St Lucia’s parliament reconvenes for more borrowing and legislative amendments

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Leader of the Opposition Philip J Pierre (L) and Prime Minister Allen Chastanet

By Melanius Alphonse
Caribbean News Now associate editor
[email protected]

CASTRIES, St Lucia — A sitting of parliament in Saint Lucia is scheduled for Tuesday, in what is commonly regarded as the final session for 2018; however, the anticipated motion of no confidence in the prime minister and minister of finance, Allen Chastanet, filed by leader of the parliamentary opposition and leader of the Saint Lucia Labour Party (SLP), Philip J Pierre, is not on the order paper distributed to members of parliament.

Absent a reversal of fortune, this reinforces the belief that the planned vote of no confidence has the government on the defensive, albeit the prime minister’s thinking “to ensure greater synergy, efficiency and improve responsiveness to the needs of Saint Lucians” in the adjustments to ministerial portfolios effective November 1, 2018, and that he is not convinced of his authority amidst internal and external dissidents co-ordinating efforts behind the scenes.

Saint Lucia’s “unsustainable debt path” and “careless” borrowing that is expected to exceed EC$4 billion by end of this fiscal year and a debt to GDP projection of 81.3 percent by 2023, is also weighing heavy on the minds of many parliamentarians and citizens alike.

On Tuesday, parliament is expected to approve addition borrowing to guarantee a loan in the amount of US$100 million from the Export Import Bank of Taiwan by the Saint Lucia Air and Sea Ports Authority for the purpose of financing the Hewanorra International Airport (HIA) Redevelopment Project.

This is of particular interest after the government of Saint Lucia rejected, with compensation, the public private partnership agreement that would have been supervised and monitored by the IFC, an arm of the World Bank.

This follows major concern with regard to financing and successfully positioning HIA operations to compete and remain viable, albeit as the usual suspects regrouped on the airport redevelopment project, and the related corruption probe continues.

In keeping with infrastructure agreements proposed in the budget address 2018/19 exposing geopolitical concerns, government will also borrow the sum of US$50 million from the Export-Import Bank of Taiwan for the purpose of financing the Road Improvement and Maintenance Programme, the Infrastructure Repairs to Schools and the Housing Development Programme, consisting of:

(a) US$42 million to finance the Road Improvement and Maintenance Programme – Phase IV;

(b) US$4 million to finance infrastructure repairs to schools;

(c) US$4 million to finance the Housing Development Programme.

This is in contrast to government having claimed to have a revenue stream from the fuel surcharge of EC$1.50 per gallon that would be used for all infrastructure developments. Nor has Chastanet found the EC$6.80 tax component in the cost of a gallon of gas that he claimed was there during a 2015 protest against the then SLP government’s economic policies.

On April 10, 2018, Chastanet revealed that the Saint Lucia government had entered into an agreement with a sports project management firm, The Parker Company (TPC) in Miami, Florida, represented by Donald Lockerbie, to provide sports programme management services for the sum of US$12 million on another ‘no bid’ contract.

The entire 2018/19 budget estimate for the ministry of youth development and sports is EC$8,360,100 (US$3 million).

However, parliament is expected to borrow the sum of EC$32 million from the Bank of Saint Lucia Limited (BOSL) for the purpose of financing the 2018/2019 Budget in the amounts of (a) EC$24.3 million to finance the National Sports Infrastructure Strategy and action plan; and (b) EC$8.1 million to finance the 2018/2019 budget.

At the October 30 sitting of parliament, the government borrowed EC$3,301,324.50 from the First National Bank for capital expenditure to build a wall in the prime minister’s constituency that seemingly did not go to tender, and EC$32,603,000 from First National Bank for capital expenditure to finance the 2018/2019 Budget, that was not defined.

Similarly, there was the necessity to seek approval for recurrent and capital expenditure after the fact, with a notable lack of transparency and accountability on particular expenditure.

At the October 30 sitting of parliament, Pierre said, “First National Bank has EC$63 million-plus exposure to the government of Saint Lucia,” adding:

“We are now going to crowd out the liquidity from the local system in what is called a crowding out effect.

“My problem is that the government’s debt trajectory is becoming very, very dangerous. We are borrowing and we are not seeing the surpluses to be able to deal with that borrowing. We are not generating enough surpluses and our deficits are increasing all the time.”

Dr Kenny Anthony, former prime minister and minster for finance also expressed concern that “First National Bank is such a heavy financier of the government of Saint Lucia in this financial year,” and that “First National Bank has gone where others fear to tread.”

An International Monetary Fund (IMF) report cautioned that growth as well as the trajectory that Saint Lucia is following in the medium term looks very dismal and the long term even worse without serious steps to improve the fiscal situation.

In Lima, Peru, earlier this year, when debating The Lima Commitment, Democratic Governance against Corruption, Chastanet said in part:

“Transparency should not be so onerous that it takes precedence over development… Impractical and subjective mechanisms are unsustainable.”

Meantime, the Council of the European Union is legislating Saint Lucia into tax compliance, as witnessed by legislative amendments at the November 20, sitting of parliament in advance of further EU review and subsequent publication of a list non-cooperative tax jurisdictions due December 2018.

According the government of Saint Lucia press release on November 26, 2018:

“Not too long ago, Saint Lucia was labeled by the European Union (EU) as having harmful preferential tax regimes.

“The EU indicated that it was interested in promoting good governance worldwide, and maximizing efforts at preventing tax fraud and evasion. The EU said Saint Lucia does not apply the base erosion and profit shifting minimum standard, and was to commit to addressing the issue by December, 31, 2018. In that vein, a team was put together to create what the Prime Minister indicated is a Territorial Tax Structure.”

On Tuesday, Parliament is expected to approve the Income Tax (Amendment) (No.2) International Trust (Repeal) Bill and the International Partnership (Repeal) Bill.

The hurried approach to legislative amendments is apparently a defensive measure to avoid the repeat performance of being a day late and a dollar short on a previous European Union blacklist, and to respond to global and regional institutions that have stated that they are “not impressed with the government of Saint Lucia”.

Others are concerned that the IMF “is apparently on the horizon” and that corporations and foreign interests have began reviewing options to secure their investments.

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