The economies of the Caribbean by virtue of its geographic dispositions are naturally vulnerable and nakedly exposed to sudden economic stop or shocks. This is evident in the forms of hurricanes, earthquakes and other environmental vulnerabilities such as climate change, sea level rises, inflows of Sahara Dust, Sargassum Seaweed and now the dreaded Covid-19.
The budget speech brilliantly articulated by the MP for Micoud South, Minister of Finance and Prime Minister, represents and outlines the government’s priorities for the next financial year. The budget allocations are a key indicator of the level of importance the government places on certain social and economic issues. Additionally, the strategic necessity and importance of a national budget, is a representation in monetary terms of governmental activity, which serves as a tool to operationalise government activities towards the achievement of its priorities.
The presentation of the appropriation bill, also known as supply bill or spending bill, is a proposed law that authorizes the expenditure of government funds. It is a bill that sets money aside for specific spending. In most democracies, approval of the legislature is necessary for the government to spend money. That is the mandatory function of the exchange of arguments or debate between the proposers of the “Bill” (the Government) and those who may have a diametrically opposing view, Her Majesty’s Loyal Opposition.
Prime Minister Chastanet budget 2020/2021 budget themed appropriately, ‘New Challenges, New Opportunities to Continue to Build a Stronger St. Lucia’, is set within the context of addressing the confronting problems mounted by Covid-19.
National budgets, according to economic pundits, are set and function within the orbit of political economy concepts. This in effect focuses and refers to the combined and interacting effects of economic and political structures or processes, and policies of the nation states.
In this regard a political economy approach seeks to make explicit assumptions that lead to political debates about societal preferences as contained in the policy prescriptions set in the Appropriation Bill.
Prime Minster Allen Chastanet presented a 2020/2021 National Budget of stability and resilience, with an economic triage of sound macroeconomic policies prescriptions, aimed at stabilizing the economy, stopping the economic haemorrhage and economic resuscitation and resilience, which is the longer term approach. In his strategic and forward thinking vision, the Prime Minister focused on the economic plunks of Health, Social, Human Capital Resilience, Labour Market, Private Sector, Financial and Fiscal Stewardship among other fiscal and socio-economic policies.
Healthcare:
On the healthcare front, it is recognised that health is unarguably one of the main pillars of development. That approach is enveloped in a philosophy that government has fully embraced, especially given the prominence which the health sector has been given in the Medium Term Development Strategy. Consequently there is need for increased expenditure associated with health care particularly with regard to the COVID-19 response virus and infection. It is therefore understandable that government has indicated that this fiscal year to make drastic improvements within the healthcare system.
Social Systems Support:
The government’s support for social systems comes out of its compassionate care and concern to provide social assistance families, the marginalized and particularly the elderly children and disabled. It recognizes clearly the urgent need to in times of need in especially in times of crisis to give a broader focus and positive self-image to those most affected. This emanates out of the philosophical view that social support enhances quality of life and provides a buffer against adverse life events.
The policies are geared to address issues of gender imbalances so that there are no adverse impacts on gender equality while at the same time monitoring domestic and effecting even more measures to work towards its prevention.
The Minister of Finance in his wisdom understands that at this period of the Covid-19, the delicate balance between strategic response measures of fiscal and financial practicality is critical. In supporting the St. Lucian economy the government seeks to manage cautiously its existing debt and fiscal obligations. The governments has reached out and worked with creditors to collaborate and assist citizens in bringing relief to debt mechanisms or the establishment of new refinancing options. This is in an effort to encourage financial intermediaries to provide relief or forbearance to borrowers at this time to ease the obvious liquidity crunch that firms are undoubtedly experiencing.
Human Capital Resilience:
In the area of Human Capital Resilience the government, this aspect will be implemented by the Ministry of Equity focuses on strengthening the Social Protection System. This component is critical with its objectives geared towards:
-Enhancing targeting to identify eligible individuals for social benefits;
-Expanding social safety nets; and
-Developing a social information system to improve coordination among programmes.
Under the social protection system the budget makes provision to provide relief to the people. The provisions outline includes:
-Reduction in electricity fuel surcharge. Mr. Speaker, the fuel surcharge of $1.00 will be reduced by $0.50 for a six month period. This is expected to generate savings which will be used to reduce electricity bills of qualifying households by between $50.00 and $100.00 per month.
-Expansion of the Public Assistance Cash Transfer Programme from 2,600 households to 3,600 households.
-Increase in the Child Disability Grant from $200 to $300
-Increase in the grant for Persons Living with HIV from $100 to $200
-Increase in the grant for children in Foster Care from $200 to $300
-Provision of Covid-19 hygiene care packages for the poor and vulnerable
-Micro-finance loans to households to diversify into micro small enterprise and cottage industries
-Small infrastructure projects within the Rural Community
Labour Market Support:
The Minister of Labour and MP for Castries North, Honourable Stephenson King, in his contribution to the Appropriation Bill, articulated governments calculated response as it relates to labour market support. He spoke with regard to the planned interventions through social dialogue with worker and employer representatives that have been undertaken to provide support for thousands of St. Lucians rendered unemployed, by Covid-19.
He highlighted that other intervention approaches include a proposed amendment to section #184 of the Labour Code to extend the lay-off period by three (3) months to give workers greater job security. The Minister reported that this proposal got favourable acceptance during the process of the social dialogue at which it was discussed.
