ECONOMIC
STABILISATION CONSOLIDATION, RECOVERY AND RENEWAL IN A NEW PERIOD
-
ECONOMIC MEASURES IN THE
AFTERMATH OF THE TERRORIST ATTACKS IN THE USA ON SEPTEMBER 11, 2001
by
DR. THE HONOURABLE RALPH E. GONSALVES
Prime Minister and Minister of Finance,
Planning and Development
of
Saint Vincent and
the Grenadines
yyyyyyyyyyyyyyyyyyyy
on
Thursday October 11, 2001
Office
of the Prime Minister
St.
Vincent and the Grenadines
October
11, 2001
The terrorist attacks on New York and Washington DC, one month ago to the day, on September 11, 2001, have, for the moment, changed the world for the worst. How long this historical moment will last is a matter of conjecture since the extent of the fall-out of these attacks is yet to be fully realized. But there is no need to panic. Right-thinking peoples and nations the world over have determined that the barbarism of terrorism will not triumph over civilisation, its values and way of life. Accordingly, across the globe, right-thinking persons and nations are coming together as never before to fight terrorism and its security, economic, social, and political consequences. It is concerted action internationally, regionally and nationally, which will, in the end, ensure the defeat of barbarism and the victory of peace, stability, security, economic progress and renewal, social recovery, democratic strengthening, and community solidarity.
Immediately, the terrorist acts in New York and
Washington DC claimed thousands of innocent lives, occasioned extensive
injuries — both
physical and psychological —
to hundreds more, caused widespread and heavy economic loss and
damage and have wreaked havoc to untold millions, especially the poor and
disadvantaged the world over.
From
the very day of the terrorist attacks, my government has been in constant touch
with the United States government and both our government and theirs have
swiftly agreed to cooperate fully to address the security and economic
consequences of these dastardly, criminal acts. The Office of the Prime minister, the Ministry of Foreign
Affairs, and the Ministry of National Security, Airports and Seaports of our
Government of have been active in this regard.
Earlier today, Thursday October 11, 2001, the new Charge’ d’Affaires of
the US government to Barbados and the OECS including Saint Vincent and the
Grenadines met with me to discuss a range of matters which touch and concern
the terrorist attacks and their aftermath.
At
a personal level, I traveled to Washington DC last week to address the
Permanent Council of the Organisation of American States (OAS) and to meet with
senior officials of the United States government, especially at the State
Department, to discuss the current situation.
I then visited New York, met with the Secretary-General of the United
Nations, Mr. Kofi Annan, and addressed the General Assembly of the United
Nations (UN) on the very subject matter.
My addresses at the OAS and the UN were broadcast live here in Saint
Vincent and the Grenadines. In both
American cities I held successful meetings with Vincentian nationals
overseas. It should be noted that I am
the first Head of Government from the Caribbean to visit the USA after the
terrorist attacks and to engage in the activities heretofore detailed.
Regionally, since the terrorist
attacks, I have held discussions personally on the new situation with all the
Heads of Government of the OECS, save one, the Secretariat of the OECS, the
President of Cuba, the Prime Ministers of Jamaica and Belize, the
Secretary-General of CARICOM, and the Commanding Officer of the Regional
Security System.
At
the national level, extensive consultations have been taking place between the
Government, civil society and myriad stakeholders. Three days after the terrorist attacks, the Minister of Tourism
and I held extensive discussions with representatives from the Hotels and
Tourism Association with a view to devise and implement immediate plans for the
stabilsation and recovery of the tourism industry. On September 28, 2001, the President and Vice President of the
Hotels and Tourism Association accompanied the Director General of Finance and
Planning and myself as members of the official delegation to the Heads of Government
meeting of the OECS in St. Lucia. On
October 2, 2001, the Hotel and Tourism Association forwarded certain proposals
for the Government’s consideration.
Further,
on October 4, 2001, the National Economic and Social Development Council
(NESDC), a broad-based grouping of civil society (including representatives of
the trade union movement and the business community), government officials and
representatives of two political parties — the NDP has declined
membership — met
to consider the implications of the terrorist acts on the economy of Saint
Vincent and the Grenadines and to propose certain measures for immediate
action.
These proposals from the NESDC were
discussed along with other proposals or ideas from the Hotels and Tourism
Association, from the Saint Vincent and the Grenadines Chamber of Industry and
Commerce, from the Economic Research and Policy Unit of the Ministry of Finance
and Planning, from the OECS Heads of Government, from the Leader of the
Opposition as reported in the news media, and from the Government of Saint
Vincent and the Grenadines, at a Special Joint meeting of the Cabinet Committee
on the Economy and the Tripartite Committee on the Economy under my
Chairmanship on October 5, 2001. This
joint meeting lasted for almost nine hours.
Then,
on Tuesday October 9, 2001, officials in the Ministry of Finance and Planning
and I had a very fruitful meeting with the Managers of the commercial banks
here in Saint Vincent and the Grenadines.
And on Wednesday October 10, 2001, my Ministry’s officials and I met the
leaders of the Commercial, Technical and Allied Workers’ Union, the National
Workers’ Movement, the Saint Vincent and the Grenadines Teachers’ Union, the
Public Service Union, the Nurses’ Association, the Police Welfare Association
and the National Labour Congress to analyse the economic impact of the
terrorist attacks on Saint Vincent and the Grenadines and to chart the way
forward.
