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Prime Minister Concerned About Domestic Implications of Increasing World Oil Prices

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Contact: Prime Minister's Press Secretary

Monday, April 8, 2002 - Prime Minister Dr. Kenny D. Anthony has expressed concern about the continuing increase in oil prices on the international market and its possible consequences for the government and people of St. Lucia.

In a pre-Budget statement Monday, the Prime Minister, who is also Minister of Finance, Dr Anthony said he was particularly concerned about the consequences for the government's continuing subsidy of increases in oil prices to protect consumers.

Citing the current spiraling costs of oil, the Prime Minister explained that the average price of (international benchmark Brent) oil on the world market was US$19.34 per barrel during the final quarter of last year, by January 2002 it increased to US$1 9.49 per barrel. The world oil price has since then undergone a substantial increase, standing at US$27.60 on April 2, 2002.

The Prime Minister, who is also responsible for St. Lucia's economic development, pointed to "the war in the Middle east, as well as the global political and security environment", saying they "have given rise to great uncertainty about existing and future fuel stocks."

According to the Prime Minister: "Upward changes in the international price of oil directly affect changes in the prices charged to Caribbean importers, including the Government and People of St. Lucia. "However, the price at the pump continues to remain fixed only because Government has been absorbing those increases, at a massive cost of over $20 million since 1997."

Addressing the implications of the increasing spiral in the cost of oil on the world market, the Prime Minister said: "The current trend implies that Government will be left with fewer resources to hind its own projects and programmes -- which, after all, are for public purposes. Dr Anthony therefore sounded a word of caution. He said: "Substantially subsidizing the price of oil is not sustainable if world oil prices continue to rise significantly."

The Prime Minister reiterated that position. He said: "Government will continue to monitor the situation closely and will make a determination at the appropriate time regarding the sustainability of the practice of subsidizing the increases in the price of oil at the pump." It is expected that this matter will gain some attention in the 2002-2003 Budgetary Estimates of Revenue and Expenditure to be presented to parliament later this month by the prime Minister.

The Budget Estimates will be tabled in the House of Assembly on Monday, April 29, 2002. This will be followed by the presentation of the Throne Speech by Her Excellency the Governor General on the morning of Tuesday, April 30. Prime Minister Anthony will also present his Budget Address on Tuesday, April 30, while the Budget Debate will take place on May 2nd and 3rd.


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