Welcome Address by Honourable Stephenson King at the Opening Ceremony of the 2008 Commonwealth Finance Ministers Meeting October 6, 2008

Welcome Address

by

Honourable Stephenson King

Prime Minister and Minister for Finance

at the

Opening Ceremony

of the

2008 Commonwealth Finance Ministers Meeting

held at the

Sandals Grande Spa and Beach Resort, Saint Lucia,

October 6, 2008

His Excellency, Cornelius Lubin, Acting Governor-General

His Excellency, Kamalesh Sharma, Commonwealth Secretary-

General and Mrs Sharma

Ministers of Finance of the Commonwealth

Heads of Delegation

Cabinet Ministers

Parliamentarians

Members of the Diplomatic Corps

Invited Guests

Ladies and Gentlemen

It is my distinct honour and pleasure, as Saint Lucia’s Prime Minister and Minister for Finance, to extend a warm welcome to all our visiting brothers and sisters from near and far, to our beautiful island, Saint Lucia – “Simply Beautiful”. Let me remind you that Saint Lucia, in addition to its natural beauty and friendly people, is known particularly as the proud birthplace of two Nobel Laureates, the home of the Twin Pitons (a World Heritage Site), and most recently-announced recipient of the World Bank’s top “Doing Business Report” ranking, within the Latin America and the Caribbean region. Indeed we are proud and consider it to be a fitting honour, to have been given the opportunity to host this 2008 Commonwealth Finance Ministers Meeting.

Ladies and gentlemen, as we prepare to engage ourselves into the serious business of the 53 member states of the Commonwealth, it is profoundly clear today, that we; in the Caribbean, throughout the Commonwealth and indeed governments the world over, are right now staring down an avenue of chaotic activities that indicate that something grave is taking place and the effects seem to be contagious. We, not being in total control of the situation, must urgently make the most of opportunities such as these high-level, multilateral meetings-of-the-minds, to discuss both our national and international responses, to the issues that our people and our economies are now facing. News headlines in scores of countries and in hundreds of languages – photographs of the desperate and displaced - underscore the need for our immediate, strategic and deliberate response, as government ministers and public officials, to the myriad of global economic challenges that are affecting our countries.

Food prices are soaring. In a single year, global corn prices rose a reported 31%; rice 74%; Soya 87%, and between March 2007 and 2008, according to the FAO, the price of wheat rose a staggering 130%. Steep price escalations of this magnitude, ladies and gentlemen, are not of the nature that can easily be absorbed, especially by small economies such as ours and other Commonwealth Member States. As noted recently by the Commonwealth Secretary-General, Kamalesh Sharma, “high food and energy prices present serious humanitarian, development and macro-economic challenges to all members of the Commonwealth, and particularly to Finance Ministers.” I am therefore heartened, as Saint Lucia’s Prime Minister and Minister for Finance, to note this assembly’s commitment, to discussing these challenges, and collectively working towards viable, immediately-applicable solutions - both short term and long term.

We must also be steadfast and deliberate, in keeping our attention, and indeed the world’s attention focused, on the very real issue of Climate Change. Climate Change, particularly as it impacts on small island nations such as Saint Lucia and our neighbouring sister islands in the Caribbean chain, is an issue that must be given serious attention and deserves eternal vigilance, since we are the ones who will continue to feel the first hand effects of this raging global phenomenon.

Ladies and Gentlemen, the proposed discussions on the topic is most welcomed, because while others debate the causes and haggle over placement of blame, the impact of climate change is indisputable, and it reverberates as a major issue confronting small states, having significant implications for their sustainable development. Some have called it “a perfect storm of conditions” – for added to the challenge of combating food prices and responding to climate change, oil prices continue to hover upwards of US$100 a barrel; global economies continue to weaken; and all this against the backdrop of a global financial crisis that has seen some of the world’s largest banking institutions buckle under the weight of poor internal governance, skewed incentive packages, inadequate risk management and a general lack of well-aimed, regulatory oversight. No man is an island, and in this sense – as we too in Saint Lucia have come to experience – no island … is an island.

In the context of Saint Lucia, Ladies and Gentlemen, rising petroleum prices resulted in the Government of Saint Lucia having to provide subsidies totalling million of dollars for the period April to June 2008. Similarly, the Government of Saint Lucia continues to provide subsidies worth million of dollars for that same period April to June 2008, to support consumer purchases of basic commodities: sugar, rice and flour. Indeed, small countries such as ours – with their limited fiscal degrees of freedom – cannot continue to sustain these subsidies over the medium term and difficult decisions regarding the price of basic commodities must be made. Ultimately, it is the poor who feel the greatest impact of such price shocks and all Governments must commit to improving the social circumstances of these vulnerable groups.

