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NIS and the international airport

NIS and the international airport


EDITOR: Since the announcement on August 8, 2005, by the Prime Minister, Dr. Ralph E. Gonsalves, of the detailed plans for the construction of The International Airport at Argyle (TIAA), the opposition New Democratic Party (NDP) has been fighting against this Project which the whole Vincentian nation, at home and abroad, has been demanding for donkey years. {{more}}

One silly area of criticism by the opposition NDP and its hangers-on, concerns the borrowing by the state-owned International Airport Development Company (IADC) of EC$20 million from the National Insurance Services (NIS) to commence the purchasing of the properties at Argyle for the siting of the International Airport. The properties (houses and land) are estimated to cost some EC$84 million, at least.

The actual market price may be more. The Government will be selling some state-owned lands to pay for the lands at Argyle. The loan from the NIS is, therefore, in the form of the “bridging loan”.

The criticism against this loan is entirely unfounded. The NIS has a prudent, safe and sensible investment policy. NIS contributions alone cannot pay the NIS benefits and administrative costs. The NIS contributions cannot simply be placed in the commercial banks. The interest rate at the banks does not provide enough returns. Indeed, the Actuarial Studies show that an average of return of 6.5 per cent is required for the NIS. The banks provide much less than the required return. So, the NIS money has to be invested safely, soundly, wisely and at a reasonable interest rate, no less than 6.5 per cent. The loan to the IADC by the NIS is at 6.5 per cent and satisfies all the relevant criteria of the NIS investment policy. The loan will be secured against lands.

The opposition NDP is also being hypocritical and unpatriotic on this matter. Under the NDP regime, NIS monies were invested in all sorts of projects here in St. Vincent and the Grenadines (including government projects) and overseas. Let us deal with those loans to overseas entities by the NIS when the ULP came to office in 2001. The total of these overseas investments by the NIS up to March 28, 2001, amounted to EC$19.6 million.

A break-down of this $19.6 million is as follows:

1. Three loans to the Eastern Caribbean Home Mortgage and (ECHMB) (an entity based in St. Kitts but owned mainly by the OECS governments) amounting in the aggregate to EC$7.5 million. These loans were done through bond purchases.

2. One loan, by way of bonds’ purchase, to the St. Lucia Electricity Services Limited in the sum of EC$2.4 million. This bond issue matures in 2010.

3. One loan, by way of bonds’ purchase, to the St. Kitts Air and Seaport Authority of EC$1.6 million. This bond issue matures in 2006.

4. A direct loan to the St. Marteen Harbour Cargo Facility of EC$5.97 million. This loan is to be repaid by 2010.

5. An investment of EC$2 million, by way of equity, in the Eastern Caribbean Financial Holdings.

6. An investment of EC$0.143 million, by way of equity, in ECHMB.

But worst of all Sir James Mitchell announced a policy in the 1994 budget address to use NIS money in the Dr. Aldo Rolla Union Island leisure complex. So Eustace’s NDP established a policy to give the great Dr. Rolla our people’s pension funds from the NIS.

Over the years, up to and including the ULP time, the NIS has lent monies, by way of bond purchase, to several governments including those of Turks and Caicos Islands, St. Lucia, St. Kitts-Nevis, Barbados, Australia, and Belize. Entities owned by regional governments have also received investments from the NIS. Currently on the books is an investment by the NIS by the way of bond-purchase, in the sum of EC$15.4 million in the Princess Juliana International Airport in St. Marteen.

All the aforesaid specific investments, as distinct from the policy to help Rolla, by the NIS whether under the NDP or the ULP have satisfied the criteria of the NIS investment policy. They are prudent, safe and secure with a good yield. So, too, is the loan of EC$20 million to the IADC.

How can it be right to lend the St. Marteen Harbour Cargo Facility, the St. Lucia Electricity Services, the St. Kitts Air and Sea Port Authority, and the Princess Juliana International Airport in St. Marteen and not lend our own International Airport Project? Has the opposition NDP lost its senses?

It is not necessary for us to make our fundamental point above, to note that the NIS, under the Chairmanship of Mr. Arnhim Eustace, invested equity of EC$2.7 million in the Campden Park Container Corporation (CPCP). This entity has been a financial failure and the Government of St. Vincent and the Grenadines, under the ULP, has had to fork out money to bail out CPCP.

As Prime Minister Gonsalves has repeatedly asserted: The NIS is in excellent shape and the ULP government will never raid the NIS. On the contrary, the Government will continue to be a prudent custodian of workers monies in every respect.

Incidentally, one or two who are shouting against the NIS loan to the IADC for The International Airport Project owe the NIS personally or through companies which they own or control, contributions which they have deducted from workers and have not paid over to the NIS.

Sincerely Yours,

Glenn Jackson

Press Secretary to the Prime Minister