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St Lucia in a deep hole: Part 1

By Caribbean News Global contributor

CASTRIES, St Lucia – The Government of Saint Lucia (GOSL) last week tabled the estimates of revenue and expenditure for 2021/22 of EC$1.638,600,900. Contributing to the parliament debate, former prime minister and minister for finance Dr Kenny Anthony termed the estimates  ‘unquestionably’ that our country is in a deep hole, considering, for a moment, the indicators.’

The following is derived from Dr Kenny D. Anthony contribution to the House of Assembly on the estimates of revenue and expenditure 2021-2022.


We are unable to get any authoritative clarification of our Debt/GDP ratio. A Caribbean Development Bank (CDB) publication puts it at 102 percent. However, during the contribution of the leader of the opposition Philip J Pierre, the minister of finance says that is false, its 87 percent. But whatever the number it is clear that the unparalleled borrowing by this administration has placed substantial upward pressure on the ratio.

The decline in our GDP is so drastic that it is unknown at this time. At one sitting, we were told by the minister of finance that GDP had declined by an estimated 18 percent. I also recalled that he also suggested in a previous sitting in this House of Assembly that the Eastern Caribbean Central Bank (ECCB) had estimated that GDP had declined even further, possibly by some 22 percent. It is strange, said Anthony that the ECCB website does not cite a figure. Is it that Saint Lucia has not provided the data to ECCB?

Unavailable GDP estimates apart, we have seen a dramatic downturn in revenue. This downturn has been followed by record levels of borrowing. Inevitably, we have a rising overall deficit on our hands, suggested by these estimates to be in the region of 7.9 percent. And whether or not we care to admit it, unemployment has sharply increased, deepening poverty amidst obvious signs of social dysfunction and decay. And our handling of the COVID-19 pandemic has been dismal, the worse in the Eastern Caribbean.

How did this happen?

I will as I have done before, concede this is an unprecedented crisis of extraordinary magnitude and proportion, never experienced since our independence in 1979. To my mind these estimates of revenue and expenditure should indicate to us, to the people of Saint Lucia, even to the Friends, Family and Foreigners (FFF) how precisely we are going to crawl out from the deep hole in which we have found ourselves.

I concede that a monumental burden has been cast on the government. The questions are:

  • Whether the government has discharged the burden imposed on it by these estimates of revenue and expenditure as presented to the House of Assembly?
  • Are the estimates of revenue and expenditure, as presented, crafted to resolve the fundamental economic and financial problems which we face now and in the future?
  • That is the issue! And this is what this debate should be about. Who has the most realistic plan to rescue the people of Saint Lucia from the hole in which they have been cast?
  • There is no plan from the minister of finance to relieve our woes, no path to recovery, no restoration of hope and confidence. The only plan on the table has come from the leader of the opposition. Why do I say this?

It’s business as usual

When I examine the proposed estimates of revenue and expenditure, I see nothing which suggests that we are operating in crisis. We are in midst of a pandemic that has caused jobs, claimed 55 lives [March 18], closed businesses, caused the near-collapse of our health care system, unleashed incredible hardship and suffering. Yet, what do we see in the estimates of revenue and expenditure? More of the same – a bloated capital programme, increasing debt, reduced expenditure on transfers, unnecessary expenditure on pet projects of no immediate value to the people of Saint Lucia, projects that will have no discernible impact on the quality of life of our people.

Let us examine this budget in some detail

Let me first turn to a point made by the leader of the opposition. It deserves repetition.

The budget summary suggests that recurrent revenue for 2021/22 will be in the ballpark of EC$1 billion, relative to an out-turn of $883 million in 2020/21. We all know what the effects of the policies of this United Workers Party (UWP) administration have been, and they are accentuated by the effects of the COVID-19 pandemic.

I am therefore curious about the capacity of the economy to yield an additional $118 million in 2021/22, while global and regional economies are still reeling from the effects of the pandemic.

The question is this: Where is this additional revenue coming from? What is its source?

