There are not many organizations in our corner of the world that can boast such longevity, and I imagine that members are justifiably proud of this particular milestone.
I welcome this opportunity for dialogue and consultation as it bodes well for that vital and productive relationship that must exist between Government and the private sector in the months and years ahead. Such a relationship is both desirable and necessary if we are to conquer the many challenges facing us, both as an economy and a society.
Just as Government requires the collaboration of an autonomous and unprejudiced private sector, so too does the private sector need the impartial and objective facilitation and regulation of government. This is the vital balance to which I hope we can return.
As fate would have it, the last time I addressed you, I was the Leader of the Opposition. Fortunately, I have since lost that job, and now I have the task of outlining the policy focus of a new administration. I welcome this task, especially at this 5-month juncture of our new term in office.
So, let us start from a simple, shared premise: that the Covid-19 Pandemic, however devastating its effects on the social and economic fabric of our country, has provided an imperfect opportunity to pivot to a more relevant and resilient development paradigm.
I say this in the full belief that our task is not simply to live with covid - as so many have suggested - but to triumph and transform in the face of Covid. And so, much of this conversation today is really about the development partnerships which must be designed and deployed in a brave new approach to national development.
I hope we can agree that returning to the economic status quo is not really a viable option for us, or indeed for much of the world. The climate of creative disruption runs deep. Supply lines are changing. Production processes are being revised. Delivery modes have transformed. The conventional workplace is no more. Workers are unwilling to return to marginal existences. Even, parents are choosing home-schooling over employment. Shareholders are adjusting expectations and customers are moving on.
Taken together, these signals should tell us that opportunity is beckoning, and we must not be left unawares, longing for a paradigm long gone.
OUR BROAD ECONOMIC PHILOSOPHY
Consistent with that reality, our broad economic and political philosophy must be forward-looking. We must all govern by principles of inclusiveness and equity. In business and government, we must build meritocracies guided by principles of good governance. We must unbridle the energy and creativity of our people, and we work together.
Ours cannot be an exploitative progress. Attitudes of “winner take all and devil take the hindmost” are obsolete and are unsustainable in our small interwoven society. That requires enlightened self interest as much as mutual trust. Without these vital ingredients, we are lost.
OUR PATH TO SUSTAINABLE GROWTH AND DEVELOPMENT
We also believe that the task of restoring Saint Lucia’s economic and financial stability remains paramount. The stabilization of the last 5 months continues and is now to be followed by growth. Such growth requires market expansion and job creation in the private sector.
Consumption needs to be stimulated, with savings and investment following swiftly. Even at this initial stage, public and private sectors must collaborate to get workers back to work. But ultimately, that collaboration must extend into sustainable strategies to move our workforce up the professional ladder into better-paying jobs.
This will strengthen revenue collection for the government, and enhance our ability to further assist the private sector. Whether it is infrastructural or institutional, whether it is human or financial capital, whether it is technological or procedural, our economy must transform if it is to grow. Business as usual is simply not an option.
In this fundamental premise, we must be united because what we collectively require is a new emphasis. That new emphasis must be enlightened by the global realization that old-fashioned economic exploitation will impoverish us all: governments, businesses, nations, and the planet. Both locally and globally, we need a development path to economic dignity, to tolerance, diversity, sustainability. Here at home, we need huge investments in education, in-service training, apprenticeships, online learning, scholarships, adult literacy, and a host of other human development initiatives to make our economy more functional and competitive and to propel our people forward. No sector can do this alone.
I say this in the belief that our governance system is weak and outmoded. While it may have served us well in the opening chapters of nationhood, it has remained stagnant and has become incompatible with our evolution as a sovereign people in a global economy. One simply cannot expect blood from stone.
It is clear for example, that the people of Saint Lucia believe in the rule of law; that they strongly reject corruption; that they abhor the abuse of power. They have made these fundamentals abundantly clear, and we intend to listen and obey.
To insure against future abuse, we must now make significant changes to our statutes and to our constitution. Fortunately, we have been given the mandate to do so, and fortunately, we will engage civil society in that change process. In this respect, I now ask you to stand by to do your civic duty.
THE RESPECTIVE ROLES OF GOVERNMENT AND SOCIAL PARTNERS
As we return to fundamentals; to the belief that the role of Government is to create and sustain the enabling environment for business to thrive, and for individuals to achieve their individual and communal aspirations.
It is not the role of Government or of politicians to compete with the private sector, nor to run the state apparatus like a private business, betraying the social contract, destroying the public trust, and frustrating the arms-length objectivity required for sound and transparent governance.
Nor is it the role of the private sector to appropriate the tasks of Government. There are certain fundamentals that must be centrally provided. This is particularly vital in small economies where fairness, equity, and efficiency are essential.