So let it be quite clear that this meeting of Commonwealth Finance Ministers here in Saint Lucia is not only timely, but urgent … and not only important, but critically so. I must therefore thank you for taking this opportunity to meet as members of a unifying body of nations to share experiences and ideas, and to discuss and design both short term and long term solutions to the challenges before us.

Ladies and Gentlemen, I look forward to the next two days of intensive discussions. The proposed agenda is indeed one aptly informed by the current issues we face. I believe I am accurate, when I say that we; especially Ministers of Finance, have all been closely monitoring the events taking place within the banking and financial services industry of the United States of America. So far this year, no fewer that 12 major institutions have disappeared from that Country’s financial landscape –most recently Wachovia and Washington Mutual, the latter of which was the largest savings and loans institution in America. In addition, just days ago we witnessed the “largest single point drop” in the history of the US Stock Market, and analysts all agree that; regardless of how successful the much-talked-about bailout proves to be, more banks are likely to encounter difficulty in the very near future.

It has long been said; and I am not here to debate the truth of it, that when America sneezes, the Caribbean catches a cold. The US dollar was once considered by many as essentially the gold standard of the world, and its’ banking industry near “rock solid”. Few would argue that any longer, and let me boldly suggest that this time around we ALL will be feeling the economic effects of this “sneeze”.

Ladies and Gentlemen, allow me now to turn our attention to another fact that has not escaped many of the smaller economies of the Commonwealth, and which indeed we shall discuss as part of this Meeting’s agenda:

Some evidence would suggest that the relatively liquid capital markets of 2007 indeed resulted in record resource flows to developing countries in aggregate, but concern still surrounds the fact that, the strengthened balance of payment position for China and significant investment flows to oil exporters, indeed mask what is in actuality a deterioration in such flows to other developing countries.

This too we must discuss.

And while on the topic of economic investment, may I acknowledge and commend the efforts of the Commonwealth, in seeking to improve the investment climate of its members. Saint Lucia, for instance, has had a very beneficial relationship with the Commonwealth Development Corporation, with respect to the establishment of our lone electricity company which has emerged as a success story in the region. And as I proudly alluded to in my opening statements, Saint Lucia again placed first in Latin America and the Caribbean in the World Bank’s “Doing Business Report” ranking, placing 34th out of 191 economies. And although we dropped a few notches over last year’s performance, this ranking underscores what is clearly Saint Lucia’s national posture towards being both business-friendly and forward-thinking in the overall facilitation of corporate activity and foreign direct investment. I can give you the assurance that the Government of Saint Lucia will continue to pursue efforts to enhance its investment climate, in order to attract much needed resources that will support our economic growth targets and poverty reduction objectives.

In closing, ladies and gentlemen, as we are on the eve of the next round of meetings of the International Monetary Fund and World Bank in Washington, I further put it to this October 2008 gathering of Commonwealth Ministers of Finance that, we must continue to press for the restructuring of these international financial institutions – a mandate, as we will certainly recall, first given by Heads of Government at their meeting in Kampala in June 2007, and issued once again this year. Saint Lucia indeed embraces the principles enshrined in the Marlborough House Statement on Reform of International Institutions, and while recognizing that the IMF and the World Bank have played an important role in the international community, they too must keep pace with the times and pursue internal reforms in order to meet the needs of their membership more effectively. I therefore look forward to the discussion on developing appropriate mechanisms to advance the reform process, mandated by the Heads of Government.

Ladies and Gentlemen, given the open nature of our economies, our reliance on foreign trade and our disproportionate dependence on the tourism industry as a main economic driver, the global realties which we have touched on this evening significantly impact the economic fortunes of countries within the OECS and the wider Caribbean. These global challenges also highlight the economic vulnerabilities and fragilities associated with many small Commonwealth economies – fragilities that are further exacerbated by the fact that many of our countries are highly susceptible to the occurrence of natural disasters, such as hurricanes, landslides and earthquakes, and the ravages precipitated by climate change.

I am confident, Ladies and Gentlemen, that our deliberations over the next two days will be both insightful and instructive, and will serve well in informing clear strategies for the continued economic growth and development of all Commonwealth Member States. Indeed, the government of Saint Lucia continues to support the need for the Commonwealth Finance Ministers meeting, and also welcomes the tabled proposal to review the format, content, frequency, location and timing of future meetings, to maximize the relevance of the meeting to the whole membership.

Time is indeed of the essence, and so on this note, I once again welcome you to Saint Lucia, and welcome you to this year’s Meeting of Commonwealth Finance Ministers.

I thank you.

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