When ideology trumps economic sense!

Not so long ago, when asked how to revive the Saint Lucian economy and to put it on a sustainable path the automatic response of the liberal ideologues within the Saint Lucia Labour Party (SLP) used to be “we will have to borrow.”

Talk about misguided! Or was this the political establishment playing to the en-rouge marchers into the valley of death. Today, the word “borrow” is not only tortuous to the SLP administration, but adds a haunting element of delusion to the island’s future.

If anyone was under the delusion that the SLP’s electoral victory in 2011 meant that the island was about to experience a Lucian Spring then that belief must by now have completely dissipated in the face glaring realities and expectations of more hardships to come.

“Better days,” indeed! In fact, the only ones who seem to be benefiting from the SLP’s return to the cheese are those of its protected class and who have sworn loyalty to the party for as long as the perks continue to flow their way.

As such, the Labour administration that had advertised itself as having the secrets to economic growth and prosperity is approaching the 2013/2014 Budget with an even bigger challenge that proposes more taxes to lavish on ventures that will not create growth but instead make economic recovery more painful and of longer duration.

The situation is critical, as government initiatives are all too often partisan and do not provide forward guidance to impact on growth and employment in Saint Lucia.  This means that a complete make-over of current policies along with fresh ideas are needed to re-brand the upcoming Budget as an “action plan” to generate revenue and counter the risks to a widening deficit that is equivalent to higher taxes tomorrow. Meanwhile, to maintain fiscal stability and position Saint Lucia for a comeback the 2013/2014 Budget must be on a path towards a balanced budget rather than vested interest and ideological delusion!

First and foremost, Saint Lucia is not a billion-dollar economy, even with the misleading distinction of being the largest economy in the OECS. As such, an adjustment should be made to reflect the disparity of an old pattern that has prolonged economic and political hangovers.

Otherwise, to remain on this path is a reflection of ideological suicide that will keep Saint Lucia in a foxhole of labour debt and extensive economic weakness.

The period 2011/2012 total revenue and grants was EC$926.7 million. The period 2012/2013 amounted to EC$808.4 million; while the current expenditure to date is EC$831.8 million – reasonably far from a billion!

In 2012 some of Saint Lucia’s Statistics read as follows: Growth rate -0.6%; inflation 4.2% and debt /GDP of 80.2%. The overall deficit/GDP -12.9%; unemployment 20.7% (not taking into account the underemployment rate) while 60% of job seekers have education levels below secondary school, 33% have a secondary school education (with CXC), and 7% have tertiary level education. Per capita income estimate for 2011 is US$7,379.

How long can this continue?

But, while concerns remain, to delay is an unforgiving act, mindful that perhaps there is legitimacy in believing that we’ve been digging our own graves and loving it and in the process losing many generations to a no- growth economy of high interest rates and the
collapse of market
confidence!

The numbers don’t lie! The preceding tells the story of an under-performing economy that is compounded by limited productivity gains; the lack of political and economic reform; the crude interpretation of liberal ideology; no growth; high unemployment; widening deficits; high risk and exposed vulnerability, and a lack of trust in leadership that promised $100 million, and an influx of investment projects with transparency and accountability to “better days” for the sworn loyalist while excluding the foot soldiers.

Saint Lucia’s  short- and long-term future are at stake. It is time to return to the image we used to have beyond our borders.

Therefore, concrete measures are required to support equal opportunity, with an action plan to trim government bureaucracy and reform the public service, in-line with the private sector to support high quality value-added job creation.

All things considered, a lower VAT percentage is required for business development, and the advancement of a more business friendly environment to increase infrastructure focus and public-private partnerships, skills training and retraining of the workforce; foreign direct investment, trade and export agreements, with support for local manufactures, and asset investment to pursue growth and return confidence in the local economy.

Attending to the above is the right thing to do with practical measures for economic growth and risk mitigation, instead of clouding taxpayers and continuing the anguish by calmly increasing government overdraft facilities and borrowing cost at local banks.

As well as having to roll over bonds and treasury bills as they become due, with an open policy towards heavy debt that could suddenly see bank deposits take a hair-cut on interest rates, and account holders having less money in their bank account, should the EC dollar suddenly be devalued and Saint Lucia forced to comply with an IMF structural reform program.

The whisper is getting louder as the SLP administration’s short-sightedness  takes its toll. Perhaps the Lucian Spring is a reflection of the unbearable situation, that a nation not totally without resources has to scrunt at the hands of incompetent political and economic functionaries with their adopted regressive ideology.