St Vincent’s Leader of the Opposition Ralph Gonsalves has accused the government of improperly diverting $10 million from the national Contingency Fund to cover routine public salaries and operational expenses amid a worsening national liquidity crisis.
Speaking on the state of government finances, the Opposition Leader emphasized that the Contingency Fund is legally restricted to specific “rainy day” national emergencies, such as storms, hurricanes, volcanic eruptions, and public health crises.
According to Gonsalves, taking $10 million from these statutory reserves to meet payroll obligations was conducted contrary to the law as the government struggled to find cash in an exhausted treasury.
The alleged illegal diversion comes as commercial banking institutions raise urgent concerns over government borrowing limits. The government’s official overdraft limit of $85 million was severely breached, ballooning to approximately $240 million.
The Opposition leader disclosed that the national treasury is facing severe cash flow stagnation, with $200 million to $210 million in unpaid bills and outstanding payments currently placed on hold. These halted disbursements affect a broad cross-section of the economy, including local contractors, suppliers, and service providers.
The cash shortfall follows a sharp 10.6% decline in current tax revenues between April 1 and July 31, coupled with an 11% drop in foreign and non-tax revenues, representing a deficit of nearly $100 million.
Despite these revenue drops, the Opposition Leader pointed to unsustainable government spending, highlighting:
- An expanded executive structure featuring over 16 ministries.
- Exorbitant salaries and allowances awarded to political appointees.
- High expenditure on foreign travel and non-essential administrative projects.
Public sector workers have already experienced widespread payment delays, with late salary disbursements requiring emergency interventions through Inland Revenue and Customs collections to fulfill.
The broader economic drag has compounded private sector distress, with total national private debt reaching $2.6 billion as contractors, equipment operators, and citizens struggle with loan defaults due to halted government projects and contracts.
Government officials and representatives from the ministry of finance have not yet publicly responded to the legal allegations regarding the $10 million Contingency Fund withdrawal or the overdraft breaches. Further updates will follow as responses are released.
