Former Finance Minister Camilo Gonsalves has issued a strong warning to Prime Minister Dr. Godwin Friday and the government against entering into an International Monetary Fund (IMF) structural adjustment or austerity program.
Speaking during a radio broadcast, Gonsalves argued that outsourcing national fiscal policy to Washington DC would trigger severe social cuts, wage freezes, and privatization, urging the administration to instead focus on economic growth and the resumption of funded capital development projects.
Gonsalves raised concerns regarding the strategic lineup of officials accompanying Prime Minister Friday to the high-level World Bank and IMF meetings in Thailand. While acknowledging that attending these biannual assemblies is standard practice for Caribbean finance ministers, Gonsalves highlighted that the delegation lacks project execution heads—such as disaster management, technology, or blue economy directors—and consists almost entirely of top fiscal advisors, including Minister Bramble, Ambassador Kevin Hope, Director General of Finance Edmund Jackson, and Budget Director Ken Morris.
Gonsalves argued that this specific composition indicates that preliminary discussions for an IMF-backed structural adjustment program are underway rather than negotiations for World Bank development grants. He linked this delegation setup to recent public statements by Deputy Prime Minister St. Clair Leacock regarding national financial constraints and the need to “cut, contrive, do more with less,” and make “structural adjustments”. Gonsalves characterized those expressions as the literal “mission statement of the International Monetary Fund”
Warning of the harsh conditions attached to IMF programs, Gonsalves detailed the potential impact on public services and state assets:
Public Sector Wage Freezes & Spending Cuts: Requirements to slash budget expenditure and freeze public sector compensation.
Privatization of State Assets: Potential pressure to sell off profitable state enterprises—such as the Port, National Properties, the Bank of St. Vincent and the Grenadines, the National Lotteries, the Central Water and Sewerage Authority (CWSA), and VINLEC—to generate short-term capital.
Removal of Food Subsidies: Mandatory rollbacks of state subsidies on basic commodities like rice, flour, and sugar, alongside the removal of price controls.
Social Program Reductions: Cuts to critical social safety nets, including public assistance, university scholarships, youth training programs (YES and SET), and duty concessions for local transport operators and contractors.
Gonsalves strongly rejected assertions that the previous Unity Labour Party (ULP) administration accumulated “unnecessary debt,” pointing out that major borrowing was directed toward disaster recovery and transformative infrastructure.
He cited key allocations, including $170 million borrowed for La Soufrière volcanic recovery, $170 million for Hurricane Beryl reconstruction, $120 million for digital transformation initiatives, and funding for the modern port, Argyle International Airport, new schools, and climate-resilient bridges. He added that debt must always be evaluated relative to GDP growth and that capital investments strengthen long-term economic resilience.
Gonsalves also warned the government against “talking down” the local economy for domestic political leverage, revealing that pessimistic public commentary led a Trinidadian bank to withdraw from purchasing St. Vincent and the Grenadines government bonds.
Rather than adopting an austerity framework, Gonsalves outlined several policy recommendations to stabilize public finances and stimulate economic expansion:
Avoid IMF Engagement: Retain national fiscal sovereignty and avoid austerity conditionalities.
Restart Capital Construction Projects: Unfreeze already-funded, shovel-ready infrastructure projects, noting that construction historically accounts for up to 2% of annual GDP growth through local labor and supply chain spending.
Statutory Overdraft Cap: Legally restrict government bank overdrafts to a fixed percentage of the annual budget (e.g., 10%) to prevent financial strain on state banking institutions.
Disaster Fiscal Stress Testing: Establish a pre-arranged emergency liquidity framework (such as a $120 million buffer combining contingency funds and Cat DDOs) to prepare for natural disasters.
Centralized Project Execution: Maintain centralized technical management for public construction rather than decentralizing across ministries, which dilutes engineering expertise and delays project delivery.
Anti-Price Gouging Legislation: Pass statutory protections against retail supermarket price gouging to shield consumers from artificial inflation.
Minimum Wage Adjustment: Conduct a study to increase the national minimum wage, raising consumer purchasing power, boosting VAT receipts, and reducing dependence on state public assistance.
