(Bloomberg) – The ongoing volcanic eruption in St. Vincent and the Grenadines could cost the Eastern Caribbean nation 50% of its gross domestic product and force the government back to the debt market, Finance Minister Camillo Gonsalves said.“The damage on the north of the island is bordering on apocalyptic,” he said in a telephone interview. “The country is not recognizable as a Caribbean island in the north of the country.”
La Soufriere volcano, which dominates the northern tip of St. Vincent, began erupting April 9. Some 20,000 people — or about 18% of the entire population — have been evacuated amid ash fall and pyroclastic lava flows.
According to preliminary estimates, the areas nearest the volcano lost 100% of their vegetable crops, 90% of their tree crops — like breadfruit and mangoes — and 80% of their root crops.
“This means, essentially, that agriculture has been wiped out on the island,” Gonsalves said.
The true economic toll of La Soufriere remains unclear, but Gonsalves estimates the volcano caused $150 million in infrastructure damage and $150 million in agriculture and housing losses. In addition, it will require $20 million to $30 million to clean up the islands and about $15 million per month to feed and house evacuees.
Complicating the calculation is that the volcano remains dangerously active. The last time La Soufriere erupted, in 1979, activity lasted four months. Prior to that, in 1902, the eruption lasted a year.
The government has about $30 million to $35 million stashed away in an emergency fund, which will cover about two months worth of humanitarian costs, Gonsalves said.
The eruption comes as the economy was already being hammered by the Covid-19 pandemic and the central government debt-to-GDP is at 81% — the third highest in the Eastern Caribbean.
While The United Nations has launched a fund-raising drive, and St. Vincent has been reaching out to allies and development organizations for support, more borrowing will be needed, Gonsalves said.
“Undoubtedly our debt is going to increase as we try to rebuild and recover from this disaster,” he said. “We need our friends to stand by us at this time.”