CASTRIES, St Lucia

Prime Minister Dr Kenny Anthony says despite the chronic fiscal deficit and high public debt facing the Caribbean countries, St Lucia has been able to significantly reduce its fiscal deficit even though it is still short of the goal of four per cent of gross domestic product (GDP).

Anthony said while that the fiscal deficit had been reduced to 5.6 per cent from 9.6 per cent, there is still much work to be done.

When he presented the 2014-15 national budget in May, Anthony said the fiscal deficit stood at EC$57.2 million (US$21 million) and in his television statement said the phased measures implemented by his administration, such as the Tourism Incentive Act, gives him cause for optimism.

“We have an almost eight per cent increase in arrivals from the United Kingdom and in July arrivals from the UK was up by 13 per cent. We expect a good cruise ship season this year, so we are holding our own. So that sector of the economy is stabilising and it’s beginning to show some growth.

“But the major weakness we have in our economy is a structural one, and in our last budget for example, construction was down significantly, because construction contributes significantly to the growth in the economy.

“I am hoping we gradually see a turn around, not only in the government projects that are underway financed largely by the Caribbean Development Bank and other agencies, but also to see some improvement in that overall portfolio,” Anthony said.

Government has delayed a proposed five per cent cut in the salaries of public sector workers, to engage public sector unions on the matter, and it has taken decisive steps to reduce spending and avoid the intervention of International Monetary Fund.

Among the measures Anthony said was a decision to halt all new appointments, defer promotions and reduce the amount of study leave with pay granted to employees.

Despite an earlier announcement that the worst was over for the private sector, Prime Minister Anthony said he remained concerned about the ability of businesses to negotiate the current economic environment.

“A few months ago I suggested that the worse was over for the private sector, this is not to say that some private sector companies were not having a hard time clearly they are, because what we have is not just a decline in the global economy but a decline in the regional economy.

“Countries in this region and buying less and less of what we produce because of their own problems, Barbados is a classic case in point, so there are companies in our midst that are having problems and we want to be realistic about that,” Anthony noted.

While the banking sector has taken a hit with only one local bank registering a profit last year, the Prime Minister remains hopeful with the steadied investor confidence in the island, fuelled largely by confidence in the government’s handling of the situation.

He said the emergence of four hotel properties from receivership, was added reason for the country to remain hopeful about the future.

— CMC