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Prime Minister Stephenson King’s message: The situation could be much worse. The worst is behind us and the prospects look promising.
Within 48 hours of each other, the Opposition Leader and the Prime Minister both addressed the issue of the St Lucian economy.
Several points are not in contention. There was a five percent decline in GDP last year, accompanied by heavy lay-offs, reductions in foreign investment and stay-over visitors and declines in agriculture and even construction.
Where Kenny Anthony and Stephenson King differ is on the matter of what it all means.
As far as King is concerned, it could be worse.
“Saint Lucia was able to weather the storm better than expected,” he told St Lucians in his first address to the nation for the year, last Tuesday night. “The government for its part provided much needed support and relief through its fiscal stimulus programme. The situation would have been much worse, had it not been for the timely and effective intervention of the government. But this you will never hear from the Opposition.”
You certainly won’t. Just two days earlier, at the open session of the 2010 St Lucia Labour Party convention, Kenny Anthony had a much different take on what a 5 percent decline in GDP means.
“The economy is floundering, hopelessly,” he told supporters at the Vieux Fort Primary School. “From the time that the Flambeau Government assumed office, our economy began to decline. They inherited a 5.4 percent growth in 2006. It has been downhill since. The economy declined in 2007. It declined in 2008 into negative growth and now in 2009, it has declined even further. We are in a deep, deep hole.”
The prime minister’s address defended the government from the implications of economic decline, noting that the global economic meltdown which started in September 2008 was the worst in 70 years.
“The international financial crisis which began to intensify and adversely affect our economy from around September, 2008, manifested in fewer stay-over visitors during the 2008/09 winter season,” he said. “With declines in tourism revenue; our main source of income, hotels were forced to adjust by discounting heavily, laying-off staff and embarking on staff rotation programs. This situation was compounded by significant reductions in inflows of foreign direct investment, as funding for investments in major hotel plant on the island dried up because of the global credit crunch. The downturn in economic activity was also influenced by the level of spending on public sector investment projects, which fell short of previous years, resulting in a decline in activity in the construction sector. In addition to the tourism and construction sectors, declines were recorded in agriculture and the wholesale and retail trade.”
Kenny Anthony had already been through this in both his New Year’s address one week before and his convention speech last Sunday. In fact, he was more generous with the bad news than the prime minister.
“Unemployment has risen sharply from 13.6 % when we left office, to over 20% in 2010,” he said, warming up. “Income from tourism is down sharply. The banana industry faces imminent collapse. The fiscal deficit is out of control. Expenditure exceeds Revenue by several million dollars. Prices of basic food and services keep on climbing. Investments have dried up; investors are petrified of Pinky, Perky and the Bus Driver. Small businesses are closing daily. Loans are scarce as liquidity is tight. Banks are seizing properties left, right and centre. The Government refuses to plead with the Banks to have mercy on ordinary Saint Lucians in this time of crisis. There is no end in sight. Everything is blamed on the global financial crisis. Everything! Yet, other economies in the Eastern Caribbean, for example, Dominica and St Kitts and Nevis, outperform Saint Lucia. Why? What has been the Flambeau response? Two words describe it: more debt and more tax. You remember that in the 2006 campaign, they accused us of increasing public debt by two billion dollars. Of course, that was a blatant lie.
Opposition Leader Kenny Anthony’s message: The economy is floundering hopelessly. We are in a deep, deep hole.
“We shall reduce the national debt” [UWP Manifesto, page 8] was their promise, big and bold. Well, in three years, they have increased the public debt by over seven hundred million dollars. I predict, that in the next few months, they will increase the public debt by over one billion dollars. The other plank of their economic policy is to tax us to death, from the cradle to the grave.”
But the prime minister, speaking one day after the opposition leader, had some defense prepared for Labour’s assault on their policies.
“Their diatribe focuses only on a few revenue measures we introduced, classifying them as a “tax assault” on Saint Lucians,” he replied to Labour’s “tax and debt” attack. “They will never admit, although it is well known, that the few revenue measures we implemented were aimed at increasing efficiency and reducing waste. Their amnesia will never allow them to remind you that we lessened the burden of the global recession on Saint Lucians.”
But the prime minister’s list of measures and initiatives sounded like a list of things that Labour started and Flambeau picked up on and continued. It included increasing the income tax threshold by $1,000, increasing deductions for mortgages, improving the payment system for tax refunds, introducing development finance programs and implementing a substantial capital works program. Finally, the prime minister boasted of the HOPE program which, last year, created over 900 jobs and gave 600 skills training.
