PM brings stimulus package to soften COVID-19 impact
PRIME MINISTER Dr Ralph Gonsalves has announced an economic stimulus of just over $74 million to help deal with the fallout of the coronavirus (COVID-19) in St Vincent and the Grenadines.
The Prime Minister made his announcement by way of a national address on Wednesday night, March 25.
“A difficult and extremely challenging period lies ahead for the island economies of the Caribbean, including St. Vincent and the Grenadines. In our country an appropriate recovery plan is being put in place and is being acted upon urgently,” Gonsalves said.
He said that the plan “contains strategic and targeted measures for economic support and recovery; this plan provides help for the helpless, support for the disadvantaged, and for those who face urgent, though temporary, difficulties”.
The total package of fiscal stimulus and tax relief will amount to EC$74.05 million, more than three per cent of this country’s gross domestic product.
And government will take the package to Parliament in the form of Supplementary Estimates and a Supplementary Appropriation Bill.
Gonsalves said that the bulk of revenue for the package will come from six sources — the World Bank, the International Monetary Fund (IMF), the contingency fund of the Government of St Vincent and the Grenadines, the United Arab Emirates (UAE), the Bank of St Vincent and the Grenadines, other financial institutions and bondholders.
“The monies from these sources are either in hand or at hand,” he said, noting that additional support will also come from the Eastern Caribbean Central Bank (ECCB), the National Insurance Services (NIS), the SVG Port Authority, the Agricultural Input Warehouse, and the Eastern Caribbean Group of Companies.
A number of locally-based financial institutions, utility and telecommunication companies, the private sector and other entities are also expected to play a significant role in the country’s economic recovery.
The prime minister said that $10 million of the economic recovery and stimulus plan will be spent on COVID-19 health initiatives.
These include the construction of the Isolation Unit and associated facilities, equipment, supplies, materials, drugs; hiring of additional nurses and medical interns; accommodation, food transportation and associated expenses for 12 Cuban nurses and four doctors, specialists in handling infectious diseases.
Funds will also be used for the immediate generation of jobs in public works through specifically- funded roads and buildings programmes, other physical facilities, the second phase of PAVE and painting some of the government buildings. This will amount to $30 million.
Direct support to the tune of $9 million will also be offered in areas of farming, animal husbandry, and fishing.
Gonsalves also said that $3 million worth of support will also be given to the arrowroot industry.
Five million dollars will be used to provide social supports for vulnerable and affected persons while $1 million will be used for additional resources for grants under the Promotion of Youth Micro-Enterprises (PRYME).
Four million dollars — $2 million each — will be used to provide additional support to the Argyle International Airport for five months as well as additional support for small businesses in the field of culture and arts.
Additional support to the tune of $1 million will also be given to SVG Tourism Authority.
And $700,000 will be used to procure a medical evacuation vessel and another $350,000 will be spent on communication expenses.
“The aggregate of this expenditure amounts to $64.05 million. Additional are the tax relief and other measures which are estimated to cost the revenue approximately $10 million. In total, therefore the fiscal stimulus amounts to $74.05 million or 3.4 percent of GDP,” Gonsalves said in his address.
Several tax relief measures were included in the Prime Minister’s presentation, one of which is he waiver of duty and VAT on bleach, disinfectants, liquid hand soap, hand sanitisers, rubbing alcohol, hydrogen peroxide, soap dispensers, bath soap, toilet paper, paper towels, glycerin, hydrogen peroxide, acetaminophen and oral rehydrating salts. This is valid from March 20 to June 30, 2020.
Relief is also expected to be granted to airlines including LIAT and local carriers which operate in or out of St Vincent and the Grenadines in respect of certain taxes, fees and airport charges.
Departure tax, which is usually US$40 will be cut in half for holders of CARICOM passports.
And a regime of duty-free barrels will be instituted from May 1 to August 31 in the first instance to allow for family members sending aid from the Diaspora.
There will also be a distribution of 500,000 pounds of arrowroot starch to school feeding programmes, hospitals, prisons and others.
“As the global economy recovers, the economy of St Vincent and the Grenadines, and the rest of the region, must be in position to lift off and expand,” Gonsalves said. “Still, we are mindful that even before the expiration of the threat of COVID-19 and its hubris, the 2020 hurricane season would be upon us. This makes the overall situation even more challenging, awash with downside risks.”
The prime minister added that he was in conversation with the President of the Caribbean Development Bank and that the Bank was in the process of preparing a package of financial support for its member countries.
“I await expectantly the CDB’s offered package,” he said.