Woeful Picture of St. Lucia’s Economy Painted by CDB/ECCB Report
Director of Economics of the Caribbean Development Bank (CDB) has advised the Government of St. Lucia to engage in fiscal consolidation as a way of seeking a sustainable growth path for the economy.
Dr. Justin Ram, who held a press briefing to bring journalists up to date on a report put together by the CDB in collaboration with the Eastern Caribbean Development Bank (ECCB), painted a rather woeful picture of the economy and that of the others in the region.
According to him most of the economies of the region are characterized by low growth and high and growing indebtedness.
“With respect to Gross Domestic Product (GDP) and real growth rates, Caribbean countries have not been performing very well,” he said noting that St. Lucia is part of this grouping as well.
According to Dr. Ram the CDB was requested by the Government of St. Lucia to assess the country’s fiscal situation and make recommendations going forward.
Ubaldus Raymond, Minister in the Ministry of Finance said the purpose of the report was to provide the government with a diagnosis of the state of the economy.
“We needed to understand where we are and what we were dealing with before all our various tax proposals could be fully implemented,” Raymond said.
St. Lucia debt to GDP ratio, at the end of 2015, was around 75 percent. The CDB’s analysis showed that public finances are on an unsustainable path.
“There is also a high average cost of borrowing with respect to government dept. We have found this to be six percent compared to a slow growth of less than one percent in the past 10 years,” Dr. Ram said.
He said that the Government of St. Lucia must focus on transformative infrastructure projects and strategic liability management aimed at containing the cost of debt.
Other areas he called on government to consider as ways to improve the country’s fiscal situation include revenue reforms that improve efficiency and collections, public financial management reforms that improve planning and budget management, structural reforms that that improve competitiveness and increase growth.
As to whether government will implement any of the recommendations outlined in the report, it’s too early to say.
Minister Raymond said that there are certain things in the report that his government and the CDB have agreed on in principle however they are still in consultation.
The government is seeking public feedback on the report which Senior Communications Officer in the Office of the Prime Minister, Nicole MacDonald said will be on the government’s website in about two weeks.