A state of acute worry

“Formal education will make you a living: self education will make you a fortune.” Jim Rohn.

The fantasy and fiction emanating for the SLP administration and the economic leadership administer by prime minister and minister for finance Dr Kenny Anthony has betrayed the wisdom of basic economics and development goals, and lowered the standard of living of every Saint Lucian. 

This has made the country poorer. A self inflicted wound of economic sabotage that defies logic. The economy of Saint Lucia is no longer dominant in major areas like it once was. The finance minister is out his element and out performed by other economic competitors in the region, that looked to Saint Lucia as a model of leadership and economic stability.

This centre of gravity has given way to and ideology of incompetence and mendacity, cementing a patronage system.

By all accounts it is interesting that prime minister and minister for finance Dr Kenny Anthony on April 29, delivered the 2015/16 estimates of revenue and expenditure in the amount of EC$1.464 billion. 

On May 13, 2014 the budget statement “Advancing Sustainable Development and Fiscal Stability” was read, to which I noted in the article St Lucia’s Chinese checkers budget eclipses politics and fiscal accountability “in this budget cycle, elevated partisan rhetoric in a destabilized economy has reached a stalemate.”

“The twin disorder and the pattern of lack of trust and entitlement in this budget cycle, show signs of a special kind of political and fiscal hypocrisy that cannot hide from the reality, that dishonesty is a contagious disease. Once it gets started, it tends to spread like birds of a not true feather.”

“At the end of the fiscal year, the stock of official public debt stood at $2,787.0 million, representing an increase in nominal terms of 4.9 percent. The debt-to-GDP ratio now stands at 73.5 percent, slightly lower than the 73.7 percent observed in 2013. ~ Budget Statement 2015

“There is evidence that both documents as presented seem well strategized to confuse. 
“And as citizens come to understand this chaos, in an era of government leadership in the economy: “government is not the solution to our problem; government is the problem”. ~ Ronald Reagan.

The explanation by the finance minister that the “economy on the rebound” needs to be treated with red tape and highlights!

“On the basis of the performance of the economy during the first half of 2015 and expectations for the rest of the year, real GDP growth is estimated to expand somewhere within the range of 0.8 to 2.4 percent in 2015.” 

Risks remain, says the finance minister; “the stock of public debt as at June 2015 stood at $2,791.16 million representing an increase of 0.1 percent relative to December 2014. The low rate of increase was influenced by a $63.5 million loan which was paid off during the period under review.

“Interest payment on the debt is expected to be the largest contributor to growth in current expenditure in 2015/16, reflecting past debt accumulation and the maturity profile of the debt stock. This trend of rising debt service cost is expected to continue as an increasingly larger amount of the debt comes to maturity.

“Despite the first quarter improvements in fiscal performance, I expect that there will be, a widening of fiscal deficit in the current as expenditure pressures accelerates.

“Notwithstanding the challenges of the manufacturing sector, indications are that production increased during the January to June 2015 period by 1.8 percent. While the largest and most significant category, food and food products, recorded a 5.9 percent decline in the value of production, increases were recorded in output of corrugated paper and paper board by 13.4 percent, wood and wood products by 29.0 percent and furnishings by 20.5 per cent.

“While banana and livestock production recorded declines, purchases of fresh fruits and vegetables by the supermarkets and hotels increased. Banana exports to the UK fell by 3.7 percent to 4,937 tonnes valued at $9.1 million. 

“Following an increase of 3.5 percent in 2014, the rate of inflation is on the decline in 2015. During the period January to June 2015 growth in the consumer price index averaged 0.3 percent reflecting the dampening impact of lower fuel cost on consumer prices.” 

On the matter of unemployment: “While I do not have updated figures on the rate of unemployment, I expect that unemployment will be contained and will gradually reduce as investment intensifies and the economy expands.”

How convenient it is for the finance minister to not have kitchen table matters at his disposal, when the information is not favourable at 25 percent and not bother to explain what type of “economy on the rebound” to expect, from what and in what direction the economy is heading, that potential investors and entrepreneurs can make sound judgments on the way forward.

While the 2011 $100 million election promise is stuck in the pipeline, the country’s economy continues to shrink. 

Most important, the country is ill-prepared made up largely by the finance minister’s significant missteps and unintelligent leadership that is unable to negotiate large scale contracts, and make it difficult to tell what he actually believes, and how he intends to energize stalled growth and battered government revenues.

The economy will not come out of a downward spiral unless the narrow base of government revenue transitions to high-value industries, a more diverse range of revenue sources (sales of services) and to have the debt burden reduced from its extremely dangerous levels and negotiate better lending terms in conjunction with fiscal reform, the economy will not rebound. 

