Friday 29 May, 2020

PM Explains Ernst & Young Involvement in Budget Preparation

Many St. Lucians took to the talk shows to question the company’s involvement, looking at it as a slap in the face of the qualified civil servants who work in the Ministry of Finance and whom, over the years, had been the ones working on the budget, putting it together for presentation by the Prime Minister at the opening of every financial year which begins, April/May.

According to Chastanet, the accounting firm had been working with the present government by helping the government with its policies.

“So they have been doing a paper on the tax situation. I made that very clear from the outset, so we are looking at a revision of our personal income taxes, corporate income taxes and the VAT regime. The firm is also working with us in terms of a new incentive regime, not just for tourism but for export. They are also working on a macro economic plan,” Chastanet said.

He gave more reasons for the accounting firm’s involvement in the budget by pointing out deficiencies in the understanding of putting a budget together by government personnel.

“While we were going through the budget process, it became very, very clear that there was a great deficiency in understanding how to put the budget together. Now am I surprised? No! When I look at the results over the last couple of years as to how we managed our economy, you can see there is no management of the economy,” the Prime Minister said.

According to him, St. Lucia has a problem in that there is no fiscal space and will continue to run a deficit government and be in a position to only maintain its 82 percent debt to GDP.

“So if you take how much money we have borrowed so far and what the cost of financing that is. If you assume we are going to continue running a deficit government to the tune of about $200 million, all we would be able to do is maintain the 8 percent debt to GDP that we have and which potentially might go higher. So it means we have to restructure the country here the money we’re spending is going to generate growth. The only way we can turn this thing around is by growing the economy and putting a freeze on existing costs that we have,” Chastanet said.

Ernst & Young last week conducted a two-day training workshop aimed at getting government ministries personnel to think differently about how they spend money.

Prime Minister Chastanet described the workshop as “quality driven” while Cointha Thomas, Director of Finance, expresses it as revealing a few inadequacies and areas needing improvement where government’s financial challenges are concerned.

Get the latest local and international news straight to your mobile phone for free: