Honourable Stephenson King

Prime Minister and Minister for Finance, Economic Affairs and National Development

State of the Nation Address

February 13, 2011

My fellow Saint Lucians, ladies and gentlemen, good evening. As this is my first national address to the Nation, let me take this opportunity to extend to you my warm wishes, peace, and God’s blessings for this year.

One and a half months into this year, many of us are continuing to pray for God’s blessings, guidance and protection. Some of us are engaged in reflection and critical introspection, while many of us as leaders, continue to persevere, to maintain our resolve in our attempt at addressing the numerous challenges that confront us in our society today.

This year has dawned on the back of a very challenging and eventful 2010. Against this backdrop, allow me a brief moment to reflect on a year that will be forever etched in the collective psyche of our nation, and to contemplate the prospects for 2011.

The year 2010 saw the elevation of our very own Darren Sammy to the captaincy of the West Indies Cricket Team. Levern Spencer, our Commonwealth Games bronze medallist, continued to excel in her field. They have both proven that with hard work, perseverance and the correct attitude, one can achieve.

Regrettably, we also suffered the loss of some of our most iconic figures: Pat Charles, Sir George Mallet, Sabinus Thomas, Sir Vincent Flossaic, Dame Sesenne Descartes and Stanley French. The lives of these persons and many others, whose names are not here mentioned, exemplified selflessness, excellence, patriotism and integrity. These are values that we so desperately wish to inculcate in our youth as our nation evolves.

Last year our country was subjected to an unforgiving drought, which brought with it severe challenges to agriculture and the water sector. No sooner had we recovered from that prolonged drought almost without warning, on October 30th Hurricane Tomas swept through Saint Lucia, causing unprecedented damage to the island. The impact of Tomas on the physical, environmental, social and economic infrastructure of our beautiful Saint Lucia is evident. From the North, to the South, and across the nation from East to West, there are indelible reminders of the ravages of Tomas.

As you know, the agricultural sector was adversely affected with damage and losses to the sector amounting to over EC$150 million. Let me reassure you that this government has been working assiduously to ensure that the agricultural sector benefits from the requisite injection of finance and technical expertise to restore the sector to its pre-Tomas vibrancy. In the aftermath of the hurricane, we have been presented with a unique opportunity to institute the necessary sectoral changes. While the nation’s food security remains our highest priority, Government will continue in its efforts to diversify the agricultural sector and indeed the national economy. We must reduce our reliance on what has been traditionally a monocultural economy, with a heavy reliance on banana production.

The Education sector too, was hard hit. I am delighted that we have been able to overcome the initial hiccups, and that schools are, for the most part, functioning normally. Moving forward, Government is in the process of sourcing funds from the Caribbean Development Bank and the World Bank for the rehabilitation of schools throughout the island. Our Diaspora has also been making contributions to this sector; we thank them for their efforts.

In our determination towards increasing investment in the social and physical infrastructure of the country, Government has initiated a host of programmes geared at enabling people to resume economic activity in order to return to normalcy.

Government has already secured a loan in the amount of; approximately, EC$22 million from the IMF, in support of the Government’s recovery efforts and sustaining Saint Lucia’s balance of payments. Some of that funding, which has already been made available, is earmarked for roads rehabilitation, to include reconstruction work along the Barre de L’isle.

Notwithstanding the physical and psychological scarring caused by Tomas across our nation, we are reminded of the resilience and strength of our people - a people who have not been deterred by the obvious economic setbacks or the emotional toll of a catastrophe such as Tomas.

We delved deep into our selves and found the courage not only to dig ourselves out of the mud, but more importantly, and in a way which is akin to the Saint Lucian spirit, we reached out and assisted our neighbours in need.

Not even a storm with the ferocity of Tomas could shake the mettle of our Saint Lucian people. The resolve that you have demonstrated, is what fuels this Government to do all within its power, and all that is possible, to restore and also to reactivate the economic sectors most affected.

The initial commentary from regional and international observers, boast that the recovery effort here has surpassed expectations, and can easily compare with, if not outshine, similar recovery efforts in even the most developed countries. This is testament to what is possible, even in a small island such as ours, when we pool our resources and work together to achieve a common good.

Let me take this opportunity on behalf of the Government and people of Saint Lucia, to again express our deepest gratitude for the concern and benevolence shown towards the Government and people of Saint Lucia by many regional and international agencies.

The extraordinary demonstration of commitment and competence displayed by our utility companies, the Red Cross, NEMO, the volunteers, the Government machinery, the private sector and civil society must again be applauded. Saint Lucia would not have returned to normalcy in the record time that it did, were it not for your sterling and untiring efforts.

