PM calls on everyone to sacrifice and prevent economy from collapsing into debt trap

St. Lucia News Online

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Prime Minister Dr. Kenny D. Anthony

In his much-anticipated national address on public service wage negotiations and the state of the economy Sunday night, Prime Minister Dr. Kenny Anthony called on St. Lucians to “sacrifice collectively” and for trade unions to fore-go any significant salary increase for 2010-2012, saying any major wage increase will balloon the budget deficit, resulting in cuts in government subsidies and the size of the public service.

Instead of a wage increase, Dr. Anthony said government is offering every public officer a $1,000 bonus “until such time we can be in a better financial situation”.

“We believe there is greater equity in this as persons who are at the lower grades will be the greatest beneficiaries. For instance, a Grade 3 officer would receive a bonus equivalent to five percent of his or her annual salary.  This proposal would equate to about $10 million which the government would have to source from bonds: which is, as I have explained, borrowed money,” he explained.

The prime minister explained that the current proposal by the Trade Union Federation for a wage settlement will increase the government wage bill by about $55 million annually for every year in the future. He said the back pay associated with this proposal would cost about $40 million, leading to a worsening of the current deficit of close to $100 million for this financial year.

“It also means that for every ensuing year, government would have to borrow an extra $55 million just to meet the increase. This is clearly a path that a responsible government should not take,” he said, adding that “even with the offers on the table from the Government Negotiating Team of a lump sum payment, which is equivalent to a one-off three percent increase, government would still have to borrow an extra $10 million just to pay wages”.

He said “if we agree on a wage settlement higher than what our country can afford then we would have to immediately reduce or eliminate a number of programmes to fund this new expenditure”.

“We still have the chance to avoid going to the IMF but this will involve some very tough decisions. It will involve rebalancing our expenditure and taking steps to ensure that we borrow only for high-return capital projects.  These are the realities that face us. That is why I urge that we need – all of us – to sacrifice collectively.”

He further explained: “The subsidy on petroleum would have to be reviewed and we may have to move to a full pass-through mechanism where fuel prices increase every time the price of oil goes up on the world market. The government subsidies on rice, sugar and flour would have to be reviewed. VAT would have to be imposed on water and electricity and a range of other items that are now VAT-exempt or zero-rated.

“We would also have to revisit the size and configuration of the public service to see where we can obtain the savings required to finance the salary increases that are being requested. These are the steps that government would have to consider in attempting to guide the country away from the looming fiscal crisis. In fact, even without the impact of the union-proposed wage increases, there is still a need to cut back on a number of activities because we simply cannot continue to borrow at the rate of the past three years.

“I wish to state categorically that our Government does not want to reduce spending on education, health services, national security or social safety nets to assist the poor and vulnerable in order to pay higher wages to public officers. Neither do we wish to reduce the size of the public service and increase the pool of unemployed people in our country at this time.”

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6 comments

  1. Kenny I need you to cut down on the number of ministers, permanent secretaries and consultants; useless foreign offices; so called "social programmes" being used as political favors for supporters. You trying to scare St. Lucians so they can turn on the TUF. Kenny you want us to believe that tough economic times only started after you took office. Pissing in our eye and calling it rain...smh

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  2. You ignorant people trying to make the economic state of the country political. So what if SLP promised better days while in opposition? The reality is that there is no money in the treasury. Should the better question be how could a new government inherit such a mess? Those small minded UWP supportes need to be more responsible with their comments. Probably if we did not put a man with a GED certificate to run our country we would be better off now?

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    • John Doe?

      Who is ignorant? You or those of us who are speaking out.

      Kenny was one of the biggest critics of the last government. He was behind the curtain putting pressure on King to give the TUF a 14 percent hike and even greater. He knew very well that things were not good and all over the world economies were sinking.

      You expect us to have any sympathy for a wise arse who did not care then if the economy went down the tubes? Take the red from your eyes and see St Lucia for once!!!

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  3. Kenny fool every labour supporter. Those who are getting their cut will continue supporting him, but the others that is feeling the pinch is as angry as hell,well I want you all to please forget about the squeeze and think of bitter days ahead because all I used to hear was Enrouge Better Days Ahead. Ah Ha a bea me lea pwe eck pay jel zot.

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  4. Kenny is nothing but a political jackase. How can a PM make a fool of himself like these.

    This is frudulent what he has done. To campaign on Better Days when you knew all along you had just left government five years before, and things were already not good, should be very disturbing to a whole lot of St Lucians this morning.

    Kenny did not tell us anything that we had not already known. This speech as far as I am concern had all the elements of a con artist hoping for another way around the people of St Lucia.

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  5. This is ludicrous to say the least. Here is a guy under the SLP manifesto promised to inject $100M into the economy - in his first 100 days in office. Has the Lucian ppl forgotten about this? Hold this freaking crook accountable.

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