Address by Prime Minister Stephenson King to CDB Board of Governors Meeting in the Bahamas - 19 May 2010
THE GOVERNOR FOR SAINT LUCIA
THE HONOURABLE STEPHENSON KING
Mr. Chairman, President Bourne, Fellow Governors, Directors, Management and Staff of the Caribbean Development Bank (CDB), Distinguished Delegates, Ladies and Gentlemen:
On behalf of my Delegation, I wish to thank the Government and People of the Commonwealth of The Bahamas for extending to us such warm and gracious hospitality for which this beautiful country is renowned. We also wish to thank the Government of the Commonwealth of The Bahamas and staff of CDB for the excellent arrangements and efficient conduct of this Fortieth Annual Meeting of the Bank.
Mr. Chairman, my Government recently delivered its budget for the fiscal year 2010/2011, centered on the theme"The Road to Recovery: Engineering Growth, Engendering Social Cohesion and Building Resilience to External Shocks". The theme is indicative of St. Lucia’s continuing efforts to escape from the dungeons of the current economic and financial crisis and to embark upon a path that leads to recovery. This year’s budget sought to address some of the main macroeconomic challenges facing St. Lucia, and to chart a course of action that will propel us on to a path of recovery and growth.
St. Lucians have displayed remarkable resilience in the face of troubling economic times. It is the responsibility of my Government to inspire and to offer hope to a people who have embraced the prescription of "austerity" as they actively tailor their lifestyles and expenses as a response to the global economic contraction.
Mr. Chairman, the peculiarities of a small island state like St. Lucia are well known, particularly in this Region. Our heavy reliance on agriculture and on bananas in particular, has served as a two-edged sword. The end of the protective trade regimes meant that St. Lucia had to face open competition on the international market for its commodities. This is no small requirement as we continue to struggle with the limitations of scope and scale and rising production costs in the agricultural sector.
We have had to turn to tourism to buffer the shortfall in foreign exchange earnings. That sector too has its own volatilities. The Government has gone to great lengths to strengthen the marketing and promotion machinery of the Tourism sector with a view to maximising the gains to be had from that sector. Like many of my counterparts here, this has proven to be an uphill challenge with the onset of the most recent economic and financial meltdown with its rippling and catastrophic effects felt globally. - 2 -
The tourism sector after expanding by 2.2% in 2008 is estimated to have contracted by 6.5% in 2009. The Agricultural sector recorded mixed performances in 2009, as banana output fell and the production of other crops increased. Overall, the sector contracted by 8.5% in 2009. Real GDP contracted by 5.2% in 2009, compared with positive growth of 0.7% in 2008. Admittedly, therefore, we, like others in the international community, have had to seek external financing to mitigate the effects of dwindling foreign exchange earnings and to sustain liquidity levels in the financial sector. Though the deterioration in the external environment had a severe toll on the St. Lucian economy, proactive responses by my administration mitigated against the full potential impact of the crisis, particularly in the area of employment.
The lessons of the past year vividly illustrate that a stable efficient financial system is the cornerstone of a healthy and dynamic economy. It is, therefore, mandatory that policy-makers place greater emphasis on fundamental reform of the financial sector. The objective is to make the financial sector more resilient through, inter alia,better and more effective regulation.
I note with great interest, the proposal of the International Monetary Fund to create a kind of financial stability fund by introducing a tax, or perhaps more accurately, a number of taxes on financial institutions. The idea seems to be to use the resources of the fund to restore stability in times of financial crisis by providing adequate support to financial institutions undergoing severe stress.
While a fund of that nature might, over time, help to restore liquidity and confidence in the aftermath of a financial crisis, it would not prevent or discourage such crises and the proposal amounts to a tacit admission that their root causes have not been, or are not being adequately addressed. Similarly, more effective regulation will do some good, but the nature and magnitude of the current crisis point to the need for afundamental overhaul of the banking and financial system in the major economies and the international economy as a whole. Unless there is fundamental reform, the next crisis might prove to be far more difficult to resolve, given the inter-connectedness of the world economy.
Mr. Chairman, one can easily be tempted into presenting a litany of woes and challenges, reminiscent of fatalism. Instead, the Government of St. Lucia is keen to use this global economic and financial crisis, to bolster its resilience and to buttress the local economy by aggressively pursuing various diversification initiatives.
In this vein, I remain encouraged by the support of CDB during this crisis. However, we remain painfully conscious of the need for quick and decisive action, with the required safeguards, to ease the bottlenecks that stand in the way of the effective and timely provision of funding, under the programmes of assistance specifically intended to tackle the crisis. While we call on the rest of the world to provide special assistance on concessionary termsand to do so expeditiously, we look to our own regional development institution to lead the way in this respect.
