Options to Growth
By
Melanius Alphonse
The budget statement and its
failure to provide a clear vision for Saint Lucia coincides with yet another
call for a sustainable and integrated action plan, that would boost confidence
for Saint Lucia and usher future economic success.
The article “Government
debt policy too uncertain, says St. Lucia economist” Maxim Auguste, illustrated another practical option and a sound
knowledge base on developing economies and urge policy makers to “make it
happen.”
His
observation and option to microfinance
and social business initiatives are critical for Saint Lucia’s
growth and development that synchronize an integrated action plan.
Without an integrated plan of government,
business and the wider economy, Saint Lucia will not reach its goal to create sustainable jobs for the more than 24,000 Saint Lucians who are looking for work.
And with the continuing
expansion of the public service, high inflation and high deficits, Saint Lucia will continue to struggle.
For example with EC$32.6 million owned to Inland Revenue in Hotel
Accommodation Tax, government has missed
an opportunity to acquire equity on behalf of the people of Saint Lucia,
provide jobs and grow the economy.
More so, the options by government
to forego millions and discount outstanding payments to the Inland Revenue are
cause for concern – and on the verge of the implementation of 15 percent
Value Added Tax (VAT) coupled with the requirements to collect and remit taxes
to the Inland Revenue, the wrong message
is being sent.
Already, government and the VAT implementation team has not yet
explained what the indicators are and why the VAT threshold of EC$180,000 has
been affix.
In order to attain that threshold, the research team had to have come
up with business intelligence that a sizable number of the business community
in Saint Lucia makes over EC$180,000 a year.
If that is not the case then the threshold of EC$180,000 is high
and encourages creative accounting.
“In building opportunities
for our common future” the current 68.9
percent debt-to-GDP ratio as of March 31, 2012, means that Saint Lucia is not
competitive in the global market place.
As a result, to grow the
economy the platform upon which to operate and build must be re - establish.
That’s why the
options to grow Saint Lucia’s economy must comprise an affordable and
deep-seated module to re-position Saint Lucia’s future economic success.
The current economic pillars of - tourism, agriculture and financial
services are not captivating enough and a better composition of agriculture,
agri-business and manufacturing, micro enterprise (SME’s); and development
centers to attract foreign investors and financial services, infrastructure
development and tourism - needs to be reformulated.
The main components of
inflation are raising food and fuel prices, -therefore, the supply of
affordable transportation, waste management, infrastructure services, food,
water, and energy supply at a fair rate is a cornerstone of economic growth, that does not need government to
micro-manage business and the social sectors.
Even with the requirements
of business, government and social leaders who must deal with the deficit
problem and the economic growth problem at the same time must enact policy that
will encourage growth.
For Saint Lucia to
move forward, private enterprise must take the lead and government must roll
back to its appropriate place of limited role and not create monopolies and additional
bureaucracies such as STEP, YEP, NICE, SMILE, LEAP, and TIPPER.
In addition, further
discipline and clear timelines are necessary to help build value and confidence
in the Saint Lucian economy, such as;
Ø A reduction
in the size and cost of government; and any IMF renewal agreement;
Ø The
national debt of EC$2.2 billion and the cost of servicing the national debt
must be reduced;
Ø And the
creation of public – private partnerships, small business and development
centers are paramount.
Local and foreign investment
grows the economy over government investments - therefore the focus must be, to
encourage private sector strategic investments of capital projects that will
power the future engines of innovation and break out of low growth with
sustainable jobs.
In this regard;
Ø An
equitable tax policy; the ratification of the labor code and the rule of law
must apply;
Ø There is
greater need to make business development financing, capital financing and
equity financing accessible - as well as a clear plan to empower cooperatives
and pension funds, encourage greater local savings and Diaspora investment
options;
Ø The trade
deficit and the supply chain are unsustainable; in excess of EC$400 million – a
claw back of at least 30 percent is immediately required in order to have a
significant impact;
Ø Along with
provisions for a robust price control policy where business can compete fairly,
to offer the best prices within a reliable and sustainable system.
With regards to the
arguments and the status quo of business as usual, - the current course of
economic growth and development in Saint Lucia is not going to reach the goal
of sustainable jobs and economic growth.
That must change!
Fortunately, Saint Lucian
has fresh buds and a lot more expertise and ideas to offer towards a new
economic approach to change the current course.
The time to create sustainable
jobs and economic growth is now.
But time is critical.
Melanius Alphonse is a management
and development consultant. He is an advocate for community development, social
justice, economic freedom and equality; the Lucian People’s Movement (LPM)
critic on youth initiative, infrastructure, economic and business development.
He can be reached at malphonse@rogers.com