Further, my analysis earlier this year holds: 

“When rational thinkers examine the solutions needed, the Chinese’s checkers budget cycle has done little to bolster budgetary improvements and once again seems a mental game to survive rather than deal with problems on hand. Fiscal balance is a necessary condition for growth resumption, and Saint Lucia must look for new methods to finance its rising obligatory task and long neglected public good such as education, healthcare, infrastructure, and reform of the social system. Policymakers must look towards measures that increase output of high quality, higher volumes of equitable tax revenue, and reduce the 15 percent VAT that squeezes taxpayers like lemons, while simultaneously working on an economic and monetary agenda to improve the business climate, lower personal and corporate taxes, and aggressively pursue long-term infrastructure investment, with the view to drive innovation and increase exports.” 

Increasingly, potential investors and domestic entrepreneurs face uncertainty about government policies, and rightly so. 

However, in the wisdom of the finance minister, his “economy on the rebound” report states: “The rebound in economic performance has been helped by the slow but steady recovery in the economies of the more developed countries to which Saint Lucia’s economy is inextricably linked, as they represent the main source markets for our tourist arrivals.”
The island major economic reliance is US tourism and American’s regional policy is better position to help Saint Lucia the most.

However, the US continues to receive resistance ably assisted by agents of the government who spin bankrupt ideology of badly battered socialist countries daily on radio and television and doing a good job of it.

But the real revelation is a trapped finance minister looking for any ray of light to shine on his lax leadership performance, sustained economic stagnation and political paralysis.

To quiet critics, a hurriedly shambolic report is produced in very rare press briefing to reveal a picture of fantasy and fiction that acclaims an “economy on the rebound.”

In retrospect, this has backfired on an overrated administration’s attempt to come clean on matters of governance and economy management.

The situation is one never seen before in the history of Saint Lucia, with record performance in tourism: “by 5.3 percent to 185,424 representing a record level of arrivals over the last five years for the first six months of the year. This performance was mainly attributed to a 12.3 percent growth in arrivals from the United States, our largest source market and highest spending market per person… However, preliminary indications suggest that the 2015/16 winter season is likely to see a slowdown in cruise ship arrivals as fewer cruise lines are scheduled to visit Saint Lucia.” 

Government policy is bent on a borrowing binge, running up debt to levels that are unprecedented, although, once again his report alludes to “improved fiscal performance… not only confined to the real sectors of the economy… also improved evidenced by an overall surplus during the first quarter (April to June) of the 2015/16 fiscal year, albeit due to the commencement of the implementation of the capital programme.”

The “recovery in construction” is superficial, as it relates to “the value of imported construction materials increased by 4.8 percent compared with the corresponding period of 2014”, noting this has not translated to job creation as unemployment is trapped at 25%. Likewise, the construction jobs mentioned have been ongoing and others accounted for in the 2015 budget. Also, the “new projects” mentioned are not likely to reflect slight movement at best in six to eight months without significant mobilization.

The finance minister’s report expects Saint Lucians to share in the excitement that “Total revenue and grants increased by 11.9 percent to $253.84 million while total expenditure grew by 1.7 percent to $235.22 million. This resulted in a surplus of $18.62 million.”

Think about the latter. The economy is weaker than ever, sovereignty on the edge, depending where you stand politically. And, of course, there is little doubt, “The current account improved as the surplus for the first quarter increased by 50.5 percent to $45.71 million on account of larger increase in current revenue relative to current expenditure. Current revenue grew by 9.4 percent to $243.87 million while current expenditure was up by 2.9 percent to $198.17, mainly driven by higher interest payments on the island’s debt.”

Many argue that voodoo economics is destroying the Saint Lucian economy, and that the defining problems are acute and worrying with wage stagnation, crime, social breakdown and injustice, security crisis, 25% unemployment and political leadership overflowing with fantasy and fiction.

Nevertheless, the finance minister presents “economy on the rebound” underpinned by tourism, “the largest contributor to the increase in current revenue was taxes on income, mainly reflecting collections of tax arrears.” And seems willing to advance his economic and political ambitions at the benevolence of friendly nations via handouts and grants.

This is not economically viable but rather corrosive of Saint Lucia’s prosperity. I’m terrified!

Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality; the Lucian People’s Movement (LPM) www.lpmstlucia.com critic on youth initiative, infrastructure, economic and business development. He can be reached at malphonse@rogers.com“>malphonse@rogers.com

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