It’s Possible To Have Both.
The front-page headline of The Voice of 16th May, 2015 – “RIGOBERT FLAYS P.M. – Calls Him “Enemy of the People”, caught my attention.
For the first time in recent years I was able to watch the Budget Address as well as many of the contributions by Parliamentarians.
The presentation by the Leader of the Opposition, Gale Rigobert, addressed in part the record of the Minister of Finance who has presided over three consecutive years of economic contraction or negative economic growth.
I listened to the many attempts at rebuttal, but was not persuaded.
In summary, the response of the Administration to the fact of three consecutive years of negative growth is that the parlous economic circumstances of the country have made it necessary for the Minister of Finance to implement a self-imposed programme of structural adjustment in order to stave off an IMF Programme that would inflict even greater economic hardship on St. Lucians.
It was posited that three consecutive years of negative growth were the inevitable consequence of the imposition of the programme of structural adjustment fashioned by the Minister of Finance and that the economic hardship that the people of St. Lucia have had to endure as a consequence is a small price to pay to stay out of the clutches of the IMF and therefore to maintain the nation’s economic sovereignty.
I wish to point out that economic contraction and negative growth are not an inevitable consequence of the imposition of structural adjustment programmes whether self-imposed or otherwise. In fact, it is possible to carry through a rigorous economic adjustment strategy and yet record economic growth.
The circumstances that led the current Minister of Finance to initiate a programme of structural adjustment are not new in the annals of St. Lucia’s economic history. Indeed, there is an almost exact parallel in the period 1982 to 1987.
When John Compton came to office in 1982, the country faced extremely difficult economic conditions arising from among other things, the cost of recovery from the ravages of Hurricane Allen and the spiralling cost of Government operations brought about by a 60% wage and salary award to the public sector in the first Quarter of 1982.
Indeed, so grave was the situation, that the prospect of having to enter into an IMF Programme loomed large. It is in this context that John Compton made his famous declaration that two male crabs could not live in the same crab-hole and that under no circumstances would he allow St. Lucia to fall into the embrace of the IMF.
His senior economic advisers were therefore tasked to prepare a rigorous structural adjustment programme combined with a growth strategy. The structural adjustment and growth strategy that was formulated was subsequently approved by the Cabinet and implemented over the period 1984 to 1987 with tight control being kept over public sector finances even beyond 1987.
Suffice it to say that St. Lucia stayed out of the embrace of the IMF and steered itself to a position of fiscal stability.
In the context of the recent Budget debate, what is particularly instructive is that throughout the period of structural adjustment during 1984 to 1987 and beyond, positive growth rates were achieved. In addition, the trend of current account deficits was reversed and both current account surpluses and overall surpluses were generated.
Figures that represent St. Lucia’s economic performance for the period 1980 to 1991 are presented below.
It is clear from these figures that economic adjustment programmes do not lead inevitably to economic contraction and negative growth.
It should be apparent that in the current economic environment, strong growth in the Tourism Sector is not enough to drive the overall economy to positive economic growth. Notwithstanding the commendable performance of Minister Lorne Theophilus and his team of committed and experienced public servants, the record tourism numbers have not led to a reversal of the trend of negative growth.
I daresay from listening to his presentation that Minister Theophilus has benefited from the sage advice of his father, an outstanding public servant in his day, that, the most effective Ministers provide strong and clear policy guidance, maintain constant oversight and vigilance, but do not get overly involved in the running of the day to day affairs of their Ministries.
In the quest for positive economic growth, and notwithstanding the competent presentations of the respective Ministers, more aggressive strategies should be implemented for the infrastructure, agriculture, manufacturing and services sectors of the economy while efforts to attract foreign direct investment should be re-doubled.
By Ausbert d’Auvergne