Accurate statistics and sound economic metrics are critical to engineering economic recovery for the Virgin Islands.
A July article in a national online newspaper stated that the territory’s public debt is three times what is held in its reserve fund. The story further asserted that the matter would be made worse because 2018 revenue is projected to fall below previous years’. The preceding, of course, would be the clear outcome of the September 2017 disasters that destroyed the VI’s infrastructure.
Not to criticise a very well written story, but this economics layman was struck by the ambiguity in the article’s assessment.
What was the narrative attempting to imprint on to the mind of the reader? Yes, the story was a noble effort to get Joe Public to better understand the state of the territory’s finances. But what would Joe Public get from hearing that public debt is three times what is held in reserves, apart from some allusion to a problem of indebtedness?
The reporting begs further questions. What is the actual public debt figure in hard numbers? How is that debt distributed in terms of who is owed cash by the government? Within what time period is the debt to be settled? Where was that assertion derived? How was it derived? What was the benchmark figure for asserting the debt is too high? Where was that benchmark derived?
Above all, how would a public debt of X affect Joe’s own bottom line in terms of Joe’s standard and quality of life?
The writer was clearly attempting to explain to the public how that debt would impact the economy and families. But what does debt of three times the amount in reserves actually mean?
Finance and economics are very complex subjects. And it is critical for everyone, expert and layperson, to understand the level of national indebtedness of the VI at any one point in time — especially today with the territory in an economic recession stemming from a natural disaster.
Why is it of paramount importance to understand indebtedness? Because, as in any responsible household, an understanding of the financial health and indebtedness of the VI is a snapshot of the territory’s ability to pay its way through in terms of its financial obligations to lenders and creditors here and abroad.
An accurate assessment of the debt position is a rendition on the economic health of the territory in terms of its ability to grow economically and provide prosperity for its 20-30,000 inhabitants — or as a VI Party politician likes to put it, to take the territory from “good to great.”
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