Government must therefore be primarily engaged in the provision of public goods including physical and institutional infrastructure, national security and justice, health and education, clean air and water, the environment, and human rights.
As the prime mover of legislation and regulator of commercial activity in the economy, our government will work with the Chamber and other businesses, to ensure that legislation and regulation do not frustrate private initiative, but rather facilitate business growth and economic progress. So, I am encouraged by this early invitation, knowing that we will soon engage in active dialogue and effectively collaborate to achieve these goals.
In the meantime, I also hope that we have all learned a very expensive lesson. I hope that we have all come to realize only too clearly, how our fundamental societal obligations suffer and deteriorate when government becomes distracted and distorted by greed, corruption, and self-interest.
By way of action, I want to further emphasize that we are moving swiftly to improve the investment climate in our economy; to restore good governance to this country; and to re-establish Saint Lucia’s image internationally, as a principled, productive, and progressive place to conduct business.
WHAT WE PROMISED
In the months before the general election of July 26, the Saint Lucia Labour Party made some important policy promises that we intend to keep. I now summarize those most relevant to the private sector:
1. Stabilizing and growing the economy, focusing on the Housing Sector as a key driver of economic growth;
2. Expansion of the Digital Economy, removing impediments to e-commerce;
3. Diversification into new and emerging sectors, with an emphasis on youth and the blue, orange, and green economies;
4. Development of a new Fiscal and Economic Strategy driven by financial realities on the ground;
5. Revitalization of the private sector, removing structural impediments to doing business.
I mention these to assure you that they remain pivotal to our economic agenda, and that actions are already in play to implement these undertakings.
Let it be clearly understood that we are inviting the private sector to join us in pursuit of these diversification and sustainability objectives. We will lead but cannot go this route alone. National success, both public and private, depends on working together in the interest of ourselves and our country. While we understand that capital has no nationality, we certainly do, and ours is distinctly Saint Lucian.
In that voice, I call on the private sector to be active participants in the transformation process. Knowing that our wheels sometimes turn more slowly than yours, I urge you to push Government, not merely as individual lobbyists and narrowly focused interest groups, but as an inclusive, broadly constituted democratic and legitimate private sector agency that understands the imperative of collaboration for competitiveness and collective progress.
THE CHANGE IMPERATIVE
It is in that same voice that I encourage you to push yourselves to rethink, retool, reengineer and reposition your side of the economy. Neither your institution nor your businesses can prosper indefinitely if you continue business as usual. Just like governments, businesses need to engage in renewal and transformation in order to survive.
We can help each other to transform, but we cannot shield each other from necessary reform and unavoidable change.
New business processes, adoption of technology, new marketing techniques, and progressive human resource policies are all necessary, and this government will assist wherever we can to help you access, implement and sustain such change.
By way of example, global tourism is trending towards high-end, unique, intimate, customized, and sustainable, cultural travel experiences. This is, therefore, our opportunity to move up-market. This is the time to leverage our unique authenticity with new bespoke tourism products. This is the time to promote and monetize Saint Lucian culture, cuisine, carnival, entertainment, environment, tradition and history.
This introduces a new compatibility of objectives, not obvious before. We now have untold opportunities to merge our blue, orange, and green economies in new sustainable ways. Now is the time to learn and build on our own successes. In this, we cannot fail.
In this and similarly transformative initiatives, we are interested in long-term incentive regimes, such as technology-related tax allowances to encourage transformation at company level. Such transformation includes re-tooling, reskilling, restructuring, and upgrading which boosts domestic investment and future productivity.
We are also very interested in supporting new production models which drive private equity (as opposed to debt) into traditional agriculture. By devising new productive farming units, with production linked directly to markets and consumers, we can achieve new efficiencies that yield attractive rates of return. In this way, smaller investors with personal savings can get involved in modern tech-driven agriculture. This is a perfect time to create strong agri-business eco-systems.
We also believe that the old duty-free/tax-free approach to concessions is not sustainable in this stringent fiscal environment. We, therefore, need a shift from revenue-depleting subsidies to performance rewards. We believe that concessions should be earned, based on dollars invested, employment generated, net economic contribution, and linkages to the domestic economy.
Fiscal Councils are also increasingly recognized as tools to promote sound fiscal practice as they provide independent information, analysis, monitoring, and compliance with fiscal practices designed to put public debt on a downward path. There are some hopeful signs here, but vigilance remains the eternal price of freedom.
In the short term, global best practice suggests that new business collaborations can be surprisingly fruitful, boosting domestic investment, trade, and job creation. Our business community should, therefore, look beyond layoffs and redundancies, towards mobilizing idle man-hours to provide technical and financial coaching to downstream SMEs who are very willing to refocus their business models on customers both closer to home and in the global marketplace.