Meanwhile,
fulsome discussions between the officials of the Ministry of Finance and
Planning and myself on the one hand, and the Ministers and officials in each
Ministry on their corporate plans for the year 2002 have been going full steam
ahead in this period. And, of course,
public consultations, broadcast live on radio, on a restructured banana industry
have been taking place up and down mainland St. Vincent. A restructured banana industry is vital in
the current period of economic consolidation, recovery and renewal. Additionally, the current discussions among
CARICOM Heads will further strengthen the process of economic consolidation,
recovery and renewal. The Deputy Prime
Minister is in the Bahamas at this very moment engaged in these discussions.
Never
before in the history of Saint Vincent and the Grenadines has there been such
extensive and detailed consultation by Government and civil society and the
relevant stakeholders on an economic package.
The
package which arises from this consultative effort does not bring the
consultation to an end. Indeed, this
on-going process must be sustained since refinement of the economic recovery
package will be required on an on-going basis and the implementation of it has
to be done together, now!
Prior
to the terrorist attacks of September 11, 2001, the world economy, led by the
USA, was slowing down after the rapid growth rate internationally up to, and
including, 2000. Indeed, most
countries’ forecasts are linked to the United States economy where several
interest rate cuts, resulting in a fall in the interest rate from 6.5 percent
to 2.5 percent since January 2001, have not yet had the desired effect of
stimulating growth. The US government
is now turning after September 11th, to substantial fiscal stimuli
to revive economic confidence and growth.
Still, it is confidently being predicted by experts that Gross Domestic
Product (GDP) growth in the USA will be negative in 2001. In the process, a huge government surplus is
being wiped out. In the USA, an
economic recession looms large.
In
Japan, it is now projected that that country’s economy will go into its fourth
recession in ten years, reflecting the weakness in electronics demand. Uncertainties are heightened by
extraordinary financial difficulties in major emerging markets such as
Argentina and Turkey.
Regionally,
the CARICOM member-states face the prospect in 2001, and even 2002, of negative
growth, on average. I remind you that
in 1999, CARICOM member-states as a group had an average growth of 2.9 per cent
when the US economy grew by 4.3 per cent;
and in 2000, CARICOM states, as a group, had economic growth of 2.2 per
cent when the US economy grew by 5.3 per cent. Negative growth in the U.S. spells a similar probability in
CARICOM as a whole given the close links between the economies of the region
and that of the USA.
In the Eastern Caribbean Currency
Union (ECCU), that is in those member-states served by the Eastern Caribbean
Central Bank (Anguilla, Antigua-Barbuda, Dominica, Grenada, Montserrat, St.
Kitts-Nevis, St. Lucia, and Saint Vincent and the Grenadines), the economic
situation deteriorated in the year 2000 compared to that of 1999. Indeed, in July 2001, just four months after
the ULP government was voted into office, the
Governor of the Central Bank, Sir Dwight Venner, highlighted to the
Monetary Council of the Central Bank, the following four features of the
economies as a whole in the ECCU:
All of this as I have said was the assessment in the ECCU area
for the year 2000 up to July 2001. All
of this was before the terrorist attacks in the USA and their consequential
devastating economic impact on the region.
ECONOMIC PERFORMANCE IN SAINT VINCENT AND
THE GRENADINES BEFORE AND AFTER SEPTEMBER 11TH, 2001
I turn my attention now to the economic situation in Saint Vincent and the Grenadines before and after September 11, 2001.
In
the ECCB Report and Statement of Accounts For the Financial Year Ended 31st
March, 2001, in relation to Saint Vincent and the Grenadines, it is stated
thus:
“During 2000 the pace of economic activity in Saint Vincent and the Grenadines slowed, with real Gross Domestic Product (GDP) provisionally estimated to have increased by 2.1 per cent compared with the revised rate of 4.2 per cent in 1999.”
Indeed, in May 2001, a joint ECCB-CDB
(Caribbean Development Bank) investigating team commissioned by the ULP
government reported that, given the poor economic performance last year and the
continued slowing of the international and regional economies, it was unlikely
that economic growth in Saint Vincent and the Grenadines would exceed 1 per
cent. That was their prediction upon
the ULP’s assumption of Office.
In fact, the Eastern Caribbean Central
Bank stated in its report on Saint Vincent and the Grenadines for the financial
year ended March 31, 2001, the following about the prospects of the economy of
Saint Vincent and the Grenadines for 2001:
“In 2001 real output growth is likely to be subdued. This assessment is based in part on developments in the real sector, particularly in the banana and tourism industries. In the tourism industry the discontinuation of direct flights from San Juan, Puerto Rico, by a major airline company, the cessation of flights by a regional carrier and the exclusion of Saint Vincent and the Grenadines from the itinerary of two major cruise lines are likely to adversely affect tourist arrivals and dampen growth prospects generally.
An improvement in the central government’s fiscal operations is unlikely during the year. This assessment is based on the expectation of increased current expenditure and limited prospects for revenue growth. Higher current expenditure will be related to outlays on debt service payments and personal emoluments, while increased revenue will be constrained by dampened growth prospects.”
That was the dire economic situation and
the pessimistic assessments for the prospects of the economy which confronted
the ULP government when it assumed office on March 29, 2001! The ULP government was determined to turn
around for the better the finances of the central government and the economy as
a whole through a series of reforms and stimuli to improve the government
finances and to prod the economy itself out of its sluggishness. And before the terrorist attacks of
September 11th, 2001, the ULP was laying a solid foundation for
economic growth and things were picking up well. I will illustrate.
