Letters & Opinion

The Budget And Our Great Expectations

ONE of the many take-aways from the 2015/2016 Budget Statement delivered by the Prime Minister and Minister for Finance Kenny Anthony month, is the sheer enormity of the challenge of managing small economies and societies like ours. To put it bluntly, “It Ain’t Easy”, especially in the culture of expectancy and dependency that pervades the country. Everybody, it seems is depending on Government for one thing or another. Businesspersons expect incentives for virtually everything they do; school leavers expect Government to provide jobs; farmers have grown to expect free inputs; motorists expect pothole-free roads. Everyone has great expectations of Government.

Of course, it’s impossible for government to fulfill every one’s expectations. Government may be able to provide a school place for every child, but only a few hundred of the 3000 graduates who leave school every year will find jobs. Farmers who enjoy free inputs at great cost to the Treasury, may find their feeder roads are not in good shape. Somebody, somewhere will be disappointed for one reason or other. That’s just the way it is. That’s the way it has always been and will always be, even in the richest countries in the world.

Saint Lucia’s economy has been in recession for some time. Now that the crutches of preferential market access, concessionary (cheap) financing and other forms of external support have been withdrawn, the weaknesses in its DNA – its ultra-thin domestic market, its heavy dependence on strategic imports and its susceptibility to external shocks and natural disasters – are presenting severe governance challenges. These chronic weaknesses will never be fully overcome. But as Singapore has shown, through sound governance and much tough love, the economy can become resilient. But it must first be stabilized, and neither stability nor resilience will come overnight.

As the PM admitted in his address:
“…building a sustainable and resilient economy is a long-term process. Many expect the economy to turn around overnight and produce instant results…to be sustainable, growth must be anchored on a solid foundation. If we do not take the time now, make the hard decisions and build this foundation, then growth prospects will remain volatile and uncertain, subject to the winds of external shocks and natural disasters.”

That’s the reality. But this budget does not suggest the PM is heeding his own advice. Rather than manage the expectations of the people, this budget and others before it delivered by both administrations have only inflated the people’s expectations with promises that cannot possibly be met, even in the best of circumstances. It’s okay to give a people hope but hope must be tempered with realism.

In this writer’s view, every udget statement should contain at least one of the following caveats: (1) a budget is nothing more than a statement of Government’s best intentions; (2) all of the money is not readily available for Government to do everything it intends to do within the financial year; (3) getting the money will take time, as will designing and implementing projects on which the money will be used; (4) even when is money is sourced – as shown with Taiwanese funding for St. Jude Hospital – delays can occur in getting that money to a project.

In such a culture of realism, the PM’s estimate of 1200 jobs being created on the planned Sunwing hotel project at Smugglers Cove would not be made in the way it was. No construction project starts up with that many workers. And in this case, the early demolition work is likely to involve more the use of equipment than manual labour. And all of us should pray that this project does not suffer the same fate as the Paradis project. Indeed, based on the Paradis experience, the PM might have reminded Saint Lucians that with projects of that nature there are no guarantees things will go smoothly from start to finish.

Similarly, mention of the Administrative complex building in Vieux-Fort and the conversion of the former Golden Hope Hospital into the future office for the Prime Minister (estimated to cost about $100 million) should have been tempered by some indication of the status of these 2 projects and the real prospects of their commencement in the 2015/16 financial year. Have the designs of the projects been completed? Is the money available? Has the tender process been completed? Have contractors been recruited?

The PM was right to encourage Saint Lucians to take a long-term view of things. But with an election constitutionally due next year (2016) the PM knows full well the electorate couldn’t care a rats behind about the long-term. It’s left to be seen whether short-term electoral considerations will undermine all of the hard work the government has done to improve its fiscal and current account ledgers. As the election date draws ever nearer to him, will the Minister of Finance ignore his own concerns about the high cost of borrowing and the high interest payments on existing debt (about $145 million) and resort to more loans to finance current spending on vote-catching social programs?

The 2015/16 Budget statement hints at the answer to this question. Consider for example, that the money set aside for STEP ($3.5 million) and NICE ($20 million) programs far exceeds the paltry $500,000 set aside for a Productivity and Competitiveness Fund aimed at stimulating innovation, productivity and competitiveness. In this writer’s view this initiative and the ICT Business Incubation and Training Fund are arguably the best of all the initiatives mentioned in the Budget. These are the initiatives most likely to promote long-term economic growth by igniting the start-up of new business and encouraging the expansion of existing businesses. There is no other known prescription for economic growth.

This year and the next will say a lot about the prospects of Saint Lucia achieving long-term economic resilience. Sound governance will be required more than ever. The task will be made much easier if the people’s expectations are not raised unduly and if they are given a brutal assessment of the magnitude of the challenges that lie ahead, without the smoking mirrors of short-term political gimmickry.

The challenge of governance comes down to this: tempering the people’s expectations but unleashing their innate potential; and governing as if the future really matters.

By The Virginian

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