The Department of Labour in its proactive response according to Minister King, as part of its medium vision plan, will undertake fundal reform strategies which include:
-Formalization of social dialogue.
-Completion of the review of the Labour Act and regulations.
-Development of a “Workers Social and Economic Exogenous Shock System, to buttress against impactful occurrences such as COVID-19.
-Overhauling the Labour Market Information System (LMIS), recognizing that the identification of labour market issues rests critically on the availability of data, information and analysis.
The government remains mindful that labour market information systems (LMIS),in providing an essential basis for employment and labour policies, designed to inform the design, implementation, monitoring and evaluation of policies that are better focused and targeted.
The Labour Department sees the main purpose of LMIS as essential is the production of information and analysis for policy-makers and other labour market stakeholders. The three critical pillars that underpin the system are:
-LMIS facilitate labour market analysis;
-LMIS provide the basis for monitoring and reporting on employment and labour policies;
-LMIS constitute a mechanism to exchange information or coordinate different actors and institutions that produce and utilize labour market information and analysis.
The other major areas in the medium term vision plan of the Labour Department focuses on building capacity in occupational health and safety and the restructuring and rebranding of the labour department. As part of the response to buffer employees development economist and resilience specialist are strongly advocating giving direct assistance in employee wages. This is a forward thinking approach taken by the Allan Chastanet led Government, in the case of OJO Labs, to consider paying a fixed percentage of employee income up to the median income threshold.
Fiscal Prudence:
Covid-19 has ruptured with rapid potency and dynamism, has financial and economic base of countries the world, albeit the impact being far more severe among Small Island Developing States (SIDS) such as St. Lucia. In that regard the Minister of Finance notes with great care and concern that in providing economic support, managing foreign exchange reserves is critical at this time.
In is from this perspective that the supply side measures that support import substitution have been contemplated. In the provision for food support, local farmers have been benefited by direct purchase of local food chain supply thereby keeping critical resources at home to empower local farmers and manufacturers through direct home grown purchase.
Experts advocate for Caribbean governments to seek to coordinate their response to help improve the value of the fiscal multiplier as part of the Covid response. This represents Governments work with the private sector to implement policies that would boost local production of some goods including food via support for the domestic agriculture sector. Naturally, the government plans to continue these import substitution recovery phase of Covid.
In a snap short, the Prime Minister has outline in the budget, a systemic resilience approach in dealing with Covid-19 and its future shocks, based on the mantra that our country must be resilience, through a sustainable debt management strategy that will not compromise our ability to service our obligations.
In that regard the Prime Minister expressed that “we must of necessity perform the balancing act between executing the planned expenditure of the Government (needed to support our recovery, especially as it relates to our capital expenditure) on the one hand and generating the revenue needed to fund our expenditure plans for 2020-21, on the other hand”.
One of the core themes of the budget reflected compassion in understanding the plight and effect of the challenges that St. Lucians are experiencing. The Prime Minister articulated his budget of conscience and compassion pointing out the following.
“Mr. Speaker as we know, all Governments require revenue from taxes and other sources to fund their operations and to discharge their role and function. However, despite the strain on our excessively stressed fiscal situation caused by COVID-19 virus, this Government has taken a compassionate stance in light of challenges faced by our people and has avoided as much as possible the introduction or enactment of new taxes in this budget”.
Mr. Speaker, the main focus of the Government’s debt management strategy is to ensure that the nation’s debt is sustainable as indicated by performance indicators that converge towards prudential levels. In other words the Government’s approach to managing our sovereign debt level ensures that our current and prospective debt does not compromise our ability to service our debt obligations and to generate economic growth in the country.
The Prime Minister articulated his Government’s philosophy regarding debt, pointing out that it is based on the view that as far as possible, contracted debt should be grow and contribute to efficiency and productivity gains in beneficiary sectors of our economy. This approach helps to ensure the long run sustainability of our debt.
The government’s strategic approach outlined in the budget is based on emphasis in efficiency in the operation, management and outcomes of the various economic and social systems. It is reflected in the systems approach based on resilience to prepare socio-economic systems for future shocks.
The absolute opposing views of the opposition is defined in what appears to be its seemingly politically traditional viewpoint, that they will not support any budget of the UWP Government, or even acknowledge the sound policies and strategies that are beneficial to the citizenry.
Additionally, the opposition accuses the governing UWP Government of attacking the former Prime Minister and MP for Vieux Fort South. The UWP Government dissected the socio-economic policies of the SLP administration and did not engage in personal attacks of members of that side of the political aisle.
The purpose of the UWP economic surgery of ‘Kennynomics”, has always been for making or confirming a diagnosis, aimed at removing damaged socio-economic tissues or obstruction embedded in the policies advocated by its proponents. This is for the expressed purpose of repairing or repositioning injured economic tissues or organs of the state impacted by such policies under the SLP economic and political ideology mentioned above. The UWP socio-economic interventions in its response to Kennynomics is targeted to implant sound policy devices, to redirect the state economic blood vessels, by transplanting pragmatic macroeconomic tissues or organs to provide prescriptive and sustainable remedies.
The UWP as a political organization has its foundation in the determination to advance a cause that is right and that is moral embedded in the philosophy to fight the wrong that needs resistance and to help the cause that needs assistance. Its goal in the end is not just to win elections. The overarching goal is to change society.
