Published On: Mon, Jun 16th, 2014

A moment of reckoning; it is time to redirect

Melanius AlphonseThe mockery of high-handedness, scorn for democracy and the people of Saint Lucia may perhaps easily describe the prime minister and minister for finance, Dr Kenny Anthony’s address to the nation on June 10, 2014.

The address, though full of already known data from the recent Budget debate, was another failed attempt by Dr Kenny Anthony and the Saint Lucia Labour Party (SLP) to redirect 13 years of inefficiency and disappointing leadership.

But in keeping with the dictatorial art-form of liberal ideology, Peter is told to pay for Paul, in a government proposal (demand) that was seemingly never intended to seek anyone’s advice and counsel. Equally, no growth metric has been presented to achieve a gradual improvement in Saint Lucia’s fiscal stability that is capable of generating substantial capital inflows.

Throughout the Budget debate and again in the attempt to message “Facing the Options”, the following was continuous: “On the revenue side, we realized better revenue performance due to a widening of the tax base, through the implementation of the value added tax or VAT.”

“Our overall deficit, which currently stands at 5.7%, needs to be in the region of 3% and lower. Our debt-to-GDP ratio of 73.6% should be no higher than 60%. Additionally, large deficits and high, unsustainable debt mean that your debt service needs are so large they restrict the money you have available to spend on development programmes… These problems are magnified because of the size and openness of our economies, our vulnerability to shocks, and our very limited resource base.”

Indeed, the problem is magnified, unable to create a buffer in excess of 5-10 years on government’s credit profile, or adequately to consider debt refinancing to reduce the 16% interest payments or $137 million. Likewise, high rollover risk coupled with expected further economic contraction and high vulnerability to economic and natural shocks are never ideal, especially when “20% of Saint Lucia’s debt portfolio matures in the current 2014-15, financial year.” This situation is a major hindrance!

Explaining in a responsible manner why and how Saint Lucia’s finances came to this juncture is a necessary part to finding the solution, and to address what new systems or procedures will be installed as soon as possible to ensure it won't happen again. But inevitably, ’Labour Incorporated’ prefer to cover their indiscretion. The lack of equitable distribution and shared sacrifice seems to be not applicable to ‘Labour Incorporated’ but rather, it is more appropriate for ordinary workers and the middle class to shoulder the burden.

This is an unforgivable betrayal of the people, much like the solemn repentance within days of the SLP’s return to office in 2011.

Indeed, there is need for an urgent commonsense revolution to revive the economy, placing more emphasis on lower personal, small and medium enterprise (SMEs) and corporate taxes, and a leaner government with minimal intrusion in business and commerce, with a pragmatic approach towards an economic development model that empowers people and enterprise in a sustainable way.

Equally there has to be an immediate increase in productivity gains and renewed economic confidence in a stable political environment in order to sustain investments and cash reserves. In Saint Lucia’s case there is no more room for further tolerance of adverse fiscal deficit or economic decline without international intervention.

To enable growth, the country’s economic policy has to attract the best and brightest in an enabling environment that facilitates innovation and competition that is profitable to a reasonable quality of life.

Such possibilities for growth exist in emerging economies and market trade opportunities, through the strengthening of socio economic linkages. The scope of which is to develop immediate diversification for trade and future industries, through investment agreements. This would thereby create economic opportunities; revive new investments and reinvestment in existing businesses, thus enabling the flow of capital to create jobs and growth.

Apart from the argument to reduce wages, salaries, and pensions; and even if the third option is for a 5% adjustment in salaries and wages, or to terminate the employment of 495 workers to give savings of $18.5 million – the handicap remains that Dr Kenny Anthony has not made the case on how to close the financing gap in recurrent expenditure of $57.5 million.

In the face of the political and emotional arguments, it is the finance minister’s responsibility to address Saint Lucia’s financial situation more profoundly, rather than prance around for photo ops and interviews – an almost daily event now. Such actions seem to be merely a futile attempt to restore credibility and trust, and to reestablish a lost image and reputation ahead of retirement. Meanwhile, the squandering of more scarce assets and human resources of the country continues.

If new ideas and a fresh vision is required to take root, Saint Lucia’s systemic political economy, overleveraging and cronyism model needs to end.

Much the same as the establishment of commissions or fantasy philosophy that is tantamount to kneeling to straw men on a graveyard shift.

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

 

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