This would also accelerate Saint Lucia’s transition from physical and in-person transactions to virtual, online, and e-commerce platforms. It helps to remember that local SMEs can be new suppliers as well as new customers, sometimes simultaneously. What may start as marriages of convenience, could well flower into new prosperities.
Companies wanting to stay agile should revise investment plans to the new reality. They can seek professional support and actively engage in debt management strategies with their banks. It is also good to know that Generation-Tech is out there, often with low-debt, zero-inventory solutions that reward IP and ICT skills and use digital networks to identify needs and bridge gaps. It is time to embrace their tech-savvy solutions as the Caribbean equivalents of Uber, Amazon, and Airbnb.
Meanwhile, we will do our best to avoid another shutdown of the country. This is a shared responsibility. Together, we must work to avoid interruption of the economic machinery, knowing that overheads like rent, interest, insurance, maintenance, and salaries are accruing.
That same self-interest should drive businesses to seek out and support startups in their sectors. There is fertile ground out there, and a whole generation of young innovative Saint Lucian entrepreneurs who can benefit from our capital and business acumen. Don’t be afraid to invest, especially in innovation. If we wish to go far, we must go there together.
WHERE WE ARE TODAY
As Minister of Finance, I must temper my optimism with a sober account of where we are today. In so doing, I will resist any urge to throw stones at predecessors, but I will provide an honest and factual account of what my administration inherited on assuming office:
- For the financial year April 2020 – March 2021, the economy contracted by 23%, the most drastic decline in the Eastern Caribbean Monetary Union and the 6th in the world.
- At $3.9 billion, we also have the largest public debt portfolio in the Monetary Union, with debt service consuming 31% of total revenue. Local Payables due to local supplies stand at $154 million.
- Design/Finance Contracts stand at $184.5 million. These are repayable within 5 years; the cost of building roads, all of them untendered.
- Unpaid land acquisitions stand at $60 million.
- Debt to the University of the West Indies alone stands at $27 million.
- CDP Debt payables are $4.18 million and growing.
Under the previous administration, COVID-related borrowings from regional and international creditors amounted to $323 million. As of July 31, 2021, $301 million had been drawn down, leaving $19 million available for future use.
The reality of our situation is that government expenses have to be financed largely from rollover financing, bond financing, and treasury bills. For the last three months, and until the next budget cycle, we have had no access to institutional lending as this avenue was exhausted by the last administration.
The management of Covid-19 during the 4th wave, within a population with high levels of vaccine resistance, has compounded the challenges we now face. Fortunately, we have managed to
stabilize in-country spread, and indicators are that we are doing much better than a few months ago; however, we have to watch closely, new variants.
Access to safe and affordable vaccines will be critical to a sustainable recovery from the Covid 19 pandemic. You would be aware that we are providing vaccines to the entire population at no cost, to ensure that affordability is not a hindrance to vaccination.
Our strategy is to continue to encourage the population to vaccinate by increasing access at the community level, increasing awareness through education, and providing incentives to persons for getting vaccinated.
With the support of multilateral agencies like the World Bank and UNDP, we are taking steps to reduce the high level of vaccine hesitancy and increase the uptake toward a target herd immunity of 70% of the population.
We are gradually opening up the economy to full normalcy while keeping prescribed COVID-19 protocols in place to avoid any resurgence of the virus.
Against that background, the difficult fiscal situation has caused Government to give priority to debt servicing, financing Covid-19 demands, strengthening healthcare delivery services, and giving much-needed support to the education sector.
We are very mindful of the high unemployment situation and are working to bring relief to the unemployed, to small business owners, minibus owners, and other self-employed persons who have been directly impacted by the protocols.
Given our current economic circumstances and sub-optimal management in the last five years, we also need to do some seed planting if we are to be better positioned on the other side of this pandemic. To this end, last Monday my administration launched the Youth Economy Initiative.
THE YOUTH ECONOMY
The Central Statistics Office reports that youth unemployment affects over 15,000 Saint Lucians between 18 and 29, representing some 23% of the population. Our government understands the crippling long-term effects of unemployment on unengaged youth.
We made a solemn promise to the youth of Saint Lucia in our 2021/26 Manifesto to alleviate their unemployment situation and now, in the seat of government, we are implementing this life changing initiative especially for them.
Our Youth Economy Initiatives will transform hobbies into skills, skills into businesses, and ideas into enterprise. It will provide Training, Finance, Marketing, and Mentorship for our young people in a strategic set of interventions.
