PM Allen Chastanet presented his 2021/2022 election budget to Parliament during the week of April 13th. To judge this administration’s performance, a comparison between Saint Lucia’s economic numbers and other Caribbean islands will be done. This would allow us to judge the economic “leadership” of the current administration more accurately.
2020 GDP Performance
The PM stated the following: “Consequently, Mr. Speaker it is no surprise that the GDP in the Eastern Caribbean Currency Union (ECCU) is now estimated to have contracted by 14.0 percent in 2020. Mr. Speaker, in line with the deep contractions in global and regional economic activity, Saint Lucia’s domestic economy in 2020 is estimated by the Central Statistical Office (CSO) to have contracted by 20.4 percent.”
COVID-19 decimated all the economies across the world. However, due to the current administration policies and economic management the effect on Saint Lucia was significantly worse the average of the ECCU (-20.4% is worse than -14%). Furthermore, the average economic contraction for the ECCU without Saint Lucia included would be roughly -11% with Saint Lucia being close to 10% WORSE than the average of the remaining ECCU islands. Additionally, if the ECCB data was used then difference grows to about 15% due to a contraction of 23.8% from the ECCB data as opposed to a 20.4% contraction reported by Saint Lucia’s CSO.
The 2020 GDP contraction clearly shows that the current administration has performed worse than the rest of the ECCU despite their claims of good economic stewardship.
2021 GDP Projections
The PM stated “An expansion of the global economy of 6.0 percent is now expected for 2021 with growth ranging between 3.3 percent to 6.4 percent for advanced economies including, the US, UK, Canada and the Euro-area. The IMF World Economic Outlook for the Caribbean region projects GDP growth of 3.3 percent for 2021 and 11.1 percent for 2022.” These numbers were all quoted from the recent publication of the IMF World Economic Forecast published in April 2021. Interestingly, the PM did not include the IMF’s April 2021 projections for Saint Lucia which were 3.1% for 2021 and 10.7% for 2022.
Yet again, the 2021 GDP projected growth shows that Saint Lucia is below the average of both the global and Caribbean economy. This is further evidence of the below-average economic leadership of the current administration.
Debt to GDP
The PM stated “The pandemic-induced contraction in economic activity in conjunction with disbursements from rapidly negotiated and secured concessionary debt from regional and international financial institutions (such as the IMF, World Bank, ECCB, EIB and the CDB) resulted in an increase in the debt-to-GDP ratio estimated at 86.5 percent at the end of 2020. An estimated 75.0 percent (or ¾) of the increase in the debt to GDP ratio was due to the sharp contraction in GDP in 2020. The remainder of the increase emanated from an increase in the public debt stock largely related to the pandemic. Mr. Speaker it is important to note that the increase in Saint Lucia’s debt-to-GDP ratio is similar to what occurred in the ECCU region. The debt to GDP ratio for the ECCU as a whole registered an average increase from 67.2 percent in 2019 to 85.6 percent in 2020. An even larger jump was recorded in another OECS State which climbed from 83.1 percent in 2019 to 117.1 percent in 2020.”
The Saint Lucian PM used the debt to GDP ratio for the entire ECCU from the dashboard data numbers. Eastern Caribbean Central Bank (ECCB) showed that there was an increase in debt to GDP ratio of 18.2% across the ECCU islands. The ECCB Dashboard data shows that Saint Lucia’s debt to GDP ratio increased to 90.85% from 61.6% — an increase of 29.85% in one year. The PM did quote that there was an even larger increase (34%) from Dominica but failed to mention that Saint Lucia had the 2nd highest debt to GDP increase in the ECCU and that numerous other islands such as Grenada and St. Kitts had debt to GDP increases of less than 10% from 2019 to 2020.
Once again, Saint Lucia’s economic numbers for the Debt to GDP ratio increase are among the worst for our ECCU peer group.
The PM stated “We are certain that the unemployment rate which had already been reduced to 16 percent, would have been reduced further. As we indicated with many of the capital investment projects, the roads, the airport, St Jude, the improvements in healthcare and the continued investment in education, we are certain that unemployment would have dropped to single digits.” This is certainly wishful thinking as current numbers indicate “Saint Lucia an unemployment rate of 22.1%, the highest in the Americas. With between one-fifth and one-fourth of the country’s population being unemployed, the small Caribbean island nation has the dubious distinction of being the country with the highest unemployment rate in the region.”
The very high unemployment is evidence that relative to the rest of the Americas the current administration has failed to manage Saint Lucia’s economy effectively during the COVID-19 crisis.
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