Dear Sir
Prime minister of Saint Lucia, Allen Chastanet, has famously said that he does not listen to jackasses, he just lets them bray.
The prime minister has practised this to perfection. By his behaviour, he believes that he is of superior intellect and therefore, he listens to no one. His refusal to listen to the jackasses has been very costly for our country.
Let us examine one of the prime ministers’ defining policy initiatives, the reduction in the rate of the Value Added Tax (VAT). Economist at the Caribbean Development Bank (CDB) warned that such a move would be very costly. The prime minister ignored the CDB and proceeded to cut the rate by 2.5 percent. According to data from both the International Monetary Fund (IMF) and the Eastern Caribbean Central Bank (ECCB) in the first two years, following the 2.5 percent reduction, VAT revenue was down by about $50 million. This was the beginning of a lingering cash flow problem.
When it came to the Citizenship by Investment (CIP) the prime minister was steadfast in the belief, that he should listen to no one. Given that inflows like the CIP revenues are subject to sudden stops, the IMF outlined measures which were designed to minimize the impact of fluctuating flows on the budget.
They recommended among other things that CIP inflows should be separated from the budget, using some of the money for carefully selected projects, and making debt repayment a priority. True to form the prime minister ignored, the advice of the IMF. Some of the CIP revenue was put into the consolidated fund, while Teo AH Khing was given unfettered access to some of the CIP revenue that was paid into an escrow account. (See Clause 7 of the confidential DSH Framework Agreement.)
The COVID-19 crisis has exposed our vulnerability to the vagaries of the tourist industry. Despite the warnings of tourism experts, that the post-COVID recovery of the industry, will take several years, the prime minister has behaved as if it would take a few months. Since the crisis, everything has been about tourism. The prime minister has even announced plans for the expansion of room capacity. With his preoccupation on tourism, he has not given the issue of diversification of the Saint Lucian economy any serious thought. He probably knows something that real experts of the industry are not aware of.
It is no surprise that the prime minister recently announced that the country is broke. Let us be clear, in the wake of the COVID-19 crisis, everyone should expect the government finances to be stretched to the limit. We should brace ourselves for the difficult and uncertain road ahead.
The prime ministers’ failure to listen has made the task of recovering from the crisis more arduous. His failure to listen has put the country into a deeper hole. Prime minister, maybe it is time to listen to the jackasses.
Carlton Augustine