In the weeks ahead, we will conduct an analysis to identify the current state of existing programs. The information will be used to fashion a comprehensive action plan to include policies, programs, and projects required to design, finance, implement and maintain a sustainable, vibrant, and impactful Youth Economy.
The months ahead will continue to be a period of fiscal consolidation while we attend to the pressing needs of the various sectors of the economy, especially the health sector and the unemployed.
As such you can rationally expect that this administration will pursue a path of prudent financial management to return the macro-economic indicators of the economy to sustainable positions as required by regional and international financial institutions.
The stability of government’s finances is critical to restoring a good investment climate to attract new investment and to spur economic growth. A Debt Review exercise is ongoing to provide government with a well-structured plan to move forward within manageable parameters.
Even with the limited resources available to us, we are taking steps to prime the economic pump through community-based projects. Government has already launched a $10 million housing repairs project for the most vulnerable, whilst addressing issues of drainage, water harvesting, and unmanaged water flows in communities. We should embark on a national clean-up campaign in the coming weeks, in addition to injecting some funds into the Youth Economy.
The Cabinet of Ministers has appointed a review committee to examine what transpired at the St. Jude Re-construction Project and has decided to recommence work to complete the original hospital structure at Augier, Vieux Fort. A similar review committee was appointed for the Hewanorra International Airport Redevelopment Project without stopping work on the project.
As we gradually adjust the Covid-19 protocols and open up the economy, we are seeing improvements in Government revenue. We expect this trend to continue if the current reduction in Covid-19 infections is sustained.
The outlook for tourism has been encouraging. We are forecasting a good tourism season starting in early December and well into 2022. Most hotels are projecting above-average stay-over
bookings into the second quarter of 2022. The cruise sector is also showing bookings in excess of previous projections.
THE NEXT BUDGET CYCLE
Meanwhile, Government is avidly engaged in the 2022-2023 budget planning process. I will outline some of our priorities for the ensuing financial year given our very tight fiscal circumstances:
CRIME ABATEMENT: We can all agree that the level of crime afflicting our country is unacceptable and that the security of our country is of paramount importance as our businesses, citizens, and visitors all need safe and tranquil communities in which to grow, live, work and enjoy their vacations. It is our collective responsibility, therefore, to take all necessary actions to bring our crime situation under control.
I call on the private sector to join us in this important national fight in the months and years ahead. We should, for example, consider joint public-private sponsorship for social programs, such as after-school activities for youngsters at-risk.
LEGAL AND INSTITUTIONAL FRAMEWORK: This administration will implement policies to facilitate greater investment participation by our nationals. These measures will provide the impetus for the private sector to invest in new business opportunities in the areas of:
- Creative Industry, particularly crossover activity engaging youth;
- Green Technology, particularly renewable energy adaptation for households and businesses; - Village Tourism, particularly village-based accommodation, sites, attractions, and amenities; - Marine Resource Development, including water-based business activities; - The Digital Economy, including the development of online or web-based businesses.
On the Infrastructural front, our immediate plans remain constrained by pre-existing commitments from which we cannot easily extricate ourselves. We will therefore concentrate on the completion of St Jude Hospital to provide a proper health facility serving the needs of people in the Southern half of our country.
We will also continue the HIA Redevelopment Project, once Cabinet considers the recommendations in the Final Report of that Project’s Review Committee.
Similarly, we are giving serious consideration to the present operations of the Citizenship by Investment Program and will institute strategic changes to enable it to generate more revenue for the country.
STRENGTH AND UNITY
As I’m about to end, I want to reiterate that as partners in development the government and the Chamber have to work together to innovate, retool and transform the economy. We must reposition this country to be a competitive place to live, work and do business. Our citizens here and in the diaspora must be fully engaged in the development process and the creation of opportunity and wealth.
Too many of us, for too long, have merely subsisted in survival mode. The era of scarcity and wastage must end. We owe this to ourselves and the generations to whom we hope to pass the business of government and commerce. In this, we must not fail.
THE COMMONALITY OF OUR CIRCUMSTANCES
No doubt some of us just want the old times to return. But realistically, that is not going to happen. We must be willing to move on, and for that to happen we must bring citizens, companies, and communities together, building teams around shared goals. This is hard work with high rewards. I know that this is a difficult time for leaders in public and private life, in communities as much as corporations. But leadership is exactly what we need right now. Sweeping laws and powers are increasingly useless, compared to outreach and inclusion.
If we can agree that adversarial postures are unproductive, we can also agree that these times call for a shared enlightenment that bridges differences to achieve mutual progress. That requires new truth and trust. I am making that offer in the hope and expectation that the private sector is ready to reciprocate.
Ladies and Gentlemen, I wish you all persistent prosperity and thank you profoundly for this opportunity.