Is there finally hope for business in Saint Lucia?
St. Lucia's economy is in dire need of a jumpstart. That much was clear throughout last week in discussions that extended beyond press conferences right on through to radio and television shows, and everyday conversation. There seems even now to be a heightened sense of urgency, particularly concerning the prime minister's revelation last Monday that his administration had run into unanticipated road blocks, placed by his predecessor, among them calculated last-minute contractual arrangements with well-known SLP stalwarts in key positions. A little over three months after being elected to office, the prime minister's frankness was admirable; still, he painted a particularly depressing picture of Saint Lucia's immediate economic future.
Last Thursday evening TALK host Rick Wayne sat down with Senator Ubaldus Raymond, Minster in the Ministry of Finance, to discuss what the Chastanet government planned to do about the nightmare it claimed to have inherited. Raymond had just come out of a press meeting with the Caribbean Development Bank's Director of Economics, Dr. Justin Ram.
“People have been suffering for so long,” stated the host at the start of the discourse, “they expected automatic relief within days of your coming into office.
"Something that particularly concerns me is the official silence regarding the number of businesses that have gone under in the last four or five years. There is not a business in this country that is not on the brink. Very few that have not been forced to place cherished staff on rotation . . . but we don't hear the politicians addressing that.”
One day earlier, while talking on-air with NewsSpin's Timothy Poleon, Wayne had claimed: “Even the drug pushers are on the breadline. People cannot afford anymore the relief they once got from cheap booze. Most of that is attributed to bad politics, self serving policies . . .”
Asked about the public perception that the government did not know, or seemed not to care, about the difficulties confronting business people, the minister responded simply: “We are quite aware.” Then he put in a plug for his boss.
“That is the advantage of having a prime minister like Allen Chastanet,” he said. “He comes from a business background so he understands what business people go through on a daily basis. If all the country's businesses were to fail and shut down . . . the government could not survive. And no one knows this better than the prime minister.”
“Which is why I don't understand the official attitude,” said the talk-show host. “It's like letting the golden goose die of hunger while you party.”
The topic switched gears to the deadly effects of VAT on life in Saint Lucia, and the remedial reductions promised by the current government while campaigning for office.
“Sometimes the situation seems irreparable to me,” Wayne said. “You give the promised relief from VAT but that relief is going to cost the government . . . or, should I say, the people. Like giving with your right hand and taking back what you gave with your left.”
The finance minister responded: “We have myriad fiscal policies. We have other things to do. We will do other things besides reducing the VAT. We have other fiscal policy measures to mitigate against the possible reduction in VAT revenue. I said possible, because sometimes less provides more.”
He elaborated: “If nothing else is done, you're in trouble . . . I said possible also because the reduction in VAT could spur even more economic activity. Through that heightened economic activity, more revenue will be collected. That's what we're expecting to see happen. I should say we're not really depending on the consumer to boost spending through the reduction in the VAT rate; we are engaged in other fiscal consolidation, other ways of raising revenue, within the system. Being more efficient, having more efficient customs departments . . . having a more efficient Inland Revenue department.”
At that point, the real question was: How much faith could really be put into the word “efficiency” which has been used by every administration?
“VAT is supposed to be efficient,” the finance minister said. “That's how it was sold. A broad-based tax that is simplified and efficient. The question is: Is the current VAT model efficient? It's not. I'm saying . . . so we must make it efficient. Let us simplify it.”
As the conversation winded down Dr. Raymond cited some recommendations by the CDB's Dr. Justin Ram.
“There needs to be fiscal consolidation to ensure that the debt profile of Saint Lucia is on a sustainable trajectory,” Ram had told the media. “We want to emphasise that the reforms that will really allow the business community to thrive are very important. The private sector really needs to become the engine of growth here.”
The finance minister promised Prime Minister Chastanet will be addressing the nation in October.
The Finance Ministry’s Dr. Ubaldus Raymond appeared on TALK with Rick Wayne last Thursday, shortly after his government had met with the CDB’s Dr. Justin Ram.