When the ULP assumed office on March 29,
2001, there was a deficit on the government’s current account of $8.95 million
for the year 2001. By the end of August
2001, the ULP had turned this around to a current surplus of $4.53
million. This was an increase of over
100 per cent above the surplus of just over $2.2 million for the corresponding
period January 1st to August 31, 2000.
How did the ULP government accomplish this turn around in five months? By sensible, balanced fiscal policies, economic stimuli, the people’s efforts and public confidence. It should be noted that the ULP government did not turn the huge inherited deficit into a solid surplus by cutting back on spending. In fact current expenditure for the period January 1, 2001 to August 31, 2001, amounted to $165.59 million compared with $153.72 million for the same period last year, an increase in current spending of $12 million. At the same time, the ULP government collected more revenue: current revenue for January to August 31, 2001, was $170.12 million or close to $15 million more than was collected in the comparable period in 2000. Recurrent revenue in fact increased by 9.1 per cent outpacing the growth in recurrent expenditure, which went up by 7.7 per cent. When the officials in the Ministry of Finance and Planning reported to me on the budget out-turn up to the end of August 2001, they stated in the opening paragraph of their report that: “Government finances for the year up to August 31, 2001, exhibited improvement relative to the corresponding period last year.”
On the capital side of the budget, some
$15 million was spent between January and the end of August 2000 compared with
over $24.56 million for the same period in 2001. Although this is a much better performance than last year, it is
still not good enough.
The ULP government’s difficulties in
pushing the capital works’ programme even more, have been directly connected to
the following:
1.
The
out-going NDP government left no savings to be put to the capital
programme. Indeed, in 2000 there was a
shortfall of revenue of some $27 million and after its last three months from
January to March 28, 2001, it left the new ULP government a current account
deficit of $8.9 million.
2.
The
out-going NDP government had failed to negotiate the $33.7 million in loans
which were earmarked for spending on the capital projects in 2001. It is the ULP government which had to
successfully negotiate these loans, take the legislation in respect of them to
Parliament in July 2001 and had the law gazetted for them by August 2001,
before a draw down was possible. Even
so, I had to spend a substantial part of the proceeds of the loans to pay
off outstanding bills for capital projects which the NDP government had
undertaken. Thus, when we in the ULP
assumed office there were no loan monies available for application to the
capital projects.
3.
The out-going NDP government had failed to access, in
practical terms, grant monies to be applied to capital projects. Thus, in this regard, the ULP government had
to start from scratch.
4.
The out-going NDP government had so run down the
administration’s institutional capacity to prepare and implement capital
projects that the ULP government had to set about to strengthen and develop the
institutional capacity of the state administration to get things done. Much, much work is still required in this
regard.
Over
the past six months since the ULP government was voted into office, it has
taken vital measures to shore up the productive sectors especially with its
restructuring of the banana industry, its revamping of the off-shore finance
sector, its boosting of the information technology sector through the
liberalized telecommunications policy and the call centres’ initiatives, its
enhanced and productive working relationships with the stakeholders in the
tourism industry, its thrust into agricultural diversification, its over-all
macro-economic policies directed towards poverty eradication and sustainable
development, and its vigorous developmental programmes in education, health,
sports and culture.
Just as
the basis was being laid for economic take-off, the terrorists attacked New
York and Washington DC and put all the economic calculations in a tail spin
amidst uncertainties on a scale not experienced in living memory. Yet, there is no need to panic. Steady hands and creative minds are at the
helm nationally. Regional and
international economic cooperation is apace with greater urgency. And a resilient, hard-working, creative
citizenry at home and abroad are determined to work in a disciplined way to
pull our country out of the current and prospective economic difficulties. Together we will turn the set back into an
advance; we will transform limitations
into possibilities, weaknesses into strengths, threats into opportunities,
challenges into success. As a nation,
and a civilisation, we will ensure that temporary defeats metamorphose into
sustained triumphs. Of all that, you
and I are certain. Indeed, we must
not embrace negativism and
defeatism. In the current, challenging
circumstances, negativism and defeatism, opportunistic babble, fence-sitting,
criminality, laziness, ill-discipline and narrow partisan politics amount to
unpatriotic conduct and a subversion of the national will to move forward
purposefully.
The
terrorist attacks of September 11, 2001, will result, in among other things,
the following:
1. A
likely decline in overall GDP performance of the economy;
2.
A likely decline in the performance of important sectors of
the economy, such as tourism, financial services, agricultural trade, and high
technology trade. For example,
currently, half of the hotels in Saint
Vincent and the Grenadines have occupancy rates of below 10% when normally it
would have been closer to one-third.
3.
A slow down in foreign direct investment and new
international aid flows.
4.
A likely decline in remittances from abroad, particularly
from the U.S.A.
5.
A likely decline in government’s revenues.
6.
A likely increase in unemployment.
7.
Increased cost for installation and maintenance of security
equipment at air and sea ports and the Post Offices
This
new difficult economic situation or condition does not represent a full-blown
economic crisis. As the noted Caribbean
economist, Lloyd Best, has reminded us, the condition amounts to crisis when
the principals are innocent. But where,
as in Saint Vincent and the Grenadines and the region a whole, we are fully
aware of the difficulties and the potential perils and extent of the current
condition, it is truly not a situation of crisis. Only those whose agendas diverge from patriotism and the nation’s
goodwill and who have yet to come to grips with their rejection at the polls,
seek to paint the picture in doomsday terms.
