While writing in a local media column, Astaphan who, until 2009, served in the Cabinet of Prime Minister Denzil Douglas, said that the (International Monetary Fund, (IMF), since 2009, in its official Report on St. Kitts & Nevis, warned the government that even if the administration introduces the tough remedial policies recommended, Kittitians and Nevisians may still have to brace themselves for an extended period of hardships.
Part of that hardship, intimated Mr. Astaphan, would be created by the higher cost of living caused by the introduction of the VAT in November 2010. He said that while people are being distracted from other things with the continuing focus on goods, the cost of living will go up significantly in services. The former government member argues that poor people will have to pay VAT on electricity for their homes and small businesses.
Astaphan said that last year’s IMF report indicated that, “While strong fiscal and structural adjustments could place debt on a downward trajectory, debt will remain at uncomfortably high levels over the medium term… (leading) to a debt-to-GDP ratio of 140% by the year 2014”.
There are already indications that the administration of Prime Minister Douglas intends to cut approximately 1,000 public sector jobs, thereby reducing the current levels from 6,000 down to 5,000 government employees, said the former Minister of Tourism & Consumer Affairs.
He said that there are various government departments and offices that should also be closed, to help control the astronomically high cost of inefficiency.
Other measures under consideration, said Astaphan, include the re-introduction of personal income tax which was abolished in the early 1980s by the then coalition government of the People’s Action Movement, (PAM), and the Nevis Reformation Party, NRP.
If Astaphan’s claims are true, it would become a bitter irony that the Nevis Reformation Party, which is in a loose coalition partnership with Douglas’ Labour Party, could be criticized for accommodating a new policy that would require Kittitians and Nevisians to once again dig deep, to pay a much dreaded personal income tax.
Part of the strong fiscal and structural adjustments urged by the IMF, said Astaphan, include the sale of huge parcels of government lands, once used in the sugar industry; the reduction or elimination of tax concessions; corporatization or preferably privatization of the electricity department; capping the government sector wage bill through lay-offs and freezing increments for public sector workers.
Astaphan made the further claim that the growing gap between revenue and expenditure will continue to produce accumulating deficits for the country. Therefore the failure to implement a revenue regime to mirror our GDP growth over the years, said Astaphan, has put the government in a position where it cannot even provide steady electricity, keep the roads in good order, install modern sewage and drainage systems, maintain government buildings and Springfield cemetery, etc.
During the period between now and 2014, said Astaphan, there will be much economic and social suffering and loss in our federation.
The problem is that people have less money to give and it will get worse as people are laid off from both the public and private sectors as businesses downsize and close operations, said Astaphan.
Up until 2009, Astaphan was the Minister of National Security in the Labour government, representing the Constituency of Central Basseterre.