“A total of $9.6 million has been spent on the program to date,” he said, “and, given the successes achieved and the impact of the program in creating employment and enhancing skills, Government will be extending the program into the next financial year.”
Unfortunately, the statement is sure to become a victim of bad timing, as the HOPE program is currently in limbo with no word on when it will be resumed. Still, the prime minister remained unflaggably optimistic about the near future.
“I can now report to you that the worst of the crisis appears to be behind us and we are cautiously optimistic that the prospects for recovery in 2010 look promising,” he said. “This renewed optimism is based on a turnaround in the tourism industry and robust activity anticipated in construction by the second quarter of this year, which I will elaborate on later.”
He added that the government attracted new airlines to the island increasing the number of stay-over visitors in the current season and was confident that brighter days lay ahead.
“We are cautiously optimistic that we will experience a modest recovery in tourism,” he persisted. Reflecting the global economic downturn, King admitted that the government’s fiscal position deteriorated in 2009. During the first nine months of the 2009/10 fiscal year, current revenue declined by 3.4 percent to $532 million, while current expenditure increased by 4.0 percent to $479 million, resulting in a current account surplus of $53 million which is just over half (56 percent), of the surplus realized in the same period in 2008/09.
“The fall in revenue largely reflects the decline in domestic economic activity,” he explained. “The increasing expenditure pressures stemmed mainly from higher salaries and wages paid to public officers. Preliminary estimates suggest that a reduced current account surplus will also be realized in the 2009/10 fiscal year. While this can be largely attributed to the difficult external economic conditions, Government will continue to manage this situation in order to ensure that Saint Lucia’s reputation of prudent fiscal management is maintained.”
In spite of this King boasted that his government was able to honor all its financial obligations including debt servicing and increased salaries and exhorted St Lucians that, “While the prospects for a very modest economic recovery in 2010 look promising, our optimism must be tempered with a dose of reality.”
But near the end of his address, King began to agree, once more, with Kenny Anthony abut the prospects for the future: “In general, our optimism must be tempered by the realization that spending in our source tourism markets is unlikely to be robust, investor confidence will continue to be low for some time and the global recovery, though present, is likely to be weak.”
He also agreed with the opposition leader that, “As far as the government’s financial situation is concerned, the fiscal position is likely to remain very challenging in 2010/11, as revenue growth remains weak, while expenditure pressures
increase. We will have to ensure that the capital investment program, which plays a crucial role in generating growth, is not compromised. As we emerge from the recession, it will be necessary to strengthen the resilience of our economy to external shocks and to build the fiscal space necessary for Government to respond to economic downturns such as we are currently experiencing.”
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The fact is that this is the usual story of politics. The two sides tend to view issues based solely on whether they are in government or form the opposition. King’s argument however holds more weight since, the global economic recession did occur. However, things are looking up and king should now focus on the electorate. They did elect him for specific reasons and he should now go about completing his agenda before elections are constitutionally due. It is kenny’s Job however, as the loyal opposition to inquire about government performance and to give alternatives in between planning to win the next election. The country should be seen as a corporation and the the political parties as two different management teams vying to MANAGE its Growth and development. 2010, lets act like professionals! St. Lucia deserves to be at the forefront of the Caribbean community. RISE!!!!
King’s address is a slap in the face of all St Lucians. Need I say more?
On the same page? Stephenson King does not begin to have the ability of a man like Dr. Kenny Anthony. King reads what is written for him. Dr. Anthony writes the information because he has knowledge and experience in that area. The fact remains that this government spends recklessly while claiming the economy is in recession. Spending money on the CHA Marketplace, FCCA Meeting and the Bois D’ Orange Daher Building is certainly not good fiscal spending when you are in recession and even at the same time they are doing these things they complain they couldn’t meet their obligations to Public servants. It would be good to remember that April is near and they still owe 3.75% to public servants, while this period of collective agreement is one month away from expiration. This government has brought back the vehicle license when it was put as part of the price of gasoline by the former regime. So are we paying double? This government doubled the airport tax and is planning to tax water and electricity. Is that what the majority of St. Lucians voted for in 2006. This is a government that is incompetent to handle the economy and has to go.
well if the can both agree on so many points, why cant we get pass the colors red and yellow and work for St.Lucia. We need a collective effort more than every right now!
Didier i need hear from you.The point is that this administartion of Kings’ men have not given the island one solid project to talk about.
If foot path and flowers are what going to make this administarion win so be it.
I have not seen one song policy by this administration. We are still waiting for the 7,000 jobs they promise in 2006.