Responsible leadership demands, among other things, a correct analysis
of the situation: not an overestimation
nor an underestimation of the special difficulties in the current period. In any event, the circumstances provide a
golden opportunity for focused change.
THE MEASURES FOR ECONOMIC
STABLISATION, CONSOLIDATION, RECOVERY AND RENEWAL
It is
against the backdrop of the totality of the circumstances which I have outlined
that I now submit to my fellow Vincentians, investors and friends of Saint
Vincent and the Grenadines, on behalf of my government, the specific measures
in these especially challenging times for economic stabilization,
consolidation, recovery and renewal for Saint Vincent and the Grenadines.
The
package of measures can be placed in four categories:
1. Those
aimed at fiscal stablisation and consolidation in the central government;
2. Those
directed at increasing public sector investment;
3. Those
connected with the strengthening of the mechanisms for policy formulation and
implementation; and
4. Those
focused on economic restructuring recovery, and renewal.
First,
I propose the following measures to broaden the tax base and improve tax
compliance so as to facilitate economic recovery:
-
The curtailment of duty free concessions not
directed at increased output and employment.
Charitable organisations which provide to the poor and indigent will
continue to receive 100 per cent concessions.
-
Strengthening the audit unit within the Inland
Revenue Department so as to improve tax compliance.
-
Reviewing the current rate of company tax with the
aim of reducing it in a targeted way to stimulate business activity and to
improve compliance. The Tripartite
Committee on the Economy will finalise recommendations on cutting the rate of
company tax and these will be submitted
shortly for submission to the Cabinet.
-
Granting tax credits to business which increase the
level of employment in certain specified industries, with enhanced credit for
those locating to specially-designated areas.
-
Amending the Customs (Control and Management) Act in
order to remove certain administrative and legal obstacles to revenue
collection.
-
Stricter enforcement of customs regulations in an
effort to reduce the incidence of smuggling and other tax evasion practices.
-
Speeding up the VAT feasibility and other studies
aimed at improving the tax system.
Secondly,
under the rubric of fiscal stabilisation and consolidation, I propose the
following:
-
The putting into effect of a wage freeze in the
public sector for one year subject to quarterly periodic reviews by
stakeholders. The first such review
would be at the end of the first quarter in 2002. It should be noted that roughly one-half of the central
government’s recurrent spending goes toward wages and salaries. The leaders of the public sector unions have
agreed in principle to this wage freeze, subject to further consultation with
their membership. They have asserted that
they are not ill-disposed to such a measure in these challenging times.
-
A voluntary cut in salary of 5 per cent by the ULP
members of Parliament for the year 2002.
I invite the oppostion members of Parliament to do likewise.
-
A freeze on new employment within the public service
except in essential services and very special cases.
-
A freeze on all proposals for new traveling posts
and a targeted reduction on the local mileage allowance.
-
A sharp reduction on overseas travel by Ministers of
Government and public servants.
-
The implementation of a performance appraisal system
with regard to the granting of increments.
-
A focused programme to reduce operating losses at
the Central Market which has been suffering operating losses of some
$400,000.00 annually.
-
Seek additional debt forgiveness on bilateral
debt. We have received debt relief from
the British government and we are in the process of seeking such debt relief
from a number of countries including the USA and Trinidad and Tobago. A very special approach has and is being
pursued by the ULP government in relation to the Ottley Hall debt of which more
will be said another time.
-
A programme for a significant reduction of
government’s utility bills by the elimination of wastage and abuse of the
government’s telephone and electricity services. It should be noted that government’s utility bills amount to
$8.5 million per year. Further, VINLEC
has agreed to provide immediately to the managers of government buildings
(including schools and hospitals) a checklist of practical actions that they
can take daily to reduce electricity wastage and save costs on the government’s
electricity bills.
-
Putting on hold the expansion of programmes for
overseas representation except where it is absolutely necessary and desirable.
-
Working with other regional governments to control
operational budgets for regional organizations. A wage freeze and other cost-cutting measures must apply to these
organizations also.
In
these special circumstances, the government intends to concentrate on those
projects which target the productive sectors, which enhance employment
significantly and which focus on poverty eradication. Human resource development will receive an even more heightened
focus than it has been accorded by my government which can lay the justifiable
claim to being the “education government”.
The
ULP administration has recently started or will start shortly a number of
capital projects including the Murray’s Road Rehabilitation Programme ($2.3
million), Rural Clinic Rehabilitation -Clinics
at Biabou and Greggs – costing $2.5 million), the Road Rehabilitation Programme
from South Rivers to below Old Road ($450,000), the Library and Computer Centre
– Meeting Hall at South Rivers ($540,000), and the renovation of Peace Memorial
Hall ($400,000).
Further,
the government has laid the groundwork for the commencement of several other
important capital projects early in the New Year. These include the Learning Resource Centre ($4.1 million), the
first phase of the Windward Highway Rehabilitation Project ($13 million),
Construction of the Police Stations at Canouan and Biabou ($2 million), and the
National Library Project ($7 million).
We
will also accelerate the implementation of the mortgage housing programme for Civil Servants in which 100%
financing from the National Commercial Bank
will be made available to Public servants. Further, we will accelerate the implementations of the Housing
Programme for which we gave a commitment in our Election Manifesto of
2001. These measures will further
generate employment and economic activity in the State.
