Since prime minister Allen Chastanet admission that “the country is broke”, I have had this very sick feeling. From being the envy of the rest of the Caribbean, Chastanet has made us the laughingstock.
Many Caribbean and international leaders have taken shots at us. The Unity Labour Party of St Vincent and the Grenadines Facebook page illustrated two points:
- “While our neighbours who sell passports are all broke, we handled the pandemic well.”
- “I am forever grateful for your trust and love. I will keep lifting SVG higher and never sell out our national identity and land to foreigners. Selling out to the highest bidder is not the path to job creation.”
Antigua and Barbuda
- “In Antigua and Barbuda, the Cabinet made the decision to invest the scarce resources available; to keep every public employee on the payroll; and NOT to fritter away the revenues by handouts of stimuli money, as proposed by others. The Antigua and Barbuda formula is working.”
Several regional newspapers have featured stories about our dire financial situation.
As a former desk economist for Saint Lucia at the Eastern Caribbean Central Bank (ECCB) I was able to get a clear understanding of the importance of good fiscal management. Under Sir John, Saint Lucia set the standard for fiscal management. Sir John’s formula was simple: large current account surpluses and small overall deficits. Sir John was widely admired for his astute fiscal management.
By the time Dr Kenny Anthony assumed the office of the prime minister the international environment was much less favourable. Several of our sister islands: Antigua and Barbuda, Dominica, Grenada and St Kitts and Nevis resorted to the International Monetary Fund (IMF) in order to stabilize their economies. As a result of Dr Anthony’s leadership, we were able to avoid the jaws of the IMF.
Prime minister Chastanet inherited a stable fiscal situation. The spectre of an IMF program no longer loomed over our country. One would have expected that for someone who frequently invokes the name of Sir John, he would have adhered to the principle of prudent management. But Chastanet embarked on a path of recklessness from day one.
He committed the cardinal sin of cutting the Value Added Tax (VAT) rate, without putting any measure in place to make up the shortfall in revenue. Despite the pleadings of agencies like the Caribbean Development Bank (CDB) and the IMF, he proceeded to cut the rate by 2.5 percent. Besides, Chastanet engaged in a pattern of reckless spending including land acquisition, foreign consultants, OJO labs, Desert Star Holdings (DSH), extravagant travels, The Caribbean Hospitality and Tourism Training Institute (CHTTI) and make a mess of Citizenship by Investment (CIP). Hundreds of millions were unnecessarily spent.
On top of the bad fiscal mismanagement, the prime minister has embarked on what can be described as borrowing on steroids. In the last four years debt of about $1.8 billion has been contracted. To add insult to injury, close to $140 million in CIP revenue appears to have vanished into thin air. It is not surprising that many are now looking at us with scorn.
Before the COVID-19 crisis, the prime minister ignored all sensible advice about good fiscal management. He lived a life of extravagance, wandering to the Kentucky Derby and the Royal Ascot. He also talked extensively of creating 23 artificial islands in Vieux Fort. It was as if Saint Lucia was an oil-rich country.
For our country to regain its good name #Chastanetmustgo. The repair job must begin today. Only a Saint Lucia Labour Party (SLP) administration under the leadership of Philip J Pierre can right the fiscal ship.