Notwithstanding the dire economic circumstances brought on by the worst economic and financial recession experienced since the 1930s, we welcomed 2010 with a great deal of optimism. The Government was well aware that the global economic climate did not lend itself to any extraordinary expectations with respect to growth and development. Nonetheless, the Government crafted a coherent and cautiously optimistic budget, engineered to steer our economy out of the quagmire of an economic recession that threatened to cripple economies worldwide. Though our projections for growth were largely guarded, if not tempered, we expected to realize at a minimum, some respite from the vagaries of the global economy.

In the last twelve months we have witnessed unprecedented upheavals in the global economy, with countries such as Greece and Ireland turning to the IMF and the European Union for financial assistance. Other countries such as the United Kingdom and Spain have been forced to undertake fiscal austerity programmes to ensure the sustainability of their economies. Closer to home, Antigua and Barbuda, and Jamaica have engaged in IMF-related structural reforms of their respective economies.

The year 2010 also saw rising commodity prices, with the prices of agricultural commodities such as wheat, corn, soybeans and sugar, reaching their highest levels since mid 2008, when they reached record levels. Other important commodities such as crude oil, recorded sharp price increases breaking the $US90 a barrel mark in December 2010. These increases in commodity prices, threaten to trigger an inflationary spiral and to slow down the incipient recovery of the global economy, following the devastating effects of the financial crisis.

Ladies and Gentlemen, Saint Lucia’s economy was well on its way to recovery in 2010, before hurricane Tomas almost completely reversed the progress that had been made. In fact, based on preliminary estimates, Saint Lucia’s real GDP growth for 2010 was projected at 1.7 percent just prior to the hurricane, based on actual performance during the first nine months of 2010, and projections for the final three months of the year. The recovery was led by strong performance in the tourism sector with stay-over arrivals increasing by 15.4 percent during the first ten months of 2010, compared with the corresponding period of 2009. There were also signs that activity in the construction sector was beginning to pick up, as work on a number of public and private sector projects had either started, or were about to commence.

However, as you are aware hurricane Tomas struck on October 30th and 31st resulting in substantial damage, almost crippling the local economy. According to the preliminary findings of a UN-ECLAC assessment report, damage and losses sustained from the impact of the hurricane amounted to $EC 907.6 million (US$336.2 million) representing approximately 34 percent of GDP. Damage to the physical infrastructure, including roads, bridges and the water infrastructure was valued at $EC391 million. Losses sustained by the productive sectors, mainly agriculture and tourism, amounted to $EC306 million, thus dampening economic growth for 2010.

As a result of Hurricane Tomas, real GDP was necessarily revised downwards to a preliminary estimate of 0.7 percent in 2010. The lower rate of growth, mainly reflects the fallout from the loss of banana export earnings in the final two months of 2010, coupled with the decline in stay-over visitor arrivals during the same period, associated with the fallout from the impact of the hurricane.

It is noteworthy, that despite a severe drought, the devastation caused by Hurricane Tomas and the lingering effects of the global economic recession, Saint Lucia was the only country in the OECS, and one of the few countries in the wider Caribbean to achieve positive economic growth in 2010.

The finances of the central government are under severe pressure, as the Government endeavours to stimulate economic activity and respond to disaster recovery needs. Revenue collection in the fiscal year 2010/11 has strengthened relative to the previous year, mainly as a result of the initial economic recovery. However, the fiscal deficit is likely to increase in the current fiscal year, as a result of the need for increases in capital expenditure, as government seeks to rebuild the battered infrastructure.

While government will be seeking to fund much of the disaster recovery programme from grants and concessional sources, the need for non- concessional borrowing is inevitable. Government’s policy, however, is to limit exposure to commercial borrowing as much as possible. We are cognizant of the impact that large borrowings could have on the sustainability of the public debt, and will seek to manage the financing of the disaster recovery programme accordingly.

Ladies and Gentlemen, all indications are that the prospects for the economy in 2011 are much brighter.

Notwithstanding the setback from the hurricane, the recovery that we saw in 2010 will continue in 2011, driven by a significant turnaround in the construction sector, as several projects in both the public and private sectors will come on stream.

With the resources secured from the IMF, World Bank, and CDB, major rehabilitation works on the physical infrastructure will be undertaken. Roads, bridges, schools, wellness centres and hospitals affected by hurricane Tomas will be renovated and/or rebuilt.

