La Soufriere eruptions placed an unimaginable dent in SVG’s wallet

(Source Loop Barbados) – The La Soufriere eruptions have put an inconceivable dent in the wallet of St Vincent and the Grenadines.

Minister of Finance, Economic Planning and Information Technology, Camillo Gonsalves has stated that the impact of the eruptions was “incalculable” and likened the economic devastation to that caused by Hurricane Ivan on Grenada, Maria on Dominica and Antigua and Barbuda.

Speaking to the media from Chateaubelair in the red zone on Sunday , the finance minister indicated that half of St Vincent’s GDP had been affected by the eruption coupled with the COVID-19 pandemic.

The island’s economy contracted about four to five per cent in 2020, the smallest contraction in the region and largely due to the agricultural sector. Responsible for food exports to members of the Organisation of Eastern Caribbean States (OECS), St Vincent’s agricultural sector accounts for 12 to 14 per cent of its GDP. But with the major agricultural lands in the red and orange zone utterly destroyed by pyroclastic flows and covered in ash, the country’s ‘bread and butter’ is gone.

Gonsalves reported that it may be a couple of years before the country could recover and achieve its 2019 numbers.

“Pre-pandemic we were anticipating growth between one and four per cent depending on when tourism resumes, so there is one per cent if tourism is late in the year [and] four per cent if tourism came back earlier.

“We haven’t run the numbers yet but it goes without saying, that there will be another economic contraction in St Vincent and the Grenadines this year and even if there is growth next year, it will be growth from a hole so we won’t be back to where we are supposed to be I believe for a couple years to come,” the minister added. 

As officials predict that citizens will remain in the shelters for approximately three months before an all-clear is given, Gonsalves disclosed that the costs for humanitarian aid could surpass 100 million EC.

Additionally, given the damage to roads and houses, efforts to address the infrastructural damage will amount to 150 million USD. The finance minister disclosed that it was “a multi-million-dollar price” just to clean up the ash.

“It is going to be a multi-million dollar price just to get the ash out of the way and then there is the reconstruction phase. We have not yet quantified the cost of reconstruction but rough estimates is that on the windward side of the red zone about 20 per cent of private homes have been either damaged or destroyed. We are going to have to deal with that. Roads have been destroyed, infrastructure in the north has been destroyed so there is also a construction cost there.

“We can say that the immediate humanitarian costs are likely to exceed 100 million EC and over 150 million USD of infrastructural damage has already been tabulated and that doesn’t count the cost of clean, that doesn’t account the cost of losses that farmers and other business folk have experienced.”

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