CASTRIES, St Lucia – On October 3, 2023, the government of Saint Lucia authorised the Public Debt Management Act 2023 (first tabled in parliament in October 2020) – a legislative guideline for borrowing and managing government finances, will come into effect on April 1, 2024.
“Passed in the House of Assembly on October 3, the bill sets restrictions and other procedures for borrowing. Among its many provisions, makes the ministry of finance the sole borrowing agent for the country, as well as making parliamentary approval a pre-requisite for borrowing. It also allows for a medium-term debt strategy and mandatory public debt analyses.”
Presenting the Bill, Prime Minister and Minister for Finance Philip J. Pierre explained that it was a dictate of the International Monetary Fund and the World Bank. It was first tabled in parliament in October 2020, under the previous administration.
“IMF believes that the bill is a positive step and would enhance fiscal transparency. It makes government loans accountable to the people of Saint Lucia,” and would send a positive signal to the capital market, both domestically and beyond.”
The ministry of finance in a press release Thursday, March 28, 2024, said:
“The Public Debt Management Act is enacted to consolidate and modernize the laws to strengthen the management of public debt, ensuring prudent borrowing practices and sustainable fiscal policies.”
Key provisions of the Act include:
Transparency and Accountability: The Act mandates transparency in the borrowing process, requiring the government to disclose information on debt levels, borrowing plans, and associated risks.
Debt Sustainability: It establishes mechanisms to assess and maintain the sustainability of public debt, thereby safeguarding the country’s long-term financial stability.
Risk Management: The Act introduces measures to identify, monitor, and mitigate risks associated with public debt, minimizing the potential impact on the economy.
Effective Debt Management Practices: It outlines guidelines for the issuance and servicing of debt, promoting efficient debt management and optimal use of financial resources.
Strengthened Institutional Framework: The Act enhances the institutional framework for debt management, clarifying roles and responsibilities among government agencies involved in debt-related activities.
The ministry of finance aide-mémoire to the public noted:
“ This landmark legislation represents a significant milestone in the country’s financial governance framework and underscores the government’s commitment to fiscal responsibility and transparency. The commencement of the Public Debt Management Act represents a significant step forward in our efforts to ensure sound fiscal management and sustainable economic growth.”
Prime Minister and Minister for Finance Philip J. Pierre 2023/2024 budget speech said:
“The preferred route to bringing public debt under control is to generate surpluses on the primary account. To assist the government in returning to prudential levels of borrowing, my government intends to enact the Public Debt Management Bill. This new piece of legislation will enable us to manage and consolidate all laws pertaining to debt and to do so with a high level of transparency and accountability. It will also reduce ambiguities and inconsistencies that may have existed in the various pieces of legislation.
Other reforms are necessary if we are to remain on track with debt sustainability and in this regard, we intend to support the Public Finance Act and Procurement legislation with the preparation of appropriate regulations.
“The proposed regulations are designed to provide the required clarity to certain sections of the Act to make its application more practical for use in government ministries, departments, and agencies.”
Highlighting improvements in the performance of Saint Lucia’s economy 2023/2024, Prime Minister and Minister for Finance Pierre, noted:
“This year there was a primary surplus of $104 million, $42 million more than last year, and $62 million more than the approved estimates.
Current account surpluses of $156 million or $47 million over 2023 and recurrent account surplus of $46 million or $39 million over 2023.
The primary balance is 1.5 percent of GDP as compared to 1 percent last year.
The analysis shows that the results of this fiscal year were better than last year illustrating an improvement in the performance of the Saint Lucian economy.
“These surpluses are not to be interpreted as the government having extra cash. Instead, it is the result of the prudent fiscal management of the country’s finances, which allowed it to more than meet its recurrent expenditure, leaving excess revenue to cover in part, the country’s debt obligations in interest payments and principal payments.”
Moreover, Prime Minister and Minister for Finance Pierre, delivering his 2024/2025 budget advised:
“The primary surplus balance indicates that the country is developing the capacity to reduce its level of debt over time. A deficit on the primary account would have indicated that revenue and grants would be inadequate to pay the interest on debt. As a result, no contribution would have been made towards any reduction in the debt expenses.
“I hope this explanation has debunked the idea, by some who may wish to mislead the public, that the government has generated more cash than it needs.”
The explanation continues:
“Notwithstanding those current account surpluses, the government will experience an overall deficit in 2023-2024 of $111 million or $65M less than last year indicating a lowering of the deficit gap.
“I look forward to the day when our revenue and grants will be sufficient to cover both current and capital expenditure, leaving us with an overall surplus. If this country is kept in the hands of responsible men and women to govern, as is the case now, it may one day get there.”
Public finance act and procurement legislation
Reporting on the 2023-2024 expenditure performance Prime Minister and Minister for Finance Pierre, explained:
“In 2023/24 expenditure on government operations fell by 9.0 percent moving from $1.44 billion to $1.31 billion due to a reduction in project operation costs. Additionally, there was lower expenditure on capital projects of $259.6 million as compared to the project expenditure of $302 million. Delays experienced in procurement and administrative processes were the main reasons for the shortfall. Capital expenditure increased over last year by $68 million or 4 percent.”
Prime Minister and Minister for Finance Pierre, continued under subsection development/capital expenditure ~ 2024/2025 budget.
“The enactment of the Procurement Bill is proving to be unnecessarily onerous and has resulted in an impediment to the government’s level of project implementation, as it relates to the procurement of goods and services. There is, therefore, a need to revisit the Act with a view to finding an optimum balance among the essential elements of Good Governance.
“There is an urgent need to remove some of the administrative bottlenecks that continuously undermine the level of implementation of government projects. We shall be addressing those bottleneck issues in the 2024-2025 fiscal year so that we can deliver the much-needed services to the people of Saint Lucia.”
The ministry of finance affirmed:
“This legislation [The Public Debt Management Act] reaffirms our commitment to responsible debt management practices and will contribute to the overall resilience of Saint Lucia’s economy,” and recommends that the public “ familiarize themselves with the provisions of the Public Debt Management Act as it comes into effect on April 1, 2024.”