Mr. Chairman, we have also heard a great deal of rhetoric from the International Financial Institutions concerning their desire to assist developing countries to recover from the crises. However, promised disbursements have either not materialised or have been inadequate. Swift action is required, even now, if our small and vulnerable island economies are to avoid disaster.
The development strategy of St. Lucia reflects a proactive response to the severe impact of the global recession. While we recognise the need to initiate an action plan to achieve sustained recovery in the medium term, we have not lost sight of the need for a long-term approach to development in concert with our regional partners and in the context of the regional economy. - 3 -
Crises such as the current one reinforce the necessity to deepen our integration drive. Small Island Developing States such as ours, or SIDS as they are known, must continue to pool their limited resources to weather the vagaries of the international market. Deepening international economic relations in a globalised world mean that we are increasingly susceptible to events occurring in seemingly distant places. The notion of a "global village" and its concomitant implications are all too evident. St. Lucia, therefore, reiterates its commitment to the ideals of regionalism and to the deepening of the integration process within our Region. We continue to partner with other sister states of the Organisation of Eastern Caribbean States (OECS), and the wider Caribbean Community (CARICOM) to develop mechanisms [including the Eastern Caribbean States Economic Union, and the Caribbean Community Single Market and Economy(CSME)] to enhance our resilience and to ultimately improve the prospects for enhancing the quality of life of our people. The support rendered by CDB in this regard is highly commendable.
Mr. Chairman, yesterday the President of the Bank highlighted the urgent need to address the problem of crime in all the countries of the Region. There is little doubt that crime is both a cause and an effect. It is caused by, and in turn causes, a myriad of social and economic problems and must be tackled on a number of fronts. This is not the occasion for a complete analysis of the genesis of crime in our Region, but I will deal with two salient points here.
We cannot help but be struck by the connection between the severity and extent of criminal activity on the one hand, and poverty on the other, particularly the existence of depressed living conditions in significant areas of our communities. I am not quoting from some theoretical study or survey painstakingly conducted by teams of professionals, nor do I mean to denigrate such exercises which are often necessary to support policy making. I am merely pointing out what we have all come to experience on a daily basis in our countries, especially since the onset of the recession.
A concerted effort to clean up our poorest neighborhoods and communities and provide adequate housing and decent living conditions is a priority of the highest order. While this is not the only issue relating to the epidemic of crime, it is a necessary step within a more holistic approach to finding solutions.
My second point is that there is a role for the CDB family in finding collective solutions that employ region wide policies, programmes and projects. Our countries and economies are irreversibly interconnected and criminal activity spills over our borders in unmitigated and, it seems, unstoppable fashion. The rate at which crime is growing in most of our countries has the potential to put a brake on our development and could ultimately add to the cost of building a stronger CSME.
Mr. Chairman, as CDB turns 40, the need for support for small economies such as ours that are at risk of being devastated by natural disasters, is becoming increasingly evident. And I mean this in its broadest sense, as I reflect briefly on the implications of climate change for SIDS in the Region. No longer can we ignore the imperatives of climate change and the potential negative impact on our physical environment with its implications for the economic security of our Region. I am, therefore, encouraged by CDB’s increasing focus on environmental sustainability, which increasingly is becoming a central pillar in my government’s own development initiatives.
I also wish to applaud CDB’s attention to youth development. We must engage our youth as a corrective measure to the incipient youth apathy gripping the Region. We must find creative ways to channel our youth’s exuberance. They are the repository of innovative ideas that have yet to come to the fore and it is imperative that we provide the opportunities for them to explore new ideas and develop their potential. The positive effects to be derived from this are all too obvious.
Permit me also to commend the Bank for the significant improvement in the disbursement rate on loans and grants in general, despite the decline in approvals. The Bank is urged year after year to do - 4 -
everything in its power to increase the disbursement rate and we expect this improved performance to be sustained.
Mr. Chairman, this crisis has afforded us the opportunity to dig deep within the recesses of our beings – our nations – our region - to devise survival mechanisms that will see us through these difficult times. I am heartened by the projections that suggest that global economic recovery is underway. Thankfully, economic and financial developments have been slightly more favourable than was previously projected; albeit, weak and sluggish. Consequently, the outlook for economic growth through 2010 and 2011 is cautiously optimistic.
I trust that with the support of CDB, we in the Region can position ourselves to take advantage of the emerging economic opportunities and regain some of the economic ground that we might have lost recently.
In closing, let me wish the Management and Staff of CDB every success as you continue to usher this Region out of this seemingly daunting economic crisis into a brighter and more promising economic future.
Mr. Chairman, I thank you.
© 2012 Government Information Service. All rights reserved.
Read our privacy guidelines.