Gonsalves Alleges Government Took EC$10 Million From Contingencies Fund to Help Pay September Salaries

Public Finance

Vincypowa News Staff | St. Vincent and the Grenadines

Opposition Leader Dr. Ralph Gonsalves has alleged that the government withdrew EC$10 million from Saint Vincent and the Grenadines’ Contingencies Fund to help meet public-sector salary payments for September, an assertion that raises questions about the legal authority under which the money was allegedly accessed.

Gonsalves made the allegation while discussing the country’s public finances and later responded to a series of questions seeking clarification about the claimed transaction.

He said the EC$10 million figure referred to money taken from the Contingencies Fund, not the total value of the Fund. He also made clear that he was referring to Eastern Caribbean dollars.

According to the Opposition Leader, the money was connected to the payment of salaries for September.

“The money was in relation to the payment of salaries for September,” Gonsalves said when pressed on the matter.

However, he declined to disclose the source of his information.

“You think that information which has come to me, I will give the source of my information?” Gonsalves asked.

He said that now that he had placed the allegation in the public domain, the responsibility was on the government to respond.

“Let’s hear what the Minister of Finance says.”Opposition Leader Dr. Ralph Gonsalves

What the law says

The Contingencies Fund is governed by both the Constitution and financial legislation.

Section 72 of the Constitution provides for advances from the Fund where the Minister responsible for finance is satisfied that there has arisen an “urgent and unforeseen need” for expenditure for which no other provision exists. (Constitute Project)

The Constitution also requires that when an advance is made from the Contingencies Fund, a supplementary estimate must be laid before the House of Assembly as soon as possible. Once approved by the House, a supplementary appropriation bill must be introduced to replace the amount advanced. (Constitute Project)

The Director of Audit’s reporting on the Fund states that Section 29 of the Finance Administration Act established the Contingencies Fund to provide financing for urgent and unforeseen expenditure for which no other provision, or no sufficient provision, exists. (Audit)

The Finance Administration (Contingencies Fund) Regulations 2019 further identify circumstances in which the Fund may be used.

Those include relief, recovery and reconstruction following a disaster, counter-cyclical fiscal measures during an economic recession or crisis, and, subject to specified financial thresholds, the prepayment of debt and investment in climate-resilient infrastructure and adaptation measures. (Audit)

The Director of Audit has also stated that Section 29(2) of the Finance Administration Act empowers the Minister of Finance, through a Contingencies Fund warrant signed by the minister, to authorize payments from the Fund where the statutory requirements are satisfied. (Audit)

Gonsalves explains his interpretation

In responding to questions about his allegation, Gonsalves pointed to the different purposes for which the Contingencies Fund can be accessed.

He cited natural disasters, economic crises and counter-cyclical fiscal policy among the permitted uses of the Fund.

Gonsalves said that in the case of a natural disaster, the Minister of Finance would have to issue the relevant warrant before money could be withdrawn.

He also referred to the statutory financial threshold governing certain uses of the Fund, saying the relevant amount would now be approximately EC$150 million based on the formula contained in the legislation.

Gonsalves maintained that the alleged withdrawal for September salaries was not consistent with the purposes for which the Fund was established.

His allegation, however, currently rests on information provided to him by a source whose identity he has declined to disclose publicly.

Government response now central

The allegation creates several factual questions that can ultimately be answered through official financial records.

If EC$10 million was withdrawn from the Contingencies Fund, the government should be able to identify the legal authority under which the withdrawal was made, the warrant authorizing it and the purpose for which the money was used.

If the transaction constituted an advance under Section 72 of the Constitution, the constitutional provision also requires the subsequent parliamentary process for replacing the money advanced. (Constitute Project)

There is precedent for the Fund being used during a national emergency.

In the 2021 Budget Address, the then government reported that EC$10 million had been withdrawn from the Contingencies Fund to help finance the country’s COVID-19 response. The government said the Fund stood at EC$34.1 million after that withdrawal. (Prime Minister’s Office)

That previous withdrawal was associated with the extraordinary economic and public-health circumstances surrounding the pandemic.

The current allegation is different.

Gonsalves is alleging that EC$10 million was taken from the Fund in connection with the ordinary payment of government salaries for September.

Whether that transaction occurred, the precise legal authority under which it may have occurred, and whether the statutory and constitutional requirements governing the Fund were satisfied are now matters on which the government can provide documentary clarification.

For his part, Gonsalves has placed his allegation squarely before the public.

“Let’s hear what the Minister of Finance says,” he said.

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