Options to Growth in St Lucia: By Melanius Alphonse
Castries’ budget statement and its failure to provide a clear vision for Saint Lucia coincides with yet another call for a sustainable and integrated action plan, that would boost confidence for Saint Lucia and usher future economic success.
The article “Government debt policy too uncertain, says St. Lucia economist” from Maxim Auguste, illustrated another practical option and a sound knowledge base on developing economies and urge policy makers to “make it happen.”
His observation and option to microfinance and social business initiatives are critical for Saint Lucia’s growth and development that synchronize an integrated action plan.
Without an integrated plan of government, business and the wider economy, Saint Lucia will not reach its goal to create sustainable jobs for the more than 24,000 Saint Lucians who are looking for work.
And with the continuing expansion of the public service, high inflation and high deficits, Saint Lucia will continue to struggle.
For example with EC$32.6 million owned to Inland Revenue in Hotel Accommodation Tax, government has missed an opportunity to acquire equity on behalf of the people of Saint Lucia, provide jobs and grow the economy.
More so, the options by government to forego millions and discount outstanding payments to the Inland Revenue are cause for concern – and on the verge of the implementation of 15 percent Value Added Tax (VAT) coupled with the requirements to collect and remit taxes to the Inland Revenue, the wrong message is being sent.
Already, government and the VAT implementation team has not yet explained what the indicators are and why the VAT threshold of EC$180,000 has been affix.
In order to attain that threshold, the research team had to have come up with business intelligence that a sizable number of the business community in Saint Lucia makes over EC$180,000 a year.
If that is not the case then the threshold of EC$180,000 is high and encourages creative accounting.
“In building opportunities for our common future” the current 68.9 percent debt-to-GDP ratio as of March 31, 2012, means that Saint Lucia is not competitive in the global market place.
As a result, to grow the economy the platform upon which to operate and build must be re – establish.
That’s why the options to grow Saint Lucia’s economy must comprise an affordable and deep-seated module to re-position Saint Lucia’s future economic success.
The current economic pillars of – tourism, agriculture and financial services are not captivating enough and a better composition of agriculture, agri-business and manufacturing, micro enterprise (SME’s); and development centers to attract foreign investors and financial services, infrastructure development and tourism – needs to be reformulated.
The main components of inflation are raising food and fuel prices, -therefore, the supply of affordable transportation, waste management, infrastructure services, food, water, and energy supply at a fair rate is a cornerstone of economic growth, that does not need government to micro-manage business and the social sectors.
Even with the requirements of business, government and social leaders who must deal with the deficit problem and the economic growth problem at the same time must enact policy that will encourage growth.
For Saint Lucia to move forward, private enterprise must take the lead and government must roll back to its appropriate place of limited role and not create monopolies and additional bureaucracies such as STEP, YEP, NICE, SMILE, LEAP, and TIPPER.
In addition, further discipline and clear timelines are necessary to help build value and confidence in the Saint Lucian economy, such as;
A reduction in the size and cost of government; and any IMF renewal agreement;
The national debt of EC$2.2 billion and the cost of servicing the national debt must be reduced;
And the creation of public – private partnerships, small business and development centers are paramount.
Local and foreign investment grows the economy over government investments – therefore the focus must be, to encourage private sector strategic investments of capital projects that will power the future engines of innovation and break out of low growth with sustainable jobs.
In this regard;
An equitable tax policy; the ratification of the labor code and the rule of law must apply;
There is greater need to make business development financing, capital financing and equity financing accessible – as well as a clear plan to empower cooperatives and pension funds, encourage greater local savings and Diaspora investment options;
The trade deficit and the supply chain are unsustainable; in excess of EC$400 million – a claw back of at least 30 percent is immediately required in order to have a significant impact;
Along with provisions for a robust price control policy where business can compete fairly, to offer the best prices within a reliable and sustainable system.
With regards to the arguments and the status quo of business as usual, – the current course of economic growth and development in Saint Lucia is not going to reach the goal of sustainable jobs and economic growth.
That must change!
Fortunately, Saint Lucian has fresh buds and a lot more expertise and ideas to offer towards a new economic approach to change the current course.
The time to create sustainable jobs and economic growth is now.
But time is critical.