Out of order for St Lucia
St Lucia is facing an assortment of deep anxiety. Many are too brazen, counting Prime Minister Kenny Anthony in his superficial address to the nation on January 25. Amid expressions of confidence, positions of strength and forward guidance were not revealed to reflect the calibre of economic development fundamental to St Lucia’s economic strengthening.
At any scale of vision –– 20/20 20/70 or 20/200 –– it doesn’t take much to figure out the economy is scrawny, visibly in retreat from widespread economic insecurity, crime and legal threats (the new normal we’re not used to) that have produced results tied to the St Lucia Labour Party (SLP) socialist administration’s overriding governance on the exploit
The fundamental delusion is more political ideology as usual that runs amok with piecemeal political tactics. In turn, budget commitments are growing unabated; government debt loads balloon; dipping into national reserves becomes a habit; and debt-to-GDP ratio continues to dampen the economic environment.
It’s January 25, 2016, and Anthony still proffers belated statistics of choice or the first half of 2015, with enthusiasm.
“Our fiscal balances continue to show improvement. An overall deficit of $-27.2 million was recorded for the first half of the fiscal year 2015/2016, representing a 55.8 per cent reduction from the $-61.6 million in 2014/2015.”
This tells the story of the SLP socialist administration operating from the rear and feeling upbeat in the showmanship of confidence, even though blindsided by events to date in world markets.
In the context of Anthony’s theory, the following is his upbeat assessment on the performance of the national economy.
Most economic sectors showed signs of recovery within the first nine months of 2015; construction sector gained momentum, supported by continued buoyancy in tourism, agriculture and other services.
Construction activity was led by the private sector as work commenced on the construction of the Royalton Hotel, the former Smugglers Resort. The trend continued on a number of projects, including Tides Sugar Beach in Soufriere, Harbour Club Hotel, the Courts Megastore, and the Dayana Commercial Centre.
“This increased level of activity was reflected in a 13.5 per cent increase in the importation of construction materials over the period from January to September, 2015; a 6.4 per cent increase in total arrivals over the January to November period; an increase of 10.1 and 2.6 per cent in cruise and stay-over arrivals respectively over the period, which contributed to higher visitor expenditure at an estimated $414.5 million in the first half of the year.
“Higher levels of domestic and export demand were reflected in a 6.3 per cent increase in manufacturing production.
“The output of food and food products increased by 21.6 per cent, corrugated paper and paperboard by 12.5 per cent, wood and wood products by 11.6 per cent and furnishings by 16.1 per cent. From all vantage points, these increases are welcome and encouraging.”
And the good feeling to believe employment is down from 25 per cent to 23.5, while youth unemployment is 44 per cent.
Either way one examines the feel-good theories put forward, something is wrong. Great news is not around the corner.
So, in spite of Anthony’s rather lame attempt in showmanship to be upbeat, it becomes more and more difficult to govern and to deliver on grandiose commitments and awful agreements, while the economy is stifling and standards of living suffer.
At the end of the fiscal year, the stock of official public debt stood at $2,787 million, representing an increase in nominal terms of 4.9 per cent. The debt-to-GDP ratio now stands at 73.5 per cent, slightly lower than the 73.7 per cent observed in 2013.
–– Budget Statement 2015.
This means, while revenues remain strained and debt balloons, the country is growing heavily indebted, giving way to a widening fiscal deficit. And in short order, government debt payments and interest rates grow larger than infrastructure projects.
History has shown this is not a fiscally bold agenda, given limited economic tools, but, of course, there is the SLP’s appetite to tax and spend –– the continuous taking away from Peter to pay Paul, assisted by plan B: Citizenship By Investment Programme (CIP) in the new heights of dysfunction to redistribute other people’s money and feel good about it.
On CIP, Prime Minister Kenny Anthony avowed: “I am excited by the progress in the Citizenship By Investment Programme and its prospects for the future. But given the persistent decline in foreign direct investment caused by the world financial crisis, the mounting challenges to raise money for our development, the increasing use of citizenship programmes by other countries as an incentive tool, we took the decision to offer a similar programme.
“Rest assured that I understand your concerns and fears. After all, I too was a non-believer in the necessity and viability of such programmes. I offer those who have anxieties the comfort that we have designed the most transparent, robust, and structured programme to ensure that issues of credibility and integrity are well protected.
“Whilst we have spent the last four years stabilizing and restoring our economic foundation, the Citizenship By Investment Programme will provide impetus to our recovering economy to take off in the coming months.”
Here’s what’s missing! St Lucia’s CIP, even mainstreamed to high net worth individuals, will not deliver the milk and honey, in much the same way as socialism did not, but will pose substantial governance and integrity challenges that could exacerbate existing vulnerabilities and amplify external threats.
Never mind the superficial facades, this programme is a straight sale –– cash for passports –– rather than a route towards citizenship (residency/work permit; permanent residency; citizenship say within three to five years) in the form of an investment in the economy and real connection to the country.
Therefore, there is plenty to be nervous about. The reality is such programmes lack fiscal discipline and it is reckless to rely, have faith in and confidence for real economic stability. And to all intents and purposes, the hidden agendas allude to the creation of an elite class of questionable safety havens, and the attempt towards political and economic conquest.
In previous writings I have argued for an investment strategy with real capital to encompass the removal of barriers to provide capital to SMEs: participation in private capital investment and a common economic and political regimen capable of delivering practical solutions for a sustainable growth path.
Consequently, fiscal responsibility is required to lower the debt to GDP ratio below 60 per cent to demonstrate government capability to support debt, rebuild trust and boost public and private investments. Also, weak coordination cannot continue to undermine investment, causing anxiety and severe socio-economic adversity.
But if the SLP administration continues to put cronies in charge of the economy and keeps changing the rules with status quo bureaucrats who just suck their thumbs, then capital that is already in short supply will go elsewhere.
This is more sensitive now, as St Lucia will need to transform in cohesion in the midst of market volatility in a can do attitude and in real time. Investment decision-making and reforms go hand in hand and, likewise, access to capital and information wins in the light of shrewd coordination and disciplined discussion. National cohesion is crucial to provide renewed confidence, but the slow pace of progressive reform to improve the economic, legal and social fundamentals and to invest in the younger generation is inadequate to reposition the country.
Facing that choice is the immediate gravity to develop a strategy with the virtue of being realistic; and an educated public to undertake new platforms to share facts, opinions, and ideas with good management; and fiscal discipline to keep the hopes and dream of a young nation celebrating 37 years on February 22, moving steadily forward.
More often than not, governments come to power, dazzle with a great vision and good intensions, but bluff on their ability to execute their plans to transform the political and economic scene, grow the economy and create jobs by putting more money in the hands of the poor.
Four years later, the SLP’s promises/policies have no quantitative effect on the economy except to disengage the obvious and litigate opponents while concentrating on achieving unfinished business.
And now, heading for another general election, the stakes are high to keep the gravy train flowing on ruthless ambition and costly misadventures. Candidates will be committed to defend the golden goose and pander to cartels of the past four years.
Elections have quantifiable consequences in the face of very real problems. Therefore, beyond the fantasy to believe in the exploits and more cynical enthusiasm on display, extreme election promises should be treated as unworthy and corny concerns rejected as well, with confidence, in the best interest of St Lucia.
(Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic
freedom and equality.