CDB projected growth is welcome relief for St Lucia
By Melanius Alphonse
News Americas, BRIDGETOWN, Barbados, Fri. Feb. 20, 2015 The Caribbean Development Bank (CDB) held its annual press conference on Wednesday in Barbados. The focus of the conference was a review of the economic performance of the region, particularly CDB’s borrowing member countries (BMCs) for 2014 and forecasts for 2015; and a review of the Bank’s performance and key developments in 2014.
While Saint Lucia celebrates its 36th year of independence on February 22, the 100th anniversary of Sir William Arthur Lewis birth is likewise celebrated as the founding president of CDB.
Sir Arthur holds the distinction of being the first West Indian to be appointed principal of the University College of the West Indies at Mona; the first vice chancellor of the University of the West Indies; and Saint Lucia and the Caribbean’s first Nobel Laureate in economics.
“It is notable that the CDB’s ongoing efforts to mainstream gender; build institutional and human resource capacity; improve macro-economic management, and more recently, to help BMCs to establish energy independence by exploiting their abundant renewable energy resources are all built on the same poverty reduction platform that inspired Sir Arthur’s development work many years ago,” CDB president, Dr Warren Smith, said.
CDB estimates Saint Lucia economic performance of -2.3 in 2013; and -2.7 percent in 2014 is projected to recover to 1.1 percent in 2015.
In more good news on the eve of independence in Saint Lucia, the CDB on Thursday, December 11, 2014, approved a loan of US$19.675 million for the redevelopment of the Vieux Fort water supply system, and to further provide a grant to bring reliable supply of potable water to over 19,000 people, a project that will cost an estimated US$24 million.
The CDB will also provide a grant of US$335,000 to assist in financing consultancy services for capacity building of the Water and Sewerage Company Inc. and the Water Resource Management Authority; and for evaluating the impact of the project on gender relations in Vieux Fort and its environs. The Vieux Fort water system serves Vieux Fort, Laborie, and their environs. The communities served consist of approximately 8,600 households, with an estimated population of 19,500, as well as institutional and commercial enterprises in Vieux Fort and the surrounding areas.
The CDB 2014 Caribbean economic review and outlook for 2015 indicates Saint Lucia’s growth percentage in stay-over arrivals 2014 at 6.1 percent and cruise passenger arrivals 8.0 percent from 3.9 percent in 2013. The external performance and strengthened recovery in tourism, travel receipts and continued inflows of remittances have positively influenced and provided adequate cover.
“2014 partly reflected the impact of the so-called Christmas Eve Trough just before the start of the year, which exacerbated pre-existing, chronic weaknesses in critical sectors. In St Lucia, the impact of the storm on agriculture, together with a continuation of declines in construction, distribution and manufacturing observed in most years since 2009, offset relatively strong growth in tourism.
“The recovery in tourism should have further spin-off benefits for construction and other real sector activity, however, Saint Lucia is recording 25.8 percent unemployment. This is a steady incline from 13.9 percent in 2007. The current debt to GDP ratio is reported at 75 percent,” the Bank said.
In keeping with the regional outlook and policy priorities, the CDB continued, “Sustained poverty reduction and improved standards of living will require much higher rates of economic growth than 2 or even 3% going forward. Growth will also have to be more inclusive and sustainable, not just faster – and, critically, it must create jobs.”
Indication of this is feasible in the CDB estimates and projections for Antigua and Barbuda 4.2 percent, Guyana 4.3 percent, Haiti 3.7 percent, St Kitts and Nevis 4.5 percent, Suriname 3.7 percent and the Turks and Caicos Islands 3.2 percent.
However, notwithstanding the ongoing recovery and positive outlook for 2015, the CDB noted, the need for further fiscal consolidation and greater savings means that much of the impetus for growth and job creation must come from the private sector, including through foreign direct investments (FDI).
Private sector will also have to shoulder more of the financial burden of investing in the region’s social and economic infrastructure. To encourage this, the CDB said it is rolling out new facilities to support BMCs that are increasingly turning to public-private partnerships (PPPs).
This call to action and recommendation is timely as the government of Saint Lucia is currently considering the establishment of a global residence and citizenship programme, with four investment options, namely investment in an existing or new business; investment in real estate; contribution to a National Development Fund; and investment in government bonds.
The CDB is urging member states to place priority on fiscal reform and to undertake structural reform where necessary in order to ease debt burdens as this affects credit rating and investor perceptions of the region. And to create the kind of legal and regulatory environment and broader governance framework that can attract investment, and within which the private sector can truly become the main engine of growth.