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HomeNewsLocal NewsPM Dr Drew; “We are in the red!”

PM Dr Drew; “We are in the red!”

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by Kevon Browne

St. Kitts and Nevis (WINN) – The current administration has inherited a deficit, according to the Prime Minister of St. Kitts and Nevis, suggesting that there was financial wastage during the previous administration’s time in government.

“We inherited a deficit; a deficit for those who may not understand it means that more is going out than was coming in, instead of a surplus is the opposite of a surplus. So it means, therefore, in other terms, we are in the red when it comes to our overall finances. This report would have been delivered to me by the FS just recently after doing an assessment. So we inherited a deficit,” said Hon. Dr Drew, Minister of Finance, National Security, Citizenship and Immigration, Health and Social Security, on the November 2 broadcast of Freedom’s “Issues” with host EK Flanders.

The Prime Minister gave reports on several statutory bodies, including the St. Kitts Electricity Company (SKELEC) and the Development Bank, that have significant financial challenges.

In May 2022, SKELEC requested a government financial subvention to help continue the operations of the electricity company. Now the Prime Minister has indicated that a bailout is, in fact, necessary.

“SKELEC has tremendous challenges in terms of its finances, to the point where the government now from the Consolidated Funds have to be paying the fuel charge for SKELEC above a certain point which is equating to sometimes up to $9-$11 million per month. We have decided that we as a government will pay it so that this cost is not passed on to the people. But SKELEC at this time as a company needs [a] significant financial injection from the government in order to function.”

Apart from an injection of funds to help curb costs that would otherwise be passed on to consumers, the Prime Minister reminded the public of the generators that failed recently and would need to be replaced, which is an investment in bolstering the energy of St. Kitts. 

SKELEC would need two of those generators replaced, running a price tag of $35 million each to maintain our baseline energy requirements.

The Prime Minister also indicated that the government would need to inject funds into the St. Christopher Air and Sea Ports Authority (SCASPA). He further reported that the Solid Waste Management Company (SWMC) would also need a bail-out as it does not have the necessary funds to run operations.

“When it comes to Solid Waste, EK, there’s basically no money there or very little; it cannot run itself, and so, therefore, again, the government has to come in to help in Solid Waste. A lot of the money that Solid Waste had, a lot of it was spent on the yellow smart bins, as they call them. Millions were spent on that, and that nearly hits Solid Waste very, very hard.”

According to the Prime Minister, Development Bank was in serious trouble, saying that the bank was ‘badly’ managed.

“No money EK, excessive overdrafts, could not meet the daily requirement in terms of even loans that were already given out by the bank. The bank is in a sad state; it is sad to where the bank had reached. But we have taken the decision that that bank is a fundamental bank for our development, and we have stepped in to make sure that we stabilise that bank.”

An audit of the Development bank is currently being carried out to help stabilise the bank.

How do we solve this reported wastage?

“So one of the ways of dealing with it is looking for it, holding those who participated in it responsible and making sure that you put the laws in place so that this type of thing does not happen again. So whoever comes after, you want them to really run a government that is efficient, that responds to people and would not have so many instances of corruption… this was a government; this was a mob. This was a mafia setup. This was set up on how to make money from the government.”

The Prime Minister indicated that the country is in a vulnerable state, reporting that the government’s revenue was heavily dependent on the Citizen by Investment Program (CBI), with 50-60 percent of revenue coming from the program.

We cannot ignore the implication of the reported deficit and vulnerabilities, which are compounded by external natural, socioeconomic and political shocks, including climate change, the Russia/Ukraine war and the increasing tensions between China and Taiwan, as well as the growing tensions between North and South Korea.

What does this mean for the economy going forward?

Dr Drew states that the Gross Domestic Product (GDP) is expected to shrink, as stated in the projections from the International Monetary Fund in October. While the Federation’s economy is reportedly vulnerable, the Prime Minister said the government will not be looking to discuss a financial bailout from the IMF but will manage the economy and will come up with solutions that will not incur additions to the National Debt.

MAKANA FERRY SCHEDULE

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