MEETING THE GLOBAL AND DOMESTIC CHALLENGES:
THE QUEST TO BUILD A MODERN, MANY-SIDED,
COMPETITIVE, POST-COLONIAL ECONOMY WHICH IS
NATIONAL AND REGIONAL
by
Dr. The Honourable Ralph E. Gonsalves
Prime Minister and Minister of Finance
Delivered on Monday 10th December, 2007, at the House
of Assembly, Kingstown, St. Vincent and the Grenadines
Kingstown
St. Vincent and the Grenadines
2008 BUDGET ADDRESS
DELIVERED BY DR. THE HONOURABLE RALPH E.
GONSALVES
Prime Minister and Minster of Finance
Monday 10th December, 2007
COMPETITIVE, POST-COLONIAL ECONOMY WHICH IS
NATIONAL AND REGIONAL
by
Dr. The Honourable Ralph E. Gonsalves
Prime Minister and Minister of Finance
Delivered on Monday 10th December, 2007, at the House
of Assembly, Kingstown, St. Vincent and the Grenadines
Kingstown
St. Vincent and the Grenadines
2008 BUDGET ADDRESS
DELIVERED BY DR. THE HONOURABLE RALPH E.
GONSALVES
Prime Minister and Minster of Finance
Monday 10th December, 2007
Mr. Speaker, Honourable Members,
The central theme in my Budget Address last year revolved around the affirmation that St. Vincent and the Grenadines was on the cusp of an advanced economic take-off through the instrumentalities of enhanced public and private sector investment, increased competitiveness and productivity, robust economic growth and people-centred sectoral policies and programmes. This year, the same focus is maintained but with timely variations and adaptations to meet the unfolding challenges in the global and domestic economies by way of elaborating and implementing more securely our on-going quest to build a modern, many-sided, competitive postcolonial economy which is at once national and regional. This path-breaking exercise in praxis, that is, the marriage of a relevant theory or model of economic development and
practical outcomes, is not merely transactional; it is transformational, in the people’s interest.
The Budget Address is framed against the back-drop of continued fiscal consolidation and robust economic growth for the four-year period 2004 to 2007, inclusive, during which time St. Vincent and the Grenadines experienced economic growth in excess of 5.7 per cent on an average. Indeed, the routine Article IV Consultation by the International Monetary Fund (IMF) gave rise to an enthusiastic “Concluding
Statement” by the IMF Mission in which they stressed that: “Macro-economic outcomes in St. Vincent and the Grenadines have strengthened significantly in recent years, with growth attaining a ten-year high of about per cent in 2006. The near-term outlook is also broadlyfavourable”.
The IMF accurately commented, too, that there was a welcome strengthening of the fiscal condition in 2007.
The 2008 Budget is fashioned, too, within a most challengingcontext of the global economy which exposes critical vulnerabilities of our domestic economy, namely, a dependence on imported oil, the price of which has been rising sharply; the erosion of trade preferences for bananas; the increase in the prices of imported food and other essential commodities; and the steep fall of the US dollar to which ourcurrency is tied.
The 2008 Budget is fashioned, too, within a most challengingcontext of the global economy which exposes critical vulnerabilities of our domestic economy, namely, a dependence on imported oil, the price of which has been rising sharply; the erosion of trade preferences for bananas; the increase in the prices of imported food and other essential commodities; and the steep fall of the US dollar to which ourcurrency is tied.
Additionally, there is our country’s proneness to natural disasters, especially hurricanes and
tropical storms.
tropical storms.
Still, the underlying growth potential of the economy of St.Vincent and the Grenadines, the resilience of our people, and the progressive policy mix of this administration, provide a base upon which to build further a modern, many-sided, competitive post-colonial economy to increase wealth, lift personal incomes, stimulate further economic growth, create jobs, reduce poverty and unemployment, and provide more, and a wider range, of quality goods and services for the people. All this must be done within reasonable bounds of fiscal
discipline to ensure a continued consolidation of the government’s fiscal position and a sustainable debt path, while not compromising the nation’s development requisites, particularly regarding human resource upliftment, poverty reduction, and the strengthening of the physical
infrastructure.
discipline to ensure a continued consolidation of the government’s fiscal position and a sustainable debt path, while not compromising the nation’s development requisites, particularly regarding human resource upliftment, poverty reduction, and the strengthening of the physical
infrastructure.
