Billion-dollar budget reports unprecedented growth and paves way for further progress as the country moves on

Contact: Prime Minister's Press Secretary

‘From Recovery to Expansion’

Thursday, April 27, 2006 - The $1.1 Billion 2006-2007 Budget Address presented by Prime Minister Dr. Kenny D. Anthony on Tuesday was the ninth since he assumed the position of Minister of Finance in May 1997. In his record-setting address to a joint session of the Saint Lucia Parliament, he reported a continued level of economic growth in 2005, which paves the way for an unprecedented level of construction and developmental activity throughout the country for the rest of this year.

According to the statistics presented by the Prime Minister, the economy has responded positively to the prudent management of continued on a path of growth from 2002, when it recorded a mere 0.5%. The Prime Minister reported that the growth rate for 2005 was a phenomenal 5.4% and forecasted that the rate for 2006 should be even higher, at 6.6%.
 

A Thematic Thread

But it all didn’t just happen. A thematic thread has linked the nine budgets presented by this Prime Minister so far. Each budget address has reported building and consolidating on the gains of the previous one.

As a result of the positive management of the economy by two succeeding SLP administration, Saint Lucia today has been able to weather the economic storms that have been visiting the region in a manner that has been commended by regional and international agencies, from the Eastern Caribbean Central Bank (ECCB) to the World Bank and the International Monetary Fund (IMF).

The history of progression and progress in the country’s fiscal management goes back to the change of government in 1997, from one that had lost its way to one which gave much hope for the future. That change has been good for the country, as can be evidenced in the budgetary proposals, the Estimates of Revenue and Expenditure and the general handling of public finances over the past nine years.

How it all started…

On November 7, 1997, six months after the May 23, 1997 General Election, it became necessary for the new Government to present a Supplementary Budget, in which the new Prime Minister and Minister of Finance sought to rearrange the national priorities to suit the philosophical outlook of the Labour Party and to fulfil its very attractive Manifesto promises as contained in its “Contract of Faith”.

Consequently, the theme of the first budgetary policy statement made by the Prime Minister before the Parliament of Saint Lucia was to lay the foundations to “Stabilize the Economy and Redefine its Priorities.”

The Prime Minister presented a Supplementary Budget of $124. 9 Million for the next six months and indicated during that first presentation to the parliament that “better days will be here if we do the right things now.”

How prophetic his words turned out to be. Nine years later, Saint Lucia is indeed seeing better days than those the SLP administration inherited in May 1997.

Stimulating and Sustaining Growth

One year later on April 21, 1998 Prime Minister Anthony presented his second Budget Statement to the Second Session of the Seventh Parliament of Saint Lucia, covering the period 1998-1999.

In keeping with the needs of the time and having succeeded in the initial task of stabilizing the economy and redefining the government’s development priorities, it was time to move to the next phase.

To this end, the budgetary proposals were so structured that the theme of that second Budget Address – which was really the first to cover a complete financial year -- was “Stimulating and Reorienting the Economy Towards Sustained Growth.”

The budget that year was for a whopping $633.9 Million, more than four times that presented the previous year.

Reform and Recovery

Prime Minister Anthony's third Budget Address -- for the period 1999-2000 -- was presented on March 23, 1999 to the Third Session of the Seventh Parliament.

After 18 months of the new government and much effort at reorienting the national priorities, the economy was stimulated and the prospects for growth were again becoming real.

It was now time to move to the next stage that of continuing the economic consolidation, reforming national institutions and stimulating a level of social recovery.

To this end, the budget address that year had as its theme “Institutional Reform, Economic Consolidation and Social Recovery.”

The estimates that financial year were for $744.4 Million.

Strengthening, Modernizing and Repositioning

The 2000-2001 Budget – the fourth by Prime Minister Anthony -- was presented on March 21, 2000 to the Fourth Session of the Seventh Parliament, with the strategic objective of “Strengthening, Modernizing and Repositioning the Economy.”

The level of institutional reform, economic consolidation and social recovery well under way and the various sectors responding to the more prudent management interventions of the state.

By this time, however, it was time for the new government to renew its mandate and seek the approval of the electorate for continuing it’s economic and other programmes.

The banana industry was limping slowly, but the government continued to pump financial assistance and grant concessions to the industry to ensure its survival.

These interventions – including the privatization of the industry by returning it to the hands of farmers – proved timely, as Saint Lucia maintained its dominant position as the leading producer in the Windward Islands throughout the first five years of the Labour administration.

The General Elections were held on December 3, 2001, which renewed Labour’s mandate for a second term and paved the way for the administration to continue turning the economy around.

The estimates of revenue and expenditure for the ensuing financial year were set at $726.3 Million.

A Changing World…

The 2001-2002 Budget, the first after the Labour Party's December 2001 second election victory and the Prime Minister's fifth, was presented to the First Session of the Eighth Parliament, under the theme “Inspiring and Sustaining Development In a Changing World.”

By this time, global changes were having great effect on the local economy. New rules of world trade continued to offer lower prices and the government was by now forced to press on with the repositioning of the economy. The dependence on agriculture (bananas) was impossible to maintain and the prospects for tourism were beginning to look even brighter.

But while all seemed well as 2001 came to a close, September 11 happened and this changed the entire picture, not only for Saint Lucia but for the world economy.

For our tourism industry, which was just rising to the new challenges, it was disastrous.

The challenges notwithstanding, the estimates for the next financial year were set at $857.3 Million.

