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Letter: The latest IMF SVG report released 2014
Published on August 25, 2014 Email To Friend    Print Version

Dear Sir:

If Vincentians want to know the truth about just how bad we are doing, keep watching the IMF reports.

IMF report published August 21, 2014, in relation to St Vincent and the Grenadines: 2012 Article IV Consultation

Summary: KEY ISSUES Background:

1/ Activity is slowly recovering after a cumulative decline of about 5 percent during 2008–10. Expansionary fiscal policies -- largely to counteract the impact of the global slowdown and the two successive natural disasters -- led to a deterioration in fiscal balances, with public debt up by about 10½ percent of GDP over this period.

2/ The fiscal deficit, however, is expected to narrow this year, largely reflecting cuts in capital spending.

3/ In the financial sector, non performing loans remain above prudential guidelines; provisioning and profitability are low; and supervision remains weak.

Policy Challenges:

1/ Further fiscal consolidation -- including by rebalancing government expenditure toward growth and employment generating public sector projects -- is required to ensure medium-term sustained growth as well as keep public sector debt on a downward trajectory.

2/ In the public sector, improving the efficiency of revenue collection and reducing current spending -- especially on the wage bill, which is high relative to revenues -- will be crucial to allow the government to manoeuvre fiscal policy.

3/ Financial sector weaknesses also need to be addressed, including through strengthening of supervisory and regulatory standards, to promote effective financial intermediation that supports private sector growth.

4/ Structural reforms, including infrastructure enhancements and labor market reforms, are critical to improve competitiveness and ensure medium-term growth and current account sustainability.

Country Report No. 14/251

Here is how I interpret the IMF report summary, it not what they actually say, but I believe it’s what they mean:

The report is pretty damning showing that public debt due expansionary fiscal policies in the period 2008 - 2010 rose by ten and a half percent. The IMF expected that in 2012 because the government was cutting capital spending things will improve. [Well what a surprise, we now know it didn’t, they are capital spending more than ever on the airport, it’s a never ending fiscal pit.] It says in our financial sector, which is banks and other such lenders, they are making loans that are not being repaid and lenders supervision is weak. [The government is being told by the IMF, or perhaps they told the IMF.]

Further fiscal consolidation -- including rebalancing government expenditure toward growth and employment generating public sector projects would take place to ensure medium-term sustained growth, as well as keep public sector debt going down as [probably] promised. So that’s to spend only on public projects that would increase growth and employment, making the public debt less.

Public sector [that’s the government] will improve tax collection, reduce government spending, reduce the public wage bill. They say the government wage bill is to high in relation to its income. They then say if the government does these things it will allow them to manoeuvre financially. They say the banks and other such organisations are weak and require watching, to ensure they help and don’t hurt the private sector.

They further say that the government’s fiscal policy should be restructured, the infrastructure such as roads and building require fixing, fewer people should be employed to do one man’s job, which is the only way to improve competitiveness, ensure medium-term growth of revenue in the country and allowing them to cut the overdraft and help them to stop going broke.

We must remember the IMF can only report and comment on the figures and statistics supplied to them, married to what the government states and declares as current and future policies and actions. The IMF also walks the tightrope of not upsetting or embarrassing the client country.

The IMF knows all about Maurice Bishop’s attempt to commit fraud against them; I have discussed it with them several times over the years. I have supplied them with copies of public records, some of which mention Cuba and the old USSR. I have also supplied them with copies of my history timeline, which shows all the Caribbean collaborators that helped Bishop in some of his revolutionary work.

I have assured them such a policy could never happen in SVG and we are not in any way under the total control of Cuba, ALBA or any other left wing Marxist organisation.

Peter Binose
Reads: 6962

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