Mr. Speaker, in April this year, I authored a paper entitled The Modern, Competitive Post-Colonial Economy: The Case of St. Vincent and the Grenadines. It was published in each of the three newspapers in our country and was also distributed to a number of civil society organisations, distinguished nationals, Caribbean leaders, and regional institutions, including the Organisation of Eastern Caribbean States (OECS) and the
Eastern Caribbean Central Bank (ECCB). This paper, which had an overwhelmingly favourable reception, provides a synthesis of the analysis, prescription, and frame for implementation of the many-sided public policies of my government to meet the extant global and domestic challenges.
Mr. Speaker, I do not intend to repeat here all of that paper’s contents, which are already in the public domain; rather, I shall focus, summarily, on those central elements which are germane to this budgetary exercise. These include:
1. Education and training for living and production; this
is absolutely vital for a modern, competitive economy
with quality jobs.
2. A Health and Wellness Revolution to complement the
Education Revolution.
3. Competitiveness and enhanced productivity within a
more liberalised trade environment, which has seen
the erosion of the preferential trading regime,
especially for bananas.
4. Enhanced economic diversification into a top quality
tourism of all types; agricultural diversification into
commercial agriculture; a modern fishing industry;
niche markets; manufacturing sector; international
financial services; information communication
technology services; shipping, cultural and
entertainment services; including the music and film
industries; modern transport services; top quality
retail and wholesale trade; and competitive stateprovided
services.
5. A viable, competitive air and maritime transport
system with international quality infrastructure —
airports and seaports.
6. Attracting relatively high levels of direct foreign and
regional investment, supportive of strong domestic
investment.
7. A quality business environment including a favourable
tax regime, and a quality legal system, banking,
insurance, and professional services.
8. A viable energy policy with appropriate or suitable
external links and an emphasis on energy
conservation and renewable sources of energy.
9. The maintenance and consolidation of stable and
developmental macro-economic fundamentals in the
areas of monetary and fiscal policies.
10. A social organisation of labour, which brings enhanced
benefits to the working people and keeps a focus on
considerations of equity as an organising principle.
Job creation, poverty reduction, and a moderation of
prices for food and basic personal care products are
vital here.
11. An independent and free people with a people-centred
state apparatus and good governance, including the
maintenance of law and order and the sharp reduction
of criminal activities and violence.
12. The further elaboration and practical implementation
of appropriate policies to address the physical
challenges of nature, including global warming.
13. Deepening regional integration and integrated
production.
14. A foreign policy, which is independent, principled,
nationalist, and pragmatic and is designed to enhance
our nation’s capacity to address more efficaciously our
external environment in the interest of our people’s
humanisation.
15. The building of a modern and sophisticated society, in
every material respect, without abandoning the core of
tried and tested values of our Caribbean civilisation
and its magnificent Vincentian component.
A relevanthistorical and cultural reclamation is vital here. So,too, is an increased political consciousness of
ourselves, our nation, and our place in the world.
Clearly, the overall construction of a modern, competitive postcolonial society which is at once national and regional is, by its very nature, many-sided: economic, political, social, and cultural. Every itemised element is inextricably bound with others to constitute an organic whole in which the whole is more than a summation of the individual parts. Mr. Speaker, amidst the bundle of considerations in this Budget, at least two stand out for immediate corrective action:
ourselves, our nation, and our place in the world.
Clearly, the overall construction of a modern, competitive postcolonial society which is at once national and regional is, by its very nature, many-sided: economic, political, social, and cultural. Every itemised element is inextricably bound with others to constitute an organic whole in which the whole is more than a summation of the individual parts. Mr. Speaker, amidst the bundle of considerations in this Budget, at least two stand out for immediate corrective action:
1. The increase in commodity prices from overseas,especially food and oil.
2. The matter of poverty, especially in the rural areas consequent upon the effective removal of marketpreferences for our bananas in Europe, including theUnited Kingdom.
