HERE is a prescription for rescuing our economy:
Growth is key. Government policy should aim to boost GDP growth. This will entail removing structural impediments to growth and improving the targeting of capital spending (20).
One of the challenges to growth is that rapid wage growth coupled with low productivity growth has eroded competitiveness (24).
Structural reforms aimed at enhancing growth will include the improvement of the investment climate to attract investment, improving competitiveness, and improving education and skill sets for increased productivity (26).
Capital spending on infrastructure development will target projects that will facilitate export growth such as the North-South link road network, the South Water Dam, Castries Re-development, and Investment in Renewable Energy (26).
The current environment requires consolidation and streamlining of the capital budget, as 37% of the capital budget is now spent on maintenance (31).
Government should aim to maintain fiscal sustainability.
Current expenditure must be kept flat, the wage bill must be contained, and a review undertaken of generalized food and fuel subsidies (30). Means testing should be introduced to better target subsidies to the poor and reduce the cost of transfers (35).
The overall deficit should be reduced through fiscal consolidation while debt must be redirected on a more sustainable path (20). The overall deficit is to be reduced by EC$100 million (34).
Fiscal adjustment will be difficult due to the current composition of government expenditure, with a large percentage of recurrent expenditure distributed to education, health and security (teachers, nurses and policemen) (33).
If on reading this you were to conclude that it was taken from the UWP manifesto or that they are Prime Minister Chastanet’s recommendations for the economy, it would be understandable, but you would be mistaken. The recommendations in (1) and (2) above are extracted from a presentation to the Chamber of Commerce by Dr. Reginald Darius, Permanent Secretary in the Ministry of Finance, delivered to the Chamber on February 27, 2013. (The numbers in brackets refer to the PowerPoint slides). Dr. Darius had been specially engaged as Permanent Secretary, on contract, by the Labour administration in August 2012.
And if there is any lingering doubt that these prescriptions for our economy were coming from a Labour administration, here are extracts from Dr. Anthony’s Budget address of May 24, 2013:
“…economic growth is the key to resolving many of our developmental and social problems” (pg. 30).
“To create an environment to facilitate growth, we must remove the structural barriers to growth; enhance the investment climate and business environment while achieving macro-economic stability through fiscal consolidation” (pg. 30).
“… (public sector) wages and salaries is the major expenditure line in the recurrent budget…and represents almost 13% of GDP. Among ECCB member countries, it has been agreed that an ideal ratio…should range between 9 and 10 percent. As such, to achieve the ECCB guidelines would require reduction of over $100 million in the category of wages and salaries” (pg. 93).
“The current model of the public service renders it very difficult to reduce the public service by this magnitude” (pg. 93).
“An Action Plan for improving productivity and competitiveness in both the public and private sectors” will be completed by the National Productivity Council, and “selected pilot projects to boost productivity and competitiveness” will be undertaken (iii, iv, pg. 33).
“…we have to review the level of subsidies provided by the central government. First we propose to eliminate the subsidy on white sugar in its entirety”, (and) “Secondly, we will effect a 50% reduction in subsidies on bulk rice, flour and brown sugar…” (pgs. 95-97).
“However, to minimize the impact on the poor and vulnerable, the Government will increase the basic amount provided through public assistance by roughly 25%”.
What the above demonstrates is that there are clear prescriptions for the path to our economic recovery, and that the identical prescriptions have been recognized and articulated first by Dr. Anthony, and now by Mr. Chastanet. As we see, those prescriptions have nothing to do with the colour of the T-shirt which the Prime Minister wears, or whether he is a businessman or a lawyer.
To further quote Prime Minister Anthony in that 2013 Budget address as he referred to the proposed structural reform agenda: “The unvarnished truth is that the time has come for us to face reality, unpleasant as it may be”.Unfortunately, Dr. Anthony then proceeded to ignore his own advice and, in February 2016, Dr. Darius accepted alternative employment overseas.
But the time has come, and passed, for us to face that reality to which Dr. Anthony referred. And those who attempt to achieve political gain by encouraging us to continue to ignore reality not only inflict grievous economic injury to our country, but also display an embarrassing degree of selfishness. And that is to put it mildly.
It’s time to take that chini twèf!
PS: Chini Twèf is a folk remedy for pain, among other ailments, which has a base of crushed caterpillars soaked in strong rum.