Additionally,
the government, is working to establish a Special Financing Facility regionally
and with international assistance to be used towards the financing of the
Public Sector Investment Programme. In
this regard, I held discussions this week with a team of World Bank officials
who are designing a US$100 million facility for four (4) OECS countries,
including Saint Vincent and the Grenadines, to finance targeted public sector
capital spending and economic recovery in the aftermath of the terrorist
attacks on September 11th.
I
want to reassure the general public that my government is beefing up the
capacity of the state administration to design and implement capital projects
in a timely, cost effective and efficient manner.
STRENGTHENING
MECHANISMS FOR POLICY FORMULATION AND IMPLEMENTATION
Already,
the ULP government has taken very positive steps to strengthen the mechanisms
for policy formulation and implementation.
Shortly after this government’s assumption of office on march 29, 2001,
it moved swiftly to embrace civil society’s involvement in the policy
formulation, policy implementation and management of the macro-economy with the
establishment of the National Economic and Social Development Council, the
Tripartite Committee on the Economy and the Banana Advisory Committee, which
has been transformed into a Banana Action Committee.
Simultaneously,
a Cabinet Committee on the Economy, which meets at least once per month and
which comprises the ministers who head “production” ministries and senior
public officers, was established to keep a close monitoring handle on the
economy.
And
shortly before September 11th, the government took the decision to
set up a seven-member Monitoring Committee on Public Enterprises, under my Chairmanship,
to oversee the operations of all public enterprises. Strict monthly reportage conditions have been established. I have also directed the General Manager of
the National Commercial Bank not to grant any loan or extend any overdraft
facility to any public enterprise, whatever the merits of the case, until the
Bank receives express authorisation so to do from me or from someone delegated
by me to grant such an authorization.
Too many public enterprises have historically over-reached themselves and
have behaved as though they are veritable governments unto themselves. Those days are now over! To be sure, my government will not
micro-manage them but they must submit to strict accountability and the policy
guidelines of the democratically-elected government. I am sure that this approach may meet with resistance from some
quarters but be assured the government will prevail.
Internally,
through the focused implementation of the ULP’s “First One Hundred Days Programme” and the systems which have been
put in place, the government has been able to streamline and improve public
sector performance. The morale and
output of public servants have been rising but there is a long way still to go
in this regard. This matter is being
addressed in a many-sided way on an on-going basis. More on this will be heard in my Budget Address for the fiscal
year 2002 which will be delivered before the end of November this year, God’s
willing.
It is
well known, too, that recently the government has moved boldly to enhance the
capacity to design and implement projects by recruiting, with the agreement of
the Cuban government, four engineers, one architect and other specialists. These additional staff are not a substitute
for building our own capacity on a long-term basis; they are a part of that
very process.
1.
The implementation of a policy of wage restraint in
the private sector accompanied by price restraint;
2.
The revitalisation of the tourism sector;
3.
The implementation of a revised and focused plan for
the revival of the agricultural sector;
4.
The reinvigoration of the small manufacturing sector
and a greater push in information technology;
5.
The stepped-up revamping of the offshore finance
sector;
6.
The focused engagement of the commercial banking
sector and other non-bank financial institutions;
7.
The implementation of a programme of targeted relief
and conservation on the consumption of electricity and water;
8.
The vigorous pursuit of a “Natural Vincy” Buy Local
Campaign;
9.
The implementation of the first stage of privatisation
and commercialisation process of state enterprises;
10.
The formulation of a many-sided social contract
between the state, on the one hand, and on the other, the traditional social
partners (the business community and the labour movement) and civil society as
a whole.
WAGE AND PRICE RESTRAINT IN THE PRIVATE SECTOR
The
leaders of the trade unions which represent workers in the private sector and
the Saint Vincent and the Grenadines Chamber of Industry and Commerce have
agreed that, in the current uncertain economic circumstances consequent upon
the terrorist attacks, a policy of wage and price restraint be
implemented. The Chamber has actually
proposed that this policy should be in operation for nine months. In its formal communication to me dated
October 9, 2001, the Chamber has further stated explicitly that it
“Will undertake to encourage its members and the business community to
exercise [similar] restraints regarding prices and mark ups, especially where
extraordinary cost increases occur in insurance and freight rates, fuel or
other inputs.”
The
precise contours of the policy of wage and price restraint will be finalised
through the Tripartite Committee on the Economy, on which body all the
stakeholders are amply and equally represented. This policy is self-evidently in the interest of all concerned
and thus needs no further elaboration.
REVITALISATION
O THE TOURISM SECTOR
The crux
of the revitalisation of tourism, on matters which are in our control, hinges
immediately on increased government and private sector expenditure on targeted
promotion; the participation of Saint
Vincent and the Grenadines in regional promotional activities; additional investment in LIAT and support
for airlines operating in the region;
improving air access to Saint Vincent and the Grenadines through hub
arrangements; creativity, in every
single aspect of the industry, by all the stakeholders including hotel
operators; a most determined effort to
crush criminality and visitor harassment;
and the focussed implementation of the tourism sector plan.
Already
the government of Saint Vincent and the Grenadines has agreed, since September
11th, the sum of $250,000 to provide a guarantee for a certain
number of airline seats out of London in a joint venture with Grenada and
Tobago starting from December of this year.
