Statement by the Prime Minister on the finalization of the 1999-2001 CDB Country Strategy for Saint Lucia - September 22, 199...

FOR SAINT LUCIA

September 22, 1999

INTRODUCTION

We are extremely pleased that, in preparing the 1999-2001 Strategy Paper for Saint Lucia, the Caribbean Development Bank has drawn inspiration from our budget statements and our own Medium Term Strategy Paper. We are also pleased to note that this Strategy Paper is the product of a process of dialogue between CDB and ourselves, and that the Government of Saint Lucia has had a significant input in determining the matrix of projects to be funded within the strategy period.

Saint Lucia and the CDB have traditionally enjoyed a warm working relationship; indeed it has been an enviable partnership. For Saint Lucia, the Caribbean Development Bank continues to represent our largest single source of concessionary development finance. Moreover, at the end of 1998, Saint Lucia held the fourth largest CDB portfolio, with net cumulative loans, contingent loans, grants and equity amounting to US$134.8 million.

Over the years, our partnership has matured. CDB lending has evolved and diversified provided funding for infrastructural development in a number of critical areas. These include road infrastructure, industrial estates, water resource development, education, agriculture and more recently, tourism.

Indeed, Saint Lucia's performance on projects financed by the Bank has been exemplary. This is confirmed by CDB’s own Portfolio Performance Index (PPI) which measures project performance. Compared with an overall average of 73 achieved by all CDB borrowing countries at the end of 1998, Saint Lucia recorded a score of 80. Notwithstanding this performance, we continue to strive for a perfect score.

As we commission a new strategy for the triennium 1999-2001, we expect to maintain and strengthen this special relationship with our Bankers. Our expectations are reflected in the fact that an indicative amount of approximately US$67.1 million has been set aside for project financing in Saint Lucia over the strategy period.

The quantum, terms and conditionality of this financing package are of significant value to St. Lucia; particularly in light of declining concessional aid flows from other sources. Our mutual agreement on the 1999-2001 strategy reinforces an understanding between lender and borrower, that many critical development projects, particularly social infrastructure, still require financing on less than commercial terms.

Despite constricted aid flows and our limited access to commercial borrowing abroad, we must continue to build that critical infrastructure. While we may employ scientific risk analysis at each project appraisal, investing in that infrastructure is still an act of faith and of confidence in the people and government of Saint Lucia. We acknowledge CDB’s faith in us, reassured that with sound management, the strategy will serve to accelerate growth, employment and poverty reduction in Saint Lucia.

The principal economic objectives of the agreed strategy for Saint Lucia are the following: export diversification, human resource development, poverty reduction, environmental protection and infrastructure development. The projects to be financed under the strategy are particularly important to our overall thrust to restructure the economy and position Saint Lucia on a path of sustainable growth in what is being dubbed the "post-preferences era".

A total of US$25 million is to be set aside for road infrastructure. Roads to be upgraded or reconstructed include: Southwest Coast Road (Vieux-Fort to Soufriere) the East Coast Road, and the Grand Anse Road. The third phase of the Road Improvement and Maintenance Programme (RIMP III) will also benefit from CDB support.

A total of US$6 million has been set aside for education, with the implementation of a second phase of the Basic Education Reform Programme. This will include, in particular, an expansion of the school system to create 1,675 primary and senior-primary school places. CDB will continue to provide funding for student loans through the Saint Lucia Development Bank. US$3 million has been set aside for this purpose.

In the area of the environment, CDB has allocated an amount of US$4 million for flood control and US$4 million for projects related to Solid Waste Management.

In response to our needs, CDB has taken an innovative approach to provide funding for the housing sector. The Government and CDB will engage in further discussions on the quantum of funding to be provided to this sector.

We are very pleased that the Bank will also allocate further resources to drainage control. This has already been agreed in respect of Anse la Raye, and the second component of the Castries River Wall Project. We feel obliged to mention what a phenomenal sense of relief this project has brought to our government, and more importantly, to the residents of the affected areas.

Finally, I would like to take this opportunity to thank Sir Neville for accepting our invitation to visit us in Saint Lucia. He is now serving his third and final term as President of the Caribbean Development Bank, and we would like to congratulate him on his excellent and enduring stewardship. Indeed, during his tenure CDB has continued its dynamic evolution as the premiere development finance institution in our region. Under his leadership the Bank has found new and innovative ways to fulfill its mandate in a very challenging economic environment. We wish him continued success.

I would also like to thank the members of the CDB Delegation and their Saint Lucian counterparts within our public service and government agencies, who have all worked extremely hard to prepare the 1999-2001 Strategy Paper.

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