummeted. On a per capita basis, the average inflation-adjusted income stood at (EC) $21,950 in 2011, suggesting that the economic welfare of the average Kittitian and Nevisian has improved by a mere $328 since the prime minister assumed office. Put differently, for the 16-year interval of available per capita income data, each person in St Kitts and Nevis has experienced an improvement in his or her welfare by a mere (EC) $20.50 under the PM’s rule.

Our Honourable PM has offered little more than lip service to addressing the root causes of the full-blown financial crisis that has long been underway. There have been few discretionary actions taken on his part to mitigate the harmful effects of a selected number of events that are very much within his control. His fiscal difficulties did not evolve because the masses are under-taxed. They evolved because of his chronic failure to live within his means and his propensity to spend that which he has not earned.

Despite the “effective” IMF takeover of the management of his fiscal affairs, his newly introduced unconscionably high VAT tax, and the easy money that is flowing into the treasury from his newly-established Citizenship by Investment Program; his propensity to spend beyond his means has not been in anyway diminished. These new sources of funding have only served to spur him to unprecedented new higher spending levels.

A review of “actual” annual budget submissions shows that the prime minister over-spent his revenue collections in 12 of the 15 years for which his budget performance is available. The most recent data for 2010 shows a budget deficit of (EC) -$87.4 million, the highest deficit ever recorded in the history of the Federation of St Kitts and Nevis. A double-digit increase of 15.2 percent propelled total government expenditures to (EC) $507.2 million in 2010, the highest level ever recorded.

This 2010 surge in run-away spending occurred at a time at a time when our public debt-to-income ratio, as reported by the Western Hemisphere Department of the International Monetary Fund, soared to 199.2 percent, the second highest in the entire world. Only Japan experienced a higher level of indebtedness.

A massive 36 percent three-year decline of (EC) $173 million, through 2011, in net foreign direct capital investment, on a balance of payment basis, reflecting a decline in investor confidence in our shores meant nothing to our Honourable Prime Minister. Our continuing heavy debt burden, our arrears in debt payments and our inability to redeem our outstanding bond issues, all meant nothing to our prime minister.

While expenditures were heading north at a galloping pace, revenue collections were heading south, falling by (EC) -$30.1 million to $419.8 million. The punishment imposed on households struggling to survive under his new VAT tax reeled in a tidy (EC) $12.2 million. Revenue collections were given a further boost from the Citizen by Investment Program in the amount of (EC) $42.1 million. But these new revenue gains merely added fuel to the fire providing the means for this prime minister to continue down the destructive path of the ever-expanding state.

With a pot of money that the PM claims, he is collecting, in the amount of (EC) $271 million per year from the Citizenship In Investment Program, not for one moment did it occur to the PM that he could have made a giant leap forward by using the proceeds for ridding the country of the IMF and the meager dollar assistance it extended, substantially reducing the public debt, reducing the unconscionably high annual interest expenditure payments on the cumulative outstanding public debt and ending the practice of selling off the people’s patrimony -- their land assets -- the only asset that the masses can jointly claim as their very own.

Clinging fiercely to the PM’s “debt me arse” distasteful and unsavory comment and perception of his mounting debt problems and the devastating effect of its implications; the evidence is clear that nothing will stop this prime minister from his fiscal recklessness and his total disdain for fiscal sobriety and his chronic impulse to spend the people’s money. The message is clear, new tax revenues will merely provide fodder for expanding the size of government, and in short order, leaving our deficit and debt situation unchanged.

This has been the 2010 experience and a dominant element, among other grievances, that are at the core of the pending vote for no confidence in his leadership of the Federation of St Kitts and Nevis.
 
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Comments:

Dr. of What??:

While he sports the title of Dr. I'm not so sure of any of his qualifications. The least of which is money management. I'd say he failed any and all money management courses he might have taken in his post graduate education. The whole idea of a PM also being the Minister of Finance is absolute stupidity. Maybe that's why SKB & NEV are in the trouble they are??? Responsible people don't act that way or lead their country in that direction. A sad story often retold in many 3rd world countries. To long in power, no checks & balances, no accountability to the people. Radio talk shows is NOT transparency.

Ian Francis, Toronto,Ontario:

I am not in a position to respond to your opinion on the functioning of the St. Kitts-Nevis economy. I do not have the data that you have presented. However, since your opinion also addressed the no-confidence motion, we cannot ignore the following.

1, Dr. Douglas's Labour Party has a majority in Parliament. PAM has a minority, I do not see them getting a majority vote. This being the case, Douglas might be embattled but his majority is intact.

2. The No-confidence motion will give PAM an opportunity to rant and rave on the topic of the motion

3. However, after all is said and done, Dougie is riding home safely.

4. The natives are very satisfied with Labour and PAM's hot and sweaty behavior will not change the political situation.


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