Additionally, three days ago, as Minister of Finance I promptly informed
the Saint Vincent and the Grenadines Hotels and Tourism Association that the
government would provide immediately $50,000 of the $100,000 required by the
Association to increase our promotional efforts in the region and London. On this matter I responded positively within
one hour of receiving the formal request by letter.
Additionally,
immediate assistance will be offered to the hotel sector, whereby hotels and
guest houses will receive a 10 per cent discount on electricity charges
(excluding the fuel surcharge) provided that the customer has achieved at least
a 10 per cent saving on his average monthly electricity use. This discount will apply for six months from
November 2001 through April 2002. The
government, through VINLEC, is tying this targeted discount to energy
conservation.
As
regards air access, the government has agreed to purchase additional shares in
LIAT and has been assured a seat on LIAT’s Board of Directors. My government is also providing support to
LIAT’s latest Bond Issue for its further capitalisation by granting tax-exempt
status in Saint Vincent and the Grenadines on the interest earned on these
bonds. Further, the Governments of St.
Lucia and Saint Vincent and the Grenadines have already concluded agreements on
a hub arrangement out of Hewanorra International Airport, St. Lucia to commence
shortly after November 1, 2001. We are
in the process of finalising discussions with LIAT concerning flights between
Saint Vincent and the Grenadines and Hewanorra. I will shortly be inviting domestic carriers for discussions on
this issue, among others. A similar hub
arrangement with Barbados is envisaged after that with St., Lucia has been put
into effect practically.
On
cruise ship tourism, the government, in conjunction with the other OECS
countries, has been examining the issue of the cruise ship service charge (the
Head Tax). Accordingly, it has agreed
to adjust this charge downwards in order to bring it in line with other OECS
destinations, in particular by offering volume discounts to the cruise lines.
The
yachting sub-sector appears to be one of the more resilient tourism sectors in
the face of the on-going global recession and the other consequences of the
events of September 11th. To
further attract this category of tourists and others to our country, we will
intensify our efforts to provide a clean and beautiful Saint Vincent and the
Grenadines. Simply put, this means no litter on our streets and drains,
no fuel or effluent in our seas, and no noise pollution. Accordingly, the government has made it
plain to the law enforcement authorities that it has a policy of “zero
tolerance” to any violation of existing legislation which touches upon the
environment and related concerns. Other
well-known concerns of the yachting operators will be addressed.
Let me speak forthrightly on
the issue of violence against tourists and visitor harassment. I have personally informed the Commissioner
of Police that he and the Police Force have the full backing of the Prime
Minister and this government to crush all forms of violence and other criminal
activities against visitors and citizens alike. The space for criminals must be so narrowed that their commission
of crime must be viewed as a highly risky business by them with severe
consequences. We live in a country of
laws; and the constitutional apparatus
of the land entrenches a range of fundamental human rights. That is part of the strength of our liberal
democracy but liberty cannot be raised as a flag for licence, to permit the criminal to do as he pleases. No!
This must stop. I do not want
any softly, softly approach by the Police in relation to criminals. To be sure, the Police must not abuse their
powers and violate the individual’s fundamental rights but the Police possess
the creativity, an array of powers and a sufficiency of resources to get on
with their focused job at hand against criminals. Now, too, the Police have the unequivocal, unstinting support of
this Prime Minister.
The alarming situation is that
only a relatively small band of criminals are committing crimes against
tourists. The Police know who they are
but invariably lack admissible evidence against them. But the Police known and I know, creative
ways to stay on the right side of the law but nevertheless narrow the space for
the operation of these know vagabonds and criminals. In this uncompromising battle against criminality, I am
absolutely sure of the public’s overwhelming support. I am sure, too, that the Magistrates and Judges know what is
taking place and will do their solemn duty, firmly, in accordance with the law.
Tourism has been the most badly
hit economic sector immediately. Thus,
we must all link “Together Now” to rescue it.
Tourism accounts for some 10 to 12 per cent of this country’s GDP; it is a substantial employer of labour; and it contributes significantly to the
government’s revenue. As a nation we
must thus rally to save tourism, to make it much better.
Central to the revitalization of
agriculture immediately is the successful restructuring of the banana
industry. This evening I go to
Chateaubelair for the last of the public consultations on the bill to restructure
the industry. On October 16, 2001, next
Tuesday, the Bill goes before Parliament.
The restructured industry will be run on commercial lines; it will be market driven. All practical measures are being taken to
ensure this. And the better farmers
will prosper.
Beyond bananas, the government
has taken a number of decisions to accelerate the implementation of a revised
agricultural diversification programme which includes the modernization of the
arrowroot industry, increased production of non-banana crops, the construction
or rehabilitation of much-needed feeder roads throughout the State and an
enhanced role for the produce section of the Marketing Corporation. Tomorrow,
I meet with the senior officials from the Ministry of Agriculture; and on next Monday, October 15th,
I meet with those of the Marketing Corporation. The whole machinery of government and substantial resources are
behind this renewed push in agriculture.
I hope to see more of the senior officials in the Ministry of Agriculture
in water boots on the farms with the farmers and less on the circuit which
services the regional and international agricultural bureaucracies.