In the 2010/2011 Budget address, the Government made a pronouncement on the implementation of a Constituency Development Programme which was geared toward identifying community development projects in consultation with parliamentary representatives and key stakeholders from the constituencies. Initially the Government set aside $EC5 million for that purpose. Immediately upon the passage of Hurricane Tomas, the Government consulted with parliamentarians to identify the most pressing needs of their respective communities. In this regard allocations of $EC50,000.00 were made available to each Parliamentarian with the exception of Soufriere/Fond St Jacques which received a total of $EC100,000.00. In addition approximately $EC4 million was made immediately available to village and town councils for the post hurricane clean up. A further allocation was made to the programme bringing the total amount to approximately $EC10 million. The projects identified under this programme will be implemented over the next few weeks.

While some of the public sector projects will be associated with the rehabilitation of the infrastructure as a result of the damage caused by hurricane Tomas, a number of construction projects previously planned have started or will get off the ground later this year.

The renovation and rebuilding phase of the Saint Jude Hospital Rehabilitation project got started in September 2010 and work will accelerate in the coming weeks.

The preparatory work on the redevelopment of Hewanorra International Airport is well underway and actual construction is likely to commence by July of this year. This project will stimulate the local economy, providing employment to hundreds of workers, particularly those in the south of the island. The Parliament has just approved legislation to implement the Airport Development Charge, a key element for finalizing the financing arrangements.

The private sector, is also investing in the future of this economy. A number of private sector projects are on the cards for commencement in 2011. Sandals will be starting a significant investment in 2011 with the expansion of the Sandals Grande hotel costing approximately $EC100 million. Other private sector activities include the third phase expansion of the Landings hotel and continuation of work on the Jalousie Sugar Tides in Soufriere. Work on a number of other smaller projects costing over $60 million will continue in 2011.

The tourism sector is expected to hold its own in 2011, as the economies of the main source markets themselves improve. Visitor arrivals, while unlikely to increase by the double digit figures we saw in 2010, is projected to grow in 2011, supported by the economic recovery in the major source markets, additional airlift by British Airways later this year, and our efforts to create greater visibility and awareness of Saint Lucia in the major source markets.

Government is mindful of the major challenges faced by other productive sectors of the economy, such as the agricultural sector. The year 2011 will be a difficult one for farmers as they recover from the devastating effects of the storm on their livelihood. As we have done previously, Government will support farmers in their efforts to rehabilitate their farms which were destroyed by the hurricane. We are confident that the necessary support will be forthcoming as we seek to prop up the rural economy at this critical juncture.

The Government has exerted considerable energy and effort in mobilizing the necessary financing for the recovery and rebuilding effort. Now that we have moved from the recovery phase to one of rebuilding, there will be ample opportunity for every sector to be actively and intimately involved in reconstructing our economy.

This is a singular opportunity: to correct some of the historical institutional inefficiencies, to diversify our productive infrastructure, to attract new and diverse investments, and to bring to life many of the development plans embedded in the National Vision Plan.

The process of rebuilding our nation MUST become part of the Saint Lucian psyche. Every major organization and institution MUST structure its own organizational plans within the overall national plan for reconstruction and development.

Thankfully, from the inception we benefited from a clear consensus on the reconstruction plan. Key stakeholders from the Private and Public sectors have been co-opted and are instrumental to the composition and the operation of the National Reconstruction and Development Unit.

While the National Vision Plan serves as the blueprint for the development of the country, Hurricane Tomas has brought into sharp focus the need to fast track some of the developmental plans outlined in the National Vision Plan. It is for that reason that the National Reconstruction and Development Unit has been conceptualized with a view to strengthening the institutional framework necessary to accelerate the implementation of the Vision Plan and related projects, under the guidance of the National Reconstruction and Development Taskforce.

At this juncture let me address the burning issue of Crime and Security, as it is the most critical element that underpins the success of any plan for reconstruction and development.

Over the last decade, our country has been confronted with a wave of crime and violence which is undermining both the rights of citizens to security, and the ability of the authorities to provide that sense of peace so that people can go about their daily lives with the confidence that they live within a safe and secure society.

We have seen our safety compromised in our homes, in public spaces, in our communities. Many of us live in fear, because criminal elements have preyed on the minds of our youth as they attempt to destabilize our country and create chaos where previously we enjoyed peace and tranquillity.

Our quality of life is therefore being undermined and our economic and social development, on which this government continues to work so hard to advance, is under threat.

Tonight, I wish to reiterate that this government will not allow our society and our way of life, to deteriorate to the extent that criminals feel they can operate with impunity. We must not, and will not allow criminal elements to dictate how we go about our daily lives, the things we do and the comfort of our families. We will not become prisoners in our own Country.

Those criminal elements will not and cannot win, because we will not allow them to win. They will be hunted down, they will be found, they will be prosecuted, they will be judged and will be made to pay the consequences for the crimes committed against our peace loving and law abiding people.