We are awaiting the 7,000 jobs as promise in the 2006 general elections by this administration.
St. Lucia Unit. Walk through the light. Join hand in hand to build a strong nation!!
Well said, TOOT TOO BOOSHE` I wish we could actually get the rest of our citizens to realise this. And according to the story the rise in the rate of unemploymeny is about the same with the USA, the decline in economic growth was worse in the USA. Think about that with the USA being a country with so much wealth and resources. If the worse is really over then St Lucia really did a good job weathering the storm.
Governments are charged with the duty of creating an environment conducive to sustainable economic growth and the tools and infra-structural framework ( social, physical and political) within which human potential can be nurtured.
In this pursuit policy maker, technocrats and politicians must be under the scrutiny of those that they represent, their long suffering paymasters. One of the key constraints on the excesses of their actions must be a strict adherence to tenets of transparency as manifested by a holistic commitment to financial accountability.
Permitting their actions to be monitored and evaluated by the ordinary citizens whose money it is that governments spend either directly in terms of cash or cash equivalents or as mortgagors charged with repaying debt for generations to come, having to forego current expenditure, cut savings and curtail investment and sacrifice opportunity
In order to make a serious and considered adjustment in the social and economic conditions in St. Lucia the whole populace must be engaged by way of engendering a public discourse on economic and social policy development.
Arguably much of the societal ills of crime, social dislocation and disaffection that confront the society today are symptoms of poor economic management and the failure to formulate and implement a socially cohesive development strategy, capable of driving growth, economic growth and development requires a stable and progressive social infra-structure without which sustainable growth can’t be achieved and the market oriented policies currently adopted will simply result in further social dislocation and a widening of the already unconscionably large gap between rich and poor. The have it all and the have it not at all.
St. Lucian’s have the right to know in sufficient detail the intricacies of the economic fundamentals that dictate their daily lives with a view towards owning the problems that confront them and thereby owning the…
solutions that reflect their aspirations. This will of course require empowerment by way of a concerted effort to enhance and grow the publics knowledge base as it relates to their economic fundamentals, this should be well within the reach of a nation that has produced an illustrious Nobel Prize winner in the field economics. Free and open access to key information held by governments, banks and investment institutions is crucial to this objective
Four years of declining GDP, 20% unemployment, falling investment, high interest rates, unrelenting increases in crime, suggest serious structural economic concerns rather than more than a mere economic crisis.
What needs to be known and transparent are matters such as the level of capitalisation of the banks, debt/GDP ratios, the budget deficit/GDP, level of foreign direct investment, by how much has it fallen in which key want sectors invested in, what is the figure for the budget deficit what was the deficit spent on, what are the plans to bring back to balance; what are the plans for currently failing sectors such as agriculture what of government commitments to investment in skills and education in preparation for the challenges of the 21st century; what is the unemployment figure for 18 – 30 age group, construction
St. Lucia is subject to the economic adversity of a small island state, the current economic landscape as far as it is revealed by the article 20% unemployment is staggering each individual case a human tragedy and the waste of a key resource.
All sectors of the economy appear to be in decline this in conjunction with rising prices of food fuel, health care, transportation and falling asset prices along with a dearth of investment, falling tax intake, increasing budget deficit and a rising USD resulting in the short run at least more expensive imports from the UK/EU, declining remittances form UK, reduced income from sale of bananas in the EU.
Important the focus shifts to 21st…
Important the focus shifts to 21st century industries, including call centres, customer services, software design, arts and culture, sports and entertainment, media etc. non of which requires very high capital investment and can be undertaken by small to medium size businesses, in other words the export of services.
The Prime Minister makes mention of a fiscal stimulus just how has been injected into the local economy by how much were taxes cut and government expenditure increased and what was this spent on what of monetary stimulus and the setting of interest rates and pumping of new money into the economy and the preparation for economic union with the OECS countries wherein productivity gains can be made economies of scale more readily achieved and access to increased regional market the resulting economic adjustment and accompanied political transformation product an economic unity more capable of integrating into the global economic and better protected from its shocks.
News Pappy Show,
You have a point, however we all know that right after elections there was the financial melt down, which slowed down investment. The point I am making here is that for real national development petty party politics need to go out the window, at least till actual elections. The SLP admin in two terms did place very sound fical polices, however the environment has changed since. Also this present global meltdown needs all hands on deck, for the sake of St.lucia. 7000 jobs was a pipe dream which should have been challenged. But I dear say we can produce at least 1000 jobs still in the yachting repair business.