MANUFACTURING
AND INFORMATION TECHNOLOGY
There is currently a
reinvigoration of the small manufacturing sector. Several enterprises in furniture manufacture, agro-processing and
baking are in the process of setting up operations in Saint Vincent and the
Grenadines. Vigorous work by the
Ministry of Telecommunications Technology and Industry and the Development
Corporation is bearing fruit. This work
will be accelerated in this new period.
Similarly, the Ministry is
pushing ahead with plans to establish call centers. The first one is due to open later this month at Arnos Vale and
is slated to employ 400 persons. Two
other call centers, scheduled for Georgetown and Ottley Hall, will open early
in the New Year and will provide employment for an additional 750 persons. A small manufacturing enterprise producing
medical kits is expected to open early next year also.
The ULP government will focus
on small and medium-sized manufacturing enterprises in this new period.
Much progress has been made in
revamping the offshore finance sector since the ULP government has been in
office. These efforts must now be even
more focused and urgently applied so as to meet effectively the old and new
challenges brought about by developments in the international situation. Currently, there is a new Proceeds of Crime
and Anti-Money Laundering Bill before Parliament. It has had its second reading and a Select Committee has been set
up to consider it. Tomorrow, there is a
meeting of the Parliamentary Select Committee on the matter and the relevant
stakeholders have been invited to attend and make submissions. Other legislative reforms of the offshore
finance sector are in the works and a further strengthening of the supervisory
capacity of the Offshore Finance Authority is already underway. Further, government will shortly be adopting
the United Nations Convention on Financing of Terrorists. And we will increase our expenditure on
off-shore finance promotion. The
government is confident that Saint Vincent and the Grenadines can build a
clean, successful offshore finance sector.
On Tuesday October 9, 2001, the
officials of the Ministry of Finance and Planning and I held a meeting with the
managers of the Commercial banks.
During the meeting the banks accepted that having held the umbrella over
their customers during times of sunshine, they must now make every practical
effort to keep the umbrella a-high during times of rain.
Accordingly, the banks
recognized that it is their duty to work closely with the government and the
ECCB to address favourably the issue of lowering the lending rates. Undoubtedly, this is a complex matter which
involves a mix of considerations touching and concerning the borrowers, the
depositors, the banks’ shareholders and the government. This matter will be further discussed at the
upcoming meeting of the Monetary Council of the ECCB in St. Lucia on October
26, 2001. I am confident that this
meeting will come up with positive results.
I declare that the position of the government of Saint Vincent and the
Grenadines is that lending rates ought to be reduced so as to bring a measure
of relief to enterprises in both the private and public sectors and to stave
off lay-offs.. But we acknowledge that
a reduction in interest rates is not itself the economic salvation, it is part
of the package.
The commercial banks have
assured the government that they will accord favourable consideration to the
rescheduling of loans and overdrafts due by businesses which have been
seriously affected by the fall-out of the terrorist attacks. This will be done on a case by case basis,
on the request of the affected business.
The banks, too, have agreed to be more alert than ever in identifying
areas for financing successful investments particularly those which generate
job-creation. And the banks further
agreed to meet with the government on an –on-going, structured basis at least
once per quarter to continue the dialogue with a view to further stimulating
the economy.
The government intends shortly
to hold discussions with insurance companies and the other financial
institutions in Saint Vincent and the Grenadines in order to encourage them to
reduce lending rates and to introduce other measures to stimulate the economy.
Further, the government gives
the nation the assurance that it will be examining the structure and operations
of the financial system in our country, and will make precise proposals in this
regard in the upcoming budget.
TARGETED
RELIEF AND CONSERVATION ON CONSUMPTION OF ELECTRICTY AND WATER
The very economic difficulties
which affect business generally in Saint Vincent and the Grenadines also
adversely hit the utilities (electricity, water and telephones) since their
revenues are likely to fall because of a reduced demand from their customers. The utility enterprises are nevertheless
willing to give as much practical support as is possible to their worse hit
customers, especially where those customers are clearly committing themselves
to conservation and efficiency. I will
speak mainly to electricity and water since these utilities are provided by
wholly-owned state enterprises.
Two or so months ago I announced
that the indigent elderly will receive a $10 rebate on their water bill
monthly. The Central Water and Sewerage
Authority is being asked to examine innovative ways in which it may be able to
assist consumers, including commercial and industrial consumers, in the current
situation.
VINLEC is reviewing its rate
structure and is seeking in particular, to rationalize the demand charges that
apply to commercial and industrial users.
VINLEC, of course, from September 2001 has reduced its basic charge by
$2.65 monthly for targeted householders, mainly the poor.
Further, with immediate effect
VINLEC will waive all charges for single pole line extensions requested by
domestic applicants. This measure will
ease considerably the burdens of many working people and the poor who have been
unable to afford the price of the single pole extension.
The Government is hopeful that
the costs of these concessions given by VINLEC will be justified by their value
to the businesses and individuals who will benefit. At the same time, VINLEC’s sound financial performance will not
be significantly eroded.
On a related energy matter, the
ULP government has been holding discussions with the Venezuelan authorities in
an effort to access the oil facility offered by the Government.
The Government of Saint Vincent
and the Grenadines has already submitted a draft agreement to Venezuela with
its focused proposals. These specific
proposals are under consideration as I speak.