I have on previous occasions outlined some of the measures that we have been taking to address the security situation in our country, to ensure that our citizens are able to live safe, comfortable and peaceful lives.

To quote Confucius: “To put the world right in order, we must first put the nation in order; to put the nation in order, we must put the family in order; to put the family in order, we must first cultivate our personal life; we must first set our heads right.” My countrymen & women let us set our hearts right.

Tonight, I wish to outline the six basic elements of our strategy to guarantee the safety of our nation and its citizens in the short, medium and long term. These elements are:

i) We will continue to enhance the capacity and capability of the police, both in terms of hardware, training and numbers, to equip and empower them to discharge their duty of making our country safe through increased patrols, greater mobility and visibility.

ii) Government will strongly support the police in a campaign to vigorously pursue and to directly confront and disable criminal elements, wherever they may be. Nowhere must be safe for them; and this campaign will be sustained for as long as is necessary.

iii) We will continue to seek and obtain technical and material assistance from friendly governments, and collaborate with our regional and sub-regional neighbours to address crime and security issues including the protection of our borders.

iv) We will strengthen existing legislation and introduce new ones where necessary, in consultation with the judiciary and legal systems and seek the support of the relevant institutions in ensuring enforcement.

v) We will implement a programme of social reform and renewal targeting all areas, and particularly inner city communities and youth, and finally,

vi) We will engage in the widest possible consultative approach with all sectors of the society on strategies for confronting the crime and security challenges facing our country. This will include the convening of a Joint Session of Parliament which will be specifically geared to address crime and security.

In the last few months, this government has restructured and strengthened the senior management of the police, and have provided them with the necessary hardware and human resources to bolster their capacity to execute their mandate to protect the citizens of this country.

In addition, the Government of Israel has approved a request from the Government of Saint Lucia to provide assistance to the local police in the following areas:

Representation has also been made to the Government of the United States of America for additional training and logistics support.

The Attorney General and Minister for Justice has announced some of the areas where legislation will be strengthened or new legislation enacted. Some of these are now going through the Parliamentary approval process.

Much has been said about the social dimensions of crime, but let me reassure you that social reform has been, and continues to be, at the center of government’s development agenda. This agenda includes the implementation of various social programmes, employment generation, and youth empowerment.

Recently, I received a proposal from the Head of the Roman Catholic Church, Archbishop Robert Rivas, proposing an “Action for Peace” programme which I fully embrace. I look forward to working with the church and all other groups in the interest of removing this threat to our society. Let me thank and to congratulate the church for this initiative. Indeed, the business of resolving the crime problem is everybody’s business. From the individual, to the family, the schools, churches, to the business community, NGOs and civil society – we all must partner with government in our efforts to uproot and bring an end to this scourge. It is OUR responsibility and we must not fail in our resolve.

In the immediate term we must all rally together as a community and as a nation against all forms of criminal activity. Criminality is criminality and we must stamp it out once and for all. The government appreciates the difficulties and the dangerous nature of the mission that the Police Force has, to undertake the job at hand and calls for the corporation of all citizens in this regard. There will be those who will criticize certain actions; there will be collateral damage at times, but The Government will not rest until we have uprooted the criminal elements and restore peace and tranquillity to our country. I will not let up in my resolve to make this country a peaceful and safe society once again. Government stands completely together with all law abiding citizens and supports our police officers in their campaign to restore law and order in the land.

Ladies and Gentlemen, I am sure you will agree that the year 2010 was very challenging for many of us - as individuals, and for our nation as a whole.

This Government can boast of its record. We have been able to maintain economic stability in the face of an international recession, a debilitating drought and severe damage caused by a hurricane. We have followed the media reports of massive job losses and foreclosures in the developed world. We have heard the stories of industries folding up and economic upheavals.

In Saint Lucia we have been able to avoid these shocks, whilst safeguarding the gains we have made since achieving nationhood. Indeed, we have avoided massive lay-offs and job losses. Our ability to maintain stability during a period of very trying domestic and international challenges, has positioned our economy to benefit from any economic up-swing which might be expected as the world climbs out of this economic recession.

Fellow Saint Lucians, notwithstanding the recent challenges and adversities, we can face 2011 with confidence. As we embrace 2011 and the task of rebuilding Saint Lucia in a post-Tomas era, we must do so with confidence and pride in our determination to succeed and to exceed previously realized gains – both personally and nationally.

The Government will continue to provide strong and insightful leadership. Government is committed to creating an enabling environment within which each Saint Lucian can realize his or her hopes and expectations.

On behalf of my Cabinet and the entire Government, I wish all of you God’s blessings, hoping that we shall experience improvements in our social and economic status this year.