Last week Tuesday, Saint Lucians receive some very good news about the performance of the economy.
According to Minister in the Ministry of Finance, Dr. Ubaldus Raymond, the economy grew by three percent in 2017 and unemployment stood at 20.1 percent at the end of 2017 – compared to 24.5 percent under the Saint Lucia Labour Party (SLP) administration.
Dr. Raymond credited the government’s improved fiscal performance to tax cuts, particularly the reduction in the Value Added Tax (VAT), by 2.5 percent, and foreign direct investment initiatives.
However, Opposition Leader Philip J. Pierre ripped through Dr. Raymond’s comments during a press conference days later, saying he predicts that the government’s fiscal position will deteriorate this year.
Pierre explained the reasons for this prediction. He said: “The government reduced VAT by two and a half percent, but we seem to forget that the Labour Party had already exempted people, businesses that earn less than $400, 000 from VAT. The government had already done that. That policy was already in place.
“Secondly, the government increased by over 50 percent the excise tax on fuel, so a reduction on VAT of two and a half percent was compensated by an increase in the excise tax. If the economy was performing as the minister is proclaiming, would that increase in revenue…? And by the way, I have not seen, we have no idea what is in the black box. The black box as for fuel, we are not sure what’s there. We have not been told.”
Moving close to his point, Pierre rubbished reports by Dr. Raymond that the increase of the debt to GDP ratio is slowing.
“So if the economy was improving as the minister is saying, if you reduce VAT by two and a half percent but you increase fuel by over 50 percent then the government’s revenue position should improve, and if the revenue position improves that should show itself in terms of the surpluses on the current position, etc. But again, I am predicting to you that the fiscal position of the government will deteriorate this year. This is my prediction and if I’m left to see whether that is true or not, and I am going to further tell you that the increase in public debt can never be less than one percent. I’m not going to use words like increase in decrease or decrease in increase, which the minister said. I am going to say fact, it cannot be less than one percent,” Pierre said.
Dr. Raymond said under the SLP regime, Saint Lucia became one of the “worst performing” countries in the Organisation of Eastern Caribbean States (OECS).
Pierre disagrees: “The Government inherited a solid framework, a solid foundation to which to grow the economy after the problems and the recessions from the year 2011, because you must recall when we came into government, the whole world was in recession. 2011 to 2012, there was an improvement. The then government implemented some policies and we got some fiscal stability. What they inherited was a country where there were surpluses on the current account, a country where the fiscal position was improving as said by their own documents and as verified by the ECCB. And I’m saying to you that this year there is going to be a further deterioration in the fiscal position which I predicted when I spoke at the last year’s budget.”