Capital revenue

According to the budget summary, in 2021, the GOSL had programmed some EC$10.8 million in capital revenue for the financial year 2020/21 but realized just about $374,000. For 2021/2022, an amount of EC$6.04 million has been programmed. It would be interesting for the minister of finance to disclose the nature of this revenue and the circumstances that suggest this amount would be realized in 2021/22 relative to the outturn in 2020/21.

Grants and revenue estimates

When one looks at revenue performance over the past year, nearly every head of recurrent revenue has shown a reduction in revenue generation. [Reference pages 8 -10 of the estimates.]

Total revenue and grants have been estimated at $1.1 billion, approximately seven million less than the approved estimates for 2020/21 and over $200 million more than the projected out-turn for 2020/21. [see budget summary]

Further, tax revenue is forecasted to be $107 million higher than the revised estimates for 2020/21. The government has forecasted increases in property tax, goods and services and international trade in financial year 2021/22. This suggests a return to some revenue sources but in a highly buoyant economy. Is this for REAL?

I would want the minister of finance to explain the assumptions and factors that contribute to this optimistic forecast. Is revenue deliberately “over forecasted” to demonstrate a smaller projected deficit for 2021/22? Is this intended to lure Saint Lucians into a false sense of security, so that they feel that their government is managing the fiscal affairs of the country prudently?

I ask those questions because discerning Saint Lucians would know that it is only after the end of a financial year, for example, January to December 2020, businesses would declare their income and pay corporate tax. If we, therefore, agree that the economy contracted severely in 2020, then, it means that many businesses would have suffered losses in 2020.”

How then would government revenue increase in such an environment? 

Similarly, many persons have lost jobs during the pandemic. Recovery in the job market will likely be slow, given the uncertainty globally. Government revenue thrives during periods of high consumption induced by high disposable income.

How can we, therefore, assume that consumption will increase and so too will government revenue, under those circumstances?

Wages and salaries

I noticed wages and salaries are programmed to increase by approximately $9 million over the budgeted amount for 2020/21.

  • Why this increase?
  • Will this be expended on the recruitment of new staff to the public service?
  • Or will we be recruiting more doctors and nurses to deal with the crisis in health care associated with the explosion in the number of COVID-19 infections on the island?

Transfers lowered

Of concern, is that transfers are budgeted to be some $40 million lower than the projected out-turn for 2020/21 [see budget summary].

You may not be aware, but that budget line transfers typically include amounts allocated to statutory enterprises or bodies that provide utilities or social services to the population. In an environment where we are witnessing so much suffering, pain and distress, why in a period when the budget is increasing, are the transfers to ordinary citizens declining?

Tax refunds

I note with alarm, the $1.0 million reduction in the allocation for tax refunds over the amount budgeted in 2020/2021. Even more alarming is the fact that out of the $10.5 million budgeted for tax refunds in 2020/2021, only $7.6 million was expended.  In order words, in their time of greatest need, when lives and livelihoods were being lost, the UWP administration prioritized expenditure on roads, rather than provide relief to Saint Lucians, in the form of refunds which are legally due to them. This is a time when citizens need money in their hands.

This is the time to put some of the promised “ching ching” in the pockets of working Saint Lucians, not deprive them of what they are justly entitled.

Relief to St Lucian’s in crisis

The budget summary suggests that the GOSL borrowed approximately $618 million to finance last year’s budget [see projected out-turn 2020-2021] and hopes to borrow another $509 million more in the financial year 2021/2022. Now, as a former minister for finance, I certainly understand the difficulties associated with deteriorating economic conditions and lower revenue performance.

However, one especially important question emerges: In acquiring $618 million in debt:

  • How much relief was provided to the ordinary Saint Lucian during this period of crisis?
  • How much employment was created?
  • How did the average single mother or student benefit?
  • How can Saint Lucians be expected to repay this debt, when they were not the beneficiaries of the same?

I sure hope the minister for finance can provide some measure of accountability on the matter of debt and its inter-generational burden. And regarding, the debt, the administration should also speak to their expectations on:

  • How they plan to raise a further $509 million in 2021/22, following $618 million in 2020/21.
  • Who are we marketing these treasury bills and bonds to?
  • Approximately $1.1 billion is expected to be borrowed in 2 years, how will the market perceive this?

To be continued … summary of government operations and financing.





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