An acceptance that reckless economic policies and fiscal mismanagement drive countries over the fiscal cliff, should have alerted George Tsiboris to the need to be thorough and skeptical of many of the projections of growth given by government Ministries but particularly the Minister of Finance in St Kitts.
The Prime Minister and Minister of Finance gives the IMF the impression that the country is expecting growth when in fact his policies are undermining private sector confidence in the economy. Since 2009 the country has been running deficits notwithstanding the over optimistic projections of the government which the IMF officials seem too willing to accept at face value. That lack of confidence by the local private sector stems from the lack of transparency and equity in the way government does things. The government for political payback exempts some entities like the Marriott Hotel and Christophe Harbour from VAT, while others like Four Seasons have to pay.
The government has developed a slush fund called the Sugar Industry Diversification Foundation (SIDF). It has a Board made up of public servants like the Chief Secretary and Cabinet Secretary, Joseph Edmeade, Hermia Morton-Anthony, etc and such like, none of whom has any record of success in business. These persons are there solely to do the bidding of the Prime Minister. The IMF team leader accepts this entity as an independent body and the world laughs at the IMF’s lack of discernment.
The SIDF is the largest contributor to the government revenue. To meet IMF targets the Ministry of Finance selectively causes funds to be transferred from the SIDF account to the Consolidated Fund. This year all tax revenues are down, and in spite of government’s projections to the contrary, in 2013 the tax revenue will be down. It is on the risky sale of our citizenships to Iranians and citizens of Eastern Europe, many of them linked to dubious states or entities, which St Kitts and Nevis government relies for financial flows. It is this Slush Fund that is manipulated to make it appear that fiscal targets are being met.
IMF should be concerned about the SIDF from a number of perspectives:
1. It acts as a quasi-government, taking revenues from sale of national assets (our citizenship and passport) and gives grants and loans to entities recommended by the Prime Minister. The proceeds of this sale of citizenship/passports ought to go directly into the Consolidated Fund. The IMF needs to have a legal opinion from reputable lawyers/solicitors to determine whether the SIDF in its current form and mode of operation is illegal. Many luminaries argue that the SIDF runs afoul of the constitution and other fiscal legislation dealing with use of public funds.
2. Examine the manner in which persons are able to access financing/grant from the SIDF. Is the process transparent and free from political bias? Is there a level playing field? Is the composition of the Board right?
3. Shouldn’t there be Parliamentary oversight over the SIDF? Shouldn’t its audited accounts be laid in Parliament and its activities be the subject of Parliamentary debate?
4. With the SIDF funding so many projects in tourism, agriculture, health, Nevis Island Assembly, etc, the National Budget becomes a farce. Its relevance limited as the government conducts the bulk of its transactions off its balance sheet and through SIDF.
The existence of SIDF creates a slush fund for the government. Such a slush fund breeds conflict, corruption, favoritism and undermines good governance.
The IMF team mission seems not to be concerned that government has:
1. Not continued the privatization of statutory corporations;
2. Not divested itself of shares in Cable TV, so as to allow it to credibly and transparently play role of regulator. Government still owns majority shares in Cable Ltd (Cable TV provider) and majority shareholding in the St Kitts-Nevis-Anguilla National Bank. All Directors on the National Bank Board are appointed exclusively by the government which is the largest debtor to the said Bank despite calls by the other shareholders to have the minority shareholders constituting 49% represented on the Board. The government uses its 51% shareholding to block and oppress the minority. If the IMF was doing its work properly and thoroughly, it would seek to right this anomaly and hence bring good governance to the National Bank. With the government control over the Bank, can we be surprised that nearly 90% of government indebtedness to the domestic sector was with the National Bank? Why are there no prescriptions on composition of the Board of Directors?
3. No audited accounts have been presented to Parliament for the National Housing Corporation (NHC) for over 15 years of its existence contrary to law and practices of good governance; and
4. Enacted a Procurement law but is not applying it in the award of construction contract or the provision of services. Indeed the act is not observed.
The IMF needs to insist on transparency. The IMF must consult regularly with the Chamber of Industry and Commerce, the Manufacturing Association and other private entities to get a sense of the reality, rather than rely on the propaganda from the government.
If George Tsiboris will not do his work thoroughly and properly, the people of our Federation will suffer and the IMF will lose its respect and credibility.
How could they have missed that in the so-called enterprise fund the SIDF is proposing to take equity interest in commercial entities? How could they have missed that the SIDF is acting as a quasi-government and a Slush Fund of the government? The IMF team is not performing well.
I urge Madame Lagarde to conduct an urgent evaluation of the work of the team leader in St Kitts and Nevis, in the interest of the people of this country and in its own interest. The reports and evaluation are not reliable and transparency and accountability of the IMF and St Kitts and Nevis are not served well.