First Signs of Growth

The Budget Address for 2002-2003, presented to the Second Session of the Eighth Parliament, was delivered on April 30, 2002.

Coming just six months after September 11, the report card was mixed. Tourism had been hit and the banana industry was still limping in recovery, but the various sectors performed well enough in the previous year to enable the Prime Minister to report the very first signs of economic recovery.

The Prime Minister reported a 0.5% growth rate in the budget of that year, but the signs of recovery were promising enough. It now remained for the government to take those measures necessary to spur investment to sustain and enhance the growth of the major sectors.

To this end, the Budget address for 2002-2003 had a theme aimed at “Enhancing Investment, Revitalizing Agriculture and Stimulating Recovery.”

The signs of growth were modest, but the climate was one which required caution, so the estimates of revenue and expenditure were decreased as against the previous year, with the figure for the ensuing year set at $780.8 Million – some $76.5 Million less than the previous year.

Development and Recovery

The Budget Address for the financial year 2003-2004, which was presented on April 8, 2003, was a sure indication that the economy was responding positively and was on a sure part of rebounding.

With investors expressing more confidence and the tourism and manufacturing sectors picking up, the increased diversification within the tourism sector and other positive factors such as infrastructural development resulted in clear evidence of even more growth prospects.

The economy had performed sufficiently well that by the time the Budget was presented, the Finance Minister was able to report a 3.1% growth rate for 2003.

Buoyed by the continued prospects for growth, the economy was poised to do even better. However, the uncertainties of the new global reality -- from the WTO to 9/11 – made it necessary for an introduction of an element of caution.

Consequently, the budget for the next year was increased and brough back to the margins of 2001-2002, with the estimates set at $861.3 Million.

The budget address for that year had as its theme “Advancing Infrastructural Development and Economic Recovery in an Uncertain World.”

Strengthening, Modernizing and Repositioning

The Budget Address for the financial year 2004-2005 was delivered to the Fourth Session of the Eighth Parliament of Saint Lucia on April 20, 2004.

As with the previous budget, the signs of economic recovery were definitely improving. The measures taken to advance infrastructural development and to continue to stimulate the economy yielded even more positive results in 2004.

The tourism sector had by now sufficiently supplanted and replaced the agricultural sector as the primary sector. Investment confidence was yielding positive results with more local and foreign investments coming on stream.

Saint Lucia had become a world class destination and all sectors of the economy were reporting progress, including moderate progress on the agricultural front.

Global shocks were being withstood, but climate change was continuing to result in more active hurricane seasons that continued to retard the growth and revival of the banana sector.

But the economy had by now definitely turned the corner and the growth rate had exceeded all expectations, with the Finance Minister reporting a full 4.0% increase in the growth rate.

By this time, the international and regional financial institutions were praising the government for its handling of what was by then the best performer among the independent nations of the OECS.

It was now time to institutionalise the reposition of the economy, while at the same time strengthening on the gains of the past while introducing more modern concepts of growth and financial management to meet the challenges of the day.

To this end, the budget for the next year was again reduced in the interest of prudent pruning of finances available for allocation. The estimates were revised downward to $768.5 Million – some $92.8 Million less than the year before.

The budget address was presented under the theme “Strengthening, Modernizing and Repositioning the Economy.”
 

Consolidating Gains and Developing Human Capacity

Last year’s Budget Address (for the financial year 2005-2006) was presented on April 19, 2005.

By this time, investor confidence was quite clear, as seen, for example, in the fact that one billion dollars worth of investments had been committed to the tourism sector alone.

In addition, the government continued to invest in infrastructural development, modernization of institutions and securing of financing for more major projects to change the social and economic climate for the future.

The gains had been scored in the first five years of the new century and it was time to build on them and to continue to sell the island as a world class tourism destination, as well as a country in which the work force had been making the transition from an agricultural to a service based one.

To do all this, the country’s human resource capacity had to also be harnessed. It was therefore prudent that the budget last year was increased considerably over that of the previous year to $954.1 Million – some $185.6 Million more than the previous year.

Last year’s budget was presented under the theme “Consolidating Gains, Developing a World Class Destination and Enhancing Human Resource Capacity.”

From Recovery to Expansion

The budget for 2006-2007 presented by the Prime Minister and Minister for Finance, International Financial Services, Economic Affairs and Information on April 25 – the last before the next General Elections – is the best yet.

Reporting a record growth rate of 5.4%, the Prime Minister indicated the country had again been commended by the international financial institution, not only for its management of the economy but also for its handling of the island’s debt management.

The $1.1 Billion budget has all week been welcomed by all as one with which there could hardly be any quarrel. It reported progress in all sectors (except agriculture) and was tax free.

It targeted the needs of all sectors of the community and paved the way for continuing the process of recovery, while at the same time promoting and ensuring expansion of the economy.

It featured short, middle and long term proposals that will radically change the economic and social climate of the country forever.

And to top it all, barring unforeseen developments such as natural disasters, it projected an even greater growth rate of 6.6% for this year.

This year’s budget took into consideration the continued consolidation on the gains of the past eight years and went a long way in ensuring the state’s finances are sufficiently available to ensure the island’s hosting of Cricket World Cup 2007 is “the best ever” without negatively affecting other sectors.

Truly, as this year’s budget theme suggests, the country is definitely moving firmly and relentlessly along the road “From Recovery to Expansion.”

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