KINGSTOWN, St. Vincent, April 22, IWN – Opposition Leader Arnhim Eustace has blamed a lack of confidence in the Government’s finances for the EC$40 million 10-year bond issued last month being undersubscribed by $14 million.
Eustace, speaking on his radio programme last week, said that he has for years been commenting on the declining finances in this country.
“A lot of bills are not being paid by the Government because they don’t have the cash to pay,” he said of the Unity Labour Party administration, which, he noted, also owes the private sector millions of dollars.
“Revenue is declining and things are getting more and more difficult and they are wasting resources on a lot of things that they need not spend money on,” Eustace further said, mentioning the $4 million spend on the “Vote Yes” campaign for the constitution referendum in 2009.
He also noted that this country was once suspended from the Organisation of Eastern Caribbean States pharmaceutical procurement service because of non-payment.
Last year, Moody’s, a global credit ratings agency, downloaded this country’s credit rating.
“That is a bad sign. It sends a signal that they are not satisfied with our credit worthiness,” Eustace said, adding that Treasury bills issued in January “failed”.
“Then, they tried a bond issue and it was barely subscribed by 200 and something thousand (dollars). And, the person who put out the bond on behalf of the government took up some the bond, otherwise, it would have been undersubscribed,” Eustace said as he noted that the latest bond was undersubscribed.
“All those are signals being sent to you that confidence in the finances of St. Vincent and the Grenadines is disappearing. … The investor has no confidence that you will be able to pay them back when the time comes,” the former finance minister said.
He said he accepts the point by Prime Minister Dr. Ralph Gonsalves, who is also Minister of Finance, that bond issues in other Caribbean countries wound up “in trouble too and that had an impact on us.
“I understand that. But, it is the lack of confidence in the St. Vincent and the Grenadines government’s finances. That is the bottom line. And, they are not doing anything, in terms of the finances to improve the situation,” Eustace said.
Gonsalves said last month that the under-subscription resulted from poor marketing, Grenada’s recent default on its bond and uneasiness in the long-term capital market.
The bond was auctioned on March 19 to assist with financing of public sector investment programme for 2013.
The maximum rate of interest was 7 per cent to be paid semi-annually, the pricing mechanism was competitive bidding, repayment was to be amortised semi-annually and the maturation date was March 19, 2023.
The bond was auctioned on regional government securities market using the primary platform of the Eastern Caribbean Securities Exchange (ECSE).