By Lesroy W. Williams Observer Reporter
“”” ” (Basseterre, St.Kitts)”The American financial system is experiencing an economic tsunami like never before since the Great Depression, with the collapse of big banks like Bear Stearns, Lehman Brothers and Merrill Lynch; some of the biggest names on Wall Street have disappeared into thin air. We may not have Wall Street in St.Kitts but we”ve got our own economic tsunamis to deal with, one of them a huge nation debt to be repaid.” According to figures at the Eastern Caribbean Central Bank, the national debt as of 2007 stood at $2,409.0m (2.4 billion E.C. dollars). At a recent press conference on October 2, the Minister of Finance, the Hon. Timothy Harris and the Financial Secretary, Mrs. Janet Harris, said that steps are being taken to reduce the impact of the national debt on the public. “We have a consultancy which is going on with respect to reducing the debt,” Mrs. Harris said when questioned about what is being done to reduce the huge debt.” She said that the public debt stands presently at 169 percent of the Gross Domestic Product (GDP) which is over two billion dollars. “Some options have been put forward by the consultant as to how the debt can be managed going forward. This is actually to be decided on in the near future. It is before Cabinet as to where we will go,” Mrs. Harris said.” “There are several options which are open to us and we are looking at these and we would finalize the debt strategy in openness and transparency,” she said. Some of the options are privatization which includes the sale of sugar lands, Mrs. Harris said.” “One of the things that we have already done is to reduce the interest payment on short term debt. We have been able to secure a 150 million dollar bond which reduced our overdraft payment,” Mrs. Harris said. “The interest rate on the overdraft now stands at 8.5 percent which is a significant reduction to what it was, Mrs. Harris said. “Dr. Harris in commenting on the national debt said that the most significant ways in reducing the debt is to look at expenditure control and revenue generation. “By and large, in dealing with debt, the general approach is to try to improve on growth rates in the country because as the economy grows more resources are released for the government to be able to deal with all the things it has to deal with”growth translates into additional revenue in the coffers of the government,” Dr. Harris said.””” “In large measure, it’s the mismatch between revenue and expenditure which translates itself into debt because if revenues are not sufficient then you are going to have to go to an overdraft or borrow,” he said.” Prime Minister Douglas said at the St.Kitts-Nevis Labor Party 76th Annual National Conference at the Marriott Resort on May 18 that the national debt was being taken care of. “The level of public debt has changed its trajectory and is heading downwards as a result of increased economic activity and a consequent increase in revenue collection,” Dr. Douglas said.” At the National Consultation on the Economy at the Marriott Hotel on August 14, the newly appointed Minister of Finance, Dr. Timothy Harris, came clean on the national debt situation. ” “Given our high level of indebtedness and given that seven countries in the Caribbean are among the ten most indebted in the world (St Kitts and Nevis leads that list), and 14 Caribbean countries are among the top 30 most indebted in the world, this may be as good a time as any for us in the Caribbean to lead a regional and international campaign for a new international order that addresses more frontally the development challenges of heavily indebted middle income countries,” Dr. Harris said. ” “We are where we are – with an extremely high public debt ” indeed, the highest in our history and an overdraft to be contained.” All these are the “large shadows in the room” and must in my view be considered among the principal budget factors, or put another way, limiting factors in the same way that our anticipated revenues are,” Dr. Harris added.