By Melanius Alphonse
Most persons would understand that a widening fiscal deficit has less space for grand deceptions. But more and more, the Saint Lucia Labour Party (SLP) administration seems to calculate the deficit as a trade-off to indulge cronies and political actors, while in a mouthful of hot air signals that it is having tremendous difficulty to generate revenue and expand the economy.
Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality; the Lucian People’s Movement (LPM) critic on youth initiative, infrastructure, economic and business development. He can be reached at email@example.com
In hindsight, this may have been the political and economic policy that was embedded within the pages of the red glossy manifesto, and articulated via the “en rouge” slogan that hoodwinked voters into believing that the Saint Lucia Labour Party really had a “blueprint for growth.” But, it is important to observe that those who are responsible for misleading the nation are still under the illusion that they are able to work economic miracles for the people of Saint Lucia and are unable to understand that perhaps they have been spellbound and drifting further into the wilderness.
For some time now, the SLP administration has been seen as a wasteful administrator of the public purse, with no real ideas and thought out strategy to benefit the citizens of Saint Lucia. They simply tax and spend and offer gold-plated consultancy packages and contracts to the political elite in their party, without a care in the world of burdening the nation with greater debt.
In the face of such, the public expenditure has ballooned. Borrowing has reached an all time high and the debt to GDP ratio of 68.9% as of March 31, 2012, now stands at 78% in less than one year with more problems on the horizon, as the incoming budget in April 2013 is expected to increase the debt to GDP ratio of Saint Lucia.
How did the SLP accomplish that? They accomplished the above through short-sightedness; and a system of patronage which dishes out promised goodies that are all laced with a massive headache of repayment for future taxpayers.
Therefore, based on the series of events to date, it is evident that the “blueprint for growth” may have been riddled with more voodoo economics than was originally thought and in the absence of any cost saving mechanism, the country has been plunged into a six-foot watery grave.
Consequently, this has hindered the public and private sector. But most telling, is the lack of foresight on the part of an SLP administration to formulate a coherent national policy, capable of offering opportunities for expanding entrepreneurship and to create the kind of innovation and economic competitiveness that is needed for a robust economy.
To prepare ourselves for the kind of economic revolution that is possible, we must first embrace a sustainable approach which places emphasis on biomedical research and treatment methodologies that are capable of curbing the high risk of diabetes, hypertension, renal and other chronic diseases on island that are crippling the workforce.
An excellent starting point would be to establish a relationship with the multiple medical schools in the south of the island, which would not only create new jobs but support the kind of research that is needed to restore the health of our people.
Other expansion options include engineering, technology, packaging and food processing with brand recognition and market presence that has the potential to complement entrepreneurs’ product development, while offering economic diversity and an avenue to accommodate trade; and for the smooth transition of students into the field of work.
Further, the theory(ies) that surround a reduction of the airport tax to $0.00 reflects on the SLP government marketing and development incoherent policy. Preferable a pre-construction management team with physical pre-positioning on the project site to satisfy the requirements and justification to continue charging the airport development tax, and thereby stating their commitment to proceed with the project would have been more favourable.
As it pertains to the Water and Sewage Company (WASCO), this is a matter that requires business leadership and not political managers. A public private partnership is an option desirable of consideration that could be structured with the state holding 51% inclusive of the entire infrastructure. The state would be expected to use its leverage (with targeted taxes and user fees) to upgrade all for the physical plant for the long-term (15/20 years), while engaging a water management company to provide operational management with approximately 25% equity (including cash) with the remaining 24% offered to Saint Lucians.
Thereafter by-products can be introduced such a bottled water, flavoured water, canned coconut water and juices.
On the issue of wage increase to public service employees, the prime minister’s analysis is incomplete. I would have proffered the composition of a mini-budget that explains total revenue and expenditures. This would show “true” numbers to enable a comprehensive reasoning and justification, using variances and projections as a basis for both Trade Union Federation (TUF) and the government arguments.
Thereafter, a projection of the fiscal deficit, future borrowing cost, the interest payments and the principal amounts that have to be taken care of immediately would require a plan of action -- knowing how much of the debt is foreign owned, and what part is local; because this is a direct burden on future Saint Lucians.
Once that is established, one would have to examine a cost containment exercise such as a 15% across the board cost reduction in operational expenses in the public service in areas such as electricity, communication, transfers, procurement and outsourcing of non-core functions with the goal to reduce public expenditure and debt.
It’s a numbers game that has to show prudence and enable investments for future growth.
As it pertains to PetroCaribe, this has to be examined based on the agreement that may have been signed; its validity and, more so, with the passing of President Hugo Chavez (May he rest in peace). Matters such as the reliability of the supply chain, storage and distribution, and the ongoing relationship with the Hess Oil Terminal Facility are of paramount importance. Additionally, payment terms, the price mechanism (wholesale and retail cost), and the economic implications are all cause for concern.
As well as deferring the purchase cost of fuel and petroleum products that attract interest payment 15 -25 years before full payment is made in cash, or in kind.
This further illustrates the concept of a false economy and the untrue cost of services, and subsequently the by-products.
Therefore, the notion held by the government of Saint Lucia that PetroCaribe will give them “greater flexibility to manage and stabilize the prices of petroleum products on the local market" and that "the revenue that is derived from the PetroCaribe arrangements will be used to invest in social development programmes and social infrastructure in Saint Lucia" is not only a misconception, but a reality that is yet to come to fruition in all of the islands that have thus far embraced PetroCaribe.
If there are any profits to be derived from the PetroCaribe arrangement, and I do insist on the use of the word "any", then the profits should be used to improve capital infrastructure, boost entrepreneurship, and improve the skills of workers for the jobs of the future through STEM (science, technology, engineering, maths). This would result in extra production to pay in full for future shipments and not increase Saint Lucia’s current $140 million annual interest payments.
Also, the concept of another supplier/distributor for petroleum products in our limited economic space has to accomplish at least three things:
- Improve the quality and efficiency of fuel and its by-products
- Increase service through competition that enables a lower marketable price point for the consumer that is not subsidized by government
- And, the supplier/distributor must seek to engage in renewable source of energy with capital investment that will transition Saint Lucia’s energy needs in the future
So, let there be no more lame excuses to conceal and confuse, but rather to demonstrate inclusion to engage the public and the private sector to form alliances that grow and expand the economy.
Noticeably, the SLP administration is unable to handle such established narratives and is gasping on to straws -- unable to lead…again!