“Saint Lucia’s pitfall to stagflation” by Melanius Alphonse
With the ever increasing deficit, money supply squeeze and runaway inflation, the Saint Lucian economy continues to recoil at a very rapid rate.
Despite such, the Kenny Anthony administration continue to advance partisan base policies that are designed to benefit party supporters, while inflating the national debt. To many, what is currently taking place, is a stark reminder of what happens in a “winner takes it all system“, where the government of the day becomes preoccupied in creating jobs for its inner circle, while putting on the pretence of working in the interest of the nation.
No government of Saint Lucia has ever awarded a job to anyone if it wasn’t first measured in political dimensions. In order words, your experience or ability to perform on behalf of the nation isn’t worth much, unless it is tested in terms of partisan loyalty. Meanwhile the economy is in freefall, the government can’t pay its bills and crime is on the rise.
It is this sort of mindless governance that turns a blind eye to quality and substance, and embraces instead an outdated system that makes partisan loyalty a prerequisite to contribute to risky economic policies that kills businesses, jobs, and investments.
The alarming number of families that are having difficulties in meeting the cost of basic necessities is just the tip of the iceberg, not even having to factor the cost of paying WASCO and Lucelec utility bills. But this administration does not seem to understand the effects that partisan base policies are having on economy performance.
This approach has already contributed to a higher unemployment index that is compounding the inflationary rate of 4.2%, while the economy continues to contract at 0.8%. The irony in all of this seems to be no serious attempt at correcting the situation.
The over-reliance on the tourism industry is at dangerous levels. In fact, not only has the Kenny Anthony administration misled the nation with the notion that his current policies are intended to advance eco-tourism, sports, medical and the creative industries, rather it is indeed a very shallow approach, which will not yield much for the nation in the absence of a national eco-system plan, supported by meaningful legislation, with the ability to withstand the competition from similar markets.
Meanwhile, development issues, the promotion of industry and product development are short-changed due to policy uncertainty and the authorities’ inability to increase revenue without hurting the poor. This proficiency is not only lacking, but is also compounded by the size, and cost of a welfare administration that continue to increase the national debt.
Perhaps the time has come for an in-depth plan to outsource non-core government services, and to seriously consider the intercession for P3’s (public private partnership) with global partners, and the proper divestment of non performing state assets to raise capital.
The key to successfully launching such is institutional strengthening; packaging and promoting the ease of doing business in a low tax and business friendly environment, with a high efficiency rate in achieving production targets and timely project completion.
Having said that, although there are moderate levels of investments and projects that have been completed on-time, economic output is not flowing at a significant level to inspire economic strengthening. As a result, this continuous slowdown is impacting Saint Lucia’s development adversely.
As usual, the Kenny Anthony administration does not know in which direction to go and has to embrace PetroCaribe and the Bolivarian Alliance of the Americas (ALBA) in search of the Hallelujah moment.
Of course this will turn out to be another misguided decision.
PetroCaribe and ALBA are political organizations with agendas designed to redirect resources for political gains. These agreements do not advance mutual economic development. At best, the program will defer Saint Lucia’s indebtedness and subsequently compound adversely its credit ratings, and accessibility to global capital.
Remember, it is common knowledge that a change of government in Venezuela would end the PetroCaribe programme in its current framework, thus leaving Saint Lucia with a huge bill to settle in short order.
Therefore, what will a future of increasing debt, low industry output; rising inflation and weak credit ratings lead to? How will voter pandering, shallow decision making and policy uncertainty play out in a comatose economy?
Well here’s the verdict!
This is very risky business, the result of which is “stagflation” – the combination of economic stagnation and wild inflation. Further, if interest rates rise and economic validity falls; business sales and services will drop. This means much higher prices, which will lead to higher interest rates and “depressflation” – the worst economic conditions combined with high inflation.
Indeed, every effort should be made through collaboration, the sharing of concepts, principles, and a set of actions to turn around this possibility. But, the unsavory blend of decision making seems to be a dress rehearsal for the Kenny Anthony administration for a greater politicization of the economy.
Sadly, while their politically based economic strategy does benefit a number of persons within their inner circle, the same can’t be said for the vast number of Saint Lucians (20% and rising) that are unemployed.
Currently, things are not looking good. People are falling behind, not only socially but economically. What once seemed like a promising future following independence on February 22, 1979, has now turned into a catastrophic situation where Saint Lucians are unable to support a quality standard of living.