The fact that he made the comments during the Annual Consultation on the Economy, which is a forum hosted by the Federal Ministry of Finance, on Tuesday 11th September, 2012, meant that Lawrence was serious about his remarks and was most certainly providing important details about the state of the economy in Nevis. If anyone would know just how healthy the financial situation was, it would be the Financial Secretary, who has served in the position since the days of the Concerned Citizens Movement, CCM.
Given that Lawrence also made it clear, when his time came to speak at the consultation, that he was in fact fitting in for the Premier and Minister of Finance, Joseph Parry, who was overseas on official business, one has to assume that his statement was an official assessment of the island government, or at the very least, the Nevis Ministry of Finance. Lawrence is also not the type of technocrat who would make loose statements on such important and sensitive issues, thus the declaration that Nevis is broke, was taken at face value.
He said it was at very late notice that he was asked to deliver the remarks on behalf of the Premier.
Given the current political climate in Nevis, with a by-election expected anytime now, it was always expected that Lawrence’s comments would become the target of much debate and disagreement.
It has taken a while, but finally the Premier of Nevis, and Minister of Finance, Joseph Parry, has publicly rejected the notion that Nevis is broke, as was stated by his own Financial Secretary.
Parry used the occasion of his 29th Independence Day Address, during a ceremonial parade at the Elquemedo Willett Park, in Charlestown, on Wednesday 19th September, 2012, to disagree with his Financial Secretary and dismiss the suggestion that the island was in dismal economic straits.
In the presence of the Federal Prime Minister and Minister of Finance for St. Kitts & Nevis, senior government officials, top business leaders and other representative from the Nevis Island Administration, Lawrence indicated that with significant reductions in revenue and after paying salaries, the government has been left with few funds to cover other expenses.
He added that they are seriously looking for an injection of funds and are looking at the Sugar Investment Diversification Foundation (SIDF) as a source.
Parry however contradicted Lawrence’s statements saying that the island of Nevis is not broke, in spite of what one might hear, or what some may wish.
The Premier told his audience that he did not ask any person to talk on his behalf at the recently held Financial Consultation in St. Kitts, to which his Financial Secretary, Mr. Laurie Laurence, spoke on the challenging economic times that the island of Nevis has been facing.
Parry said that the global economy has many countries facing difficult financial periods and some countries here in the region have been unable to pay their civil servants or pay them late, but according to the Premier, that has never happened in Nevis.
He added that Nevis is obligated to be part of a serious austerity program, not only to survive this recession, the worst since 1929, but to place the island’s economy in a position to absorb and survive shocks in the future.
“This is a work in progress,” stated Premier Parry. “It will take time, but the government is making steady progress.”
According to the Ministry of Finance, for this year up to August, Nevis Recurrent Revenue stood at $79,072,272.59 and Recurrent Expenditure at $83,247,652.77 creating a deficit of $4,175,380.18.
He noted that the government meets payments on the domestic debt. He added that when the restructuring process is complete we would be in a position to cover salaries the domestic debt and other obligations more easily.
He informed participants that no longer can Nevis rely on grants and loans because no financial institutions will extend loans after the several rounds of haircuts and the insisting by the International Monetary Fund (IMF) that Nevis balance their budget, take on capital funded projects and do it within three years.
According to Premier Parry, two options have been brought up to help ease the financial challenges in Nevis but the Premier has said a firm “NO” to both. The first has been to trim the government service and the second is to re-introduce Personal Income Tax.
“The consequence of trimming the civil service will be that people would not be able to pay rent, pay their mortgage, feed their children, meet certain obligations and the economy will fall into a downward spiral,” observed Hon. Parry.
“For me to re-introduce Personal Income Tax would be cruel and short sighted in these challenging times as the people of Nevis would have less to meet their needs and a fall-off in demand will also cause the economy to shrink.”
He said that his Nevis Reformation Party-led Administration has pursued the path of growth through private sector development, both local and foreign.
But the question remains though, who is right, the Minister of Finance, or his Financial Secretary?