Senior advisor and former Prime Minister Ralph Gonsalves has issued a scathing critique of the current administration’s handling of St. Vincent and the Grenadines’ domestic economy, warning of a looming fiscal crisis driven by mounting fuel debts and unsustainable borrowing practices.
Speaking on a local broadcast, Gonsalves detailed a series of “perilous” challenges, ranging from a potential energy supply disruption to the mismanagement of the national debt.
Gonsalves revealed that the government is facing a massive debt to fuel suppliers Sol and Rubis, which he estimated would exceed $20 million by the end of June. As of the end of April, the government reportedly owed nearly $12 million to Sol alone, a figure Gonsalves called a “conservative estimate”.
He criticized the government’s failure to implement measured fuel price increases earlier in the year, which he argues led to a “shock to the system” when prices finally spiked. According to the sources:
- Gasoline increased by nearly 40% ($1.59 per gallon).
- Diesel rose by 40% ($4.97) and low-sulfur diesel by 35% ($4.44).
- Further increases are expected through July and August.
Gonsalves also accused the administration of breaking its word regarding a price cap on diesel and gas, as well as failing to cap the fuel surcharge at the state electricity provider, Vinlec. He further raised concerns about Vinlec’s reliability, noting “too frequent” power interruptions on the eastern side of the island and questioning if maintenance materials can withstand the “sea blast” from the Atlantic.
Addressing the national budget, Gonsalves rejected the government’s claim that the national debt is “unsustainable”. He argued the debt remains “manageable” but warned that the government is currently engaging in “bad debt”—borrowing at high interest rates for short periods.
He pointed out that while external debt (roughly $2.5 billion) only takes 16% of local revenue to service due to low interest rates, the domestic debt (under $1 billion) requires nearly 27% of revenue because of less favorable terms. Gonsalves specifically highlighted recent local bonds:
- The government intended to borrow $200 million locally but only raised $52 million in the first half of the year.
- Some of these loans carry interest rates as high as 7.25% for as little as six years.
Gonsalves characterized this as a “policy of austerity” that would lead to “calamity”. He also criticized government spending on what he deemed “pet projects,” such as $600,000 for vehicles and significant expenditures on the Prime Minister’s residence, while social safety nets are “falling apart”.
The fiscal strain, Gonsalves warned, is already impacting the youth. He predicted a “slaughter” of the nation’s Education Revolution through “death by a thousand cuts” as student support is choked off. He expressed concern that high costs for essentials like electricity and internet—crucial for modern schooling—would force students to drop out of secondary schools and community colleges.
In his wide-ranging address, Gonsalves also took a stand for sanitation workers, warning the government against privatization efforts. Recalling the history of the labor movement in St. Vincent, he stated that these workers possess a “particular nobility” and warned the administration to “back off” from mistreating them.
Gonsalves concluded by urging the public to “work harder and smarter” while calling on the youth to exercise restraint in the face of these economic anxieties, which he believes have left the faces of men and women “strained and anxious across this country”.