This Venezuela Oil Facility is
normally applicable to crude oil, but in the case of Saint Vincent and the
Grenadines, we have been given the assurance that refined oil will be
considered. Purchases of up to 25 per cent
of our petroleum needs will be obtained on easy term credit. I am hopeful that this agreement on oil
which will be of tremendous benefit to Saint Vincent and the Grenadines, will
be concluded prior to the formal state visit to Saint Vincent and the Grenadines
by the President of the Bolivarian Republic of Venezuela, His Excellency Hugo
Chavez. The date of the visit has
already been agreed upon by our two governments but the announcement of the
date itself will be done at a later, more convenient and appropriate time.
“NATURAL VINCY”: BUY
LOCAL CAMPAIGN
The Government will shortly
embark on a promotional campaign which encourages Vincentians to buy local, buy
“Natural Vincy”. We produce a lot of
food and drink, agro-based products, clothing, furniture and dozens of other
commodities which are of good quality.
It is in our nation’s interest, all-round, to buy local.
The government is currently
examining the possibility of giving tax credits to retail outlets based on
their purchase of locally-produced goods.
Further, we are staging a grand “Buy Local” Exhibition at the Central
Kingstown Market from October 25-28, 2001.
Let’s all promote this event fulsomely.
Additionally, the government is
finalizing an implementation plan to promote the regular use and support of the
Central Kingstown Market:
v to boost business for
vendors in the Market;
v to highlight the wide
variety and excellent quality of local products;
v to provide
opportunity to the local producers and manufacturers;
v to support the
efforts of the vendors in the Central Kingstown Market.
PRIVATISATION AND COMMERCIALISATION OF STATE ENTERPRISES
As a matter of public policy, the ULP Government is committed to a process of prudent privatisation and commercialisation of public enterprises. We will do so transparently and with public consultation. We are already in the first stage of this exercise. This has involved the prudent laying of a sound basis for privatisation and commercialisation in a number of public enterprises. This stage, too, includes the privatisation of Diamond Dairy Limited.
As is well known, Diamond Dairy
Limited has been put into liquidation for many years now. Considerable losses have mounted including
the payment of close to $1.5 million for workers to literally sit and do
nothing. The previous government
appeared afflicted by a paralysis in moving forward on this matter. We in the ULP Government have moved swiftly
to put the requisite $2.15 million in the liquidated company as required under
the Court arrangement. Bids have been
submitted to the Liquidator. By letter
dated October 9, 2001, two days ago, the Liquidator has informed me that he has
accepted the tender of the highest bidder, a company located in St. Vincent and
the Grenadines, but owned regionally.
The Liquidator will no doubt make the appropriate announcements in due
course.
This in effect means that Diamond Dairy Limited would cease to be a drain on tax-payers’ revenues and will continue as a going concern. This is even more important in the current situation. The workers at Diamond Dairy will receive their severance pay for their service so far with the company.
On July 31, 2000, when the ULP
was in Opposition it published a document entitled Ideas towards a Social Contract Between a ULP Government and Civil
Society. Over the past six
months of governance, the ULP has initiated a series of measures reflective of
the ideas contained in that document.
Now the time is right to pursue the conclusion of this Social Contract. The Trade Unions have suggested that this
Social Contract be concluded between all the relevant stakeholders by November
30, 2001. The Government is committed
to meeting that deadline.
I have repeatedly stated before
and since my arrival at the Office of the Prime Minister, that the commandist
State has been made inoperable and out-dated by reason of the phenomenal
changes attendant upon the process of globalisation. This does not mean that the State is no longer a force for
good. Far from it. What it means is that the State must reform
its way of doing business. The reformed
State must work closely with civil society to ensure good governance to achieve
sustainable development, to create more jobs, to eradicate poverty, and, yes,
to successfully pursue economic recovery and
economic renewal in these extraordinarily challenging times. It is important that a many-sided Social
Contract be agreed upon so as to lay a
proper basis for the mobilisation of the entire nation at home and abroad to
achieve our well-defined national purposes.
As I conclude this address, I
wish to speak to the heart, soul, mind and being of our people. Additional burdens have been placed upon us
by forces external to our land. The new
challenges which have been foisted upon us have not been of our own
making. But the prime responsibility of
confronting these challenges and rising triumphantly depends upon every single
one of us, man, woman and child. I
thank each and everyone who has contributed to my understanding and the
Government’s understanding of the myriad issues which contained herein. This is not my speech; it is not the government’s; it is the peoples!
This nation of ours is blessed
with a wondrous bounty from Nature. We
have fertile lands, plentiful resources in the sea, a lovely climate, a
magnificently beautiful seascape and landscape, a stable democratic system of
government, a geographic space of peace and tranquility, a location next to the
most powerful x country on earth, and
a disciplined, talented people drawn from different lands and cultures who
dwell together in harmony. These
blessings, and more, we treasure. We
can use them in these increasingly challenging times to make our lives better
than ever before.
In the past, our people
survived slavery, indentureship, colonialism, and imperialism. We emerged out of those experiences stronger
and better. The temporary difficulties
in no way compare to genuine hardships which our forebears have had to endure.
Thus, I reiterate: There is no need for panic. This is a time for sober, creative thought,
balanced judgment, hard work, temperate conduct and goodly living. This is not a time for divisiveness, criminality,
lawlessness, vagabondry and wayward behaviour.
This is a time for us to proclaim, and act upon the proclamation, that
this is a “small country with great people”.
This is the time “Hand in Hand, Let us Build our land”.
As I leave you today I ask that
each of us redouble our efforts for ourselves, our families, and our nation. And may Almighty God continue to bless us.
Thank you!.