Analysis of 2016 UWP Manifesto — The Economy
The next election is constitutionally due within 2021, and the current administration’s 2016 term is in their final months. UWP implores in their 2016 Manifesto: “This Manifesto is a written commitment by the UWP to the people of Saint Lucia to diversify and grow the economy and to empower the people to participate fully in the process; with the clear understanding that they will receive their rightful share of the wealth that is jointly created in Saint Lucia.” Let us examine whether this government was able to fulfil the commitment that they made to people of Saint Lucia.
(Please note that references are linked within the article and depicted as the underlined words.)
Fiscal Contraction
UWP Manifesto: “Achieve an accumulated economic growth rate of at least 12 percent in the first term.” “Set ceilings or floors on revenues with the aim at boosting revenue collection and/or preventing an excessive tax burden.”
This government has not set any revenue targets, and the GDP is forecasted to be 16.2% LESS in 2020 than it was in 2016. The economic year 2021 is forecasted to still be 9.2% BELOW the 2016 GDP; clearly indicating that this government has failed at boosting revenue collection. This would be the first government in Saint Lucia history that will end up with a lower GDP at the end of their term of governance.
(Editor’s Note: COVID-19 was certainly the major factor to 2020 and negatively affected economies worldwide. However it is important to note that the numerous tourism bets by this administration such as Pearl of the Caribbean meant that the downturn faced by the Saint Lucian economy was projected to fall an average of 10% MORE than the average of the Eastern Caribbean Currency Union. (From the Governor: “Our Currency Union is experiencing its largest shock, on record, with a projected decline of 16.2 per cent this year.”; From the forecasted spreadsheet on ECCB’s website Saint Lucia has a projected decline of 26.4%). Why is this significant decline in Saint Lucia’s GDP for 2020 considered “acceptable” even if it is much worse than our neighbouring ECCU islands as suggested by numerous commentators here?)
Escalating Debt
UWP Manifesto: “Reduce the Debt-to-GDP ratio by at least five-percentage points in five years; and seek legislation for a sustainable ratio thereafter.”
From the most recent Debt Bulletin, Saint Lucia’s debt as of June 2020 is $3.553B which equate to a 84.2% Debt to GDP ratio (using the Saint Lucia’s forecasted GDP). This is a significant increase of 60% Debt to GDP ratio from the 2019 Debt Bulletin. Even the pre-COVID Medium Strategy Plan (page 80–81) projected a significant increase in the debt to GDP ratio. The growing government debt will adversely impact St. Lucia’s medium and long-term economic growth of Saint Lucia. These large increases in debt by the current administration will lead to much higher taxes, lower future incomes, and intergenerational inequity.
Ease of Doing Business Deterioration
UWP Manifesto: “Create the best possible environment for conducting business in Saint Lucia”
As can be seen from the Ease of Doing Business Ranking for Saint Lucia, this current administration has presided over a continuous deterioration in the ranking of Saint Lucia. This is directly contrary to the manifesto promise and perhaps why “investments” just as OJO Labs require the government to provide income support to private companies. “Is Government contributing to the income of Saint Lucian young people in this cutting edge industry? Yes! Is Government making a sustainable investment with Ojo Labs? Yes!”
Is our business environment so mediocre that this government needs to PAY investors to come to Saint Lucia? Has there been any analysis to determine whether this was a beneficial investment to the people of Saint Lucia?
The graph below shows Saint Lucia’s Ease Of Doing Business, according to World Bank annual ratings over the last four years.
Stubbornly High Unemployment
UWP Manifesto: “Reduce the overall level of unemployment to no more than 15%.”
Even with this government paying employers such as OJO Labs to hire persons, they have not even come close to achieving their employment targets. Unemployment remains stubbornly above 20% as of 2019 figures; likely to be much higher in the post-COVID-19 world with the significant contraction in the tourism industry. From the following data
· St. Lucia unemployment rate for 2019 was 20.71%, a 0.17% decline from 2018.
· St. Lucia unemployment rate for 2018 was 20.88%, a 0.19% decline from 2017.
· St. Lucia unemployment rate for 2017 was 21.07%, a 0.19% decline from 2016.
After the significant GDP contraction in 2020 due to COVID-19, this administration will have a higher level of unemployment at the end of their 2016 term than at the beginning despite the massive increase of the national debt. This is directly counter to the promises in the last election where the current Prime Minister indicated that as a business owner he will be able to create jobs.
Cheapest Passport in the World
UWP Manifesto: “Restructure the Citizenship by Investment (CIP) legislation into an independent body providing the highest level of governance, compliance and accountability. Revenues from the restructured CIP will be allocated towards debt reduction, infrastructure, health and education.”
This administration promised major changes to the CIP programme which they did by launching the world’s cheapest passport while claiming they are focusing on quality rather than volume. They did not create an independent body created to restructure CIP unit and provided no details on how revenue from CIP passport sales is used. In contrast, Grenada has a very detailed quarterly report of their Citizen By Investment Statistics. This includes the amounts spent by the treasury and gives significantly more details than CIP Saint Lucia. No one knows how many COVID-19 bond passports has been sold by this government or what this revenue is being used for.
Failure to Reduce Taxes
UWP Manifesto: “Increase the personal income tax threshold to $25,000 “
“Reduce corporate taxes from 35 percent to 25 percent within three (3) years.”
From the IRD website “This tax is levied only on income over $18,400 per annum received by resident or non-resident individuals who earn income in St. Lucia.” It was announced in the 2019 Budget Address that the personal allowance would be increased to $23,000, though it is unclear whether this ever became effective, and if it did then it is a sign of mediocrity that it is not updated on the official government website.
From the IRD website “Corporation tax is chargeable on all the profits of a resident company. Profits that accrue directly or indirectly to a non-resident company carrying on a business through a permanent establishment in St. Lucia are subject to corporation tax at 33.3%.” Yet again the current government misled the public and failed to deliver on promises they made to the population of Saint Lucia.
The Saint Lucian Analyzer, and by extension the people of Saint Lucia, await the manifesto of both parties for the upcoming election and would like to ensure that this contract with Saint Lucia is fulfilled by the winning party.
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