Mr. Speaker, rising food and energy prices throughout the region in recent months have their origins, almost entirely, overseas. St. Vincent and the Grenadines, like the rest of the CARICOM region, imports the bulk of its food commodities; and with the exception of Trinidad and Tobago, imports the energy products. The price of imported oil has been increasing sharply; the international price for a barrel of oil has moved from just over US$60 per barrel in January 2007 to almost US$100 recently. Speculation on oil futures, political tension,
and supply-demand factors are sending the price of oil through the proverbial roof.
In the case of the hike in food prices internationally, the following, among other factors, have been at play:
(i) The steep rise in the price of grain due to the extraordinary demand for corn to be used as ethanol for vehicles; the huge decline in wheat production in Australia due to bad weather; and the significant consumer demand from countries such as China and India.
(ii) The consequential increase in the price of animal products, including chicken, beef, milk, and cheese.
(iii) The fall in the US dollar which automatically causes an increase in the price of all commodities imported
from non-American sources.
(iv) The hike in energy prices which affects the cost of producing all goods and services.
Admittedly, too, there has been some price gouging at supermarkets and shops locally but this has been settling down more recently.
It is vital to identify correctly the causes of price rises; a wrong analysis would lead to wrong public policy. Thus, the assertion that the introduction of VAT in 2007 in St. Vincent and the Grenadines is the cause of price increases is plain wrong. How is it that zero-rated items such as chicken back and neck and milk have had increases when there is no VAT on them? And how come countries like Grenada and St. Lucia
with no VAT are experiencing higher price hikes than here in St. Vincent and the Grenadines? Everywhere in the Caribbean there are steep price rises. Indeed, the price increases are more moderate here than in most of the region.
Mr. Speaker, in August 2007, the Cabinet considered a paper prepared, upon my instruction, by the Ministries of Finance and Trade on the issue of increased prices for food and personal care products and with recommendations for remedial action. Subsequently, in October 2007, I raised the matter forcefully at a meeting of the Monetary Council of the Eastern Caribbean Central Bank. Then in November 2007, as
a member of the CARICOM Bureau of Prime Ministers, we discussed this matter at the Bureau meeting in Barbados.
And last Friday, 7th December 2007, the CARICOM Heads ofGovernment met in a special session in Guyana to address this urgent and vexing question.
Mr. Speaker, the Government of St. Vincent and theGrenadines has drawn-up a policy response to rising food
prices containing the following elements:
1. Regulatory: There are 75 commodities currently under price control. The Ministry of Trade has been
mandated to police the pricing of the core commodities with a state of heightened vigilance. Among these
commodities are basic foods. Further the Cabinet has accepted a bundle of proposals from the Ministry of Trade to streamline the price control system to make it more effective.
2. Fiscal: This response contains three limbs: (a) The recalibration of the VAT in such a way as to
expand the list of zero-rated and exempt items, including certain additional basic foods. The details
will be revealed later in this address.
(b) The provision of further tax relief for employees and businesses. These, too, will be detailed later.
(c) The review of import duties, including the Common External Tariff on certain commodities.
(3) Production: A National Food Production Plan has been drawn up by the Ministry of Agriculture; resources for the task at hand have been allocated in this year’s Budget. The emphasis is on an increased and quality production of fruit, vegetables, root crops, and livestock. Already, there has been a 50 percent reduction in the price of seeds at the state-owned Inputs Warehouse Company. Additionally, the resources allocated for the further development of the fishing industry, including the $6 million loan fund for fisherfolk to upgrade their fishing vessels, will certainly strengthen the implementation of the National Food Production Plan.
Clearly, Mr. Speaker, the production and proper marketing of a greater volume of locally-produced quality foods at competitive prices would inevitably lower food prices on a sustained basis.
(4) Consumers and Traders: Consumers are being urged to shop wisely for foods, beverages, and personal
care products. The Ministry of Trade is now publishingin the newspapers comparative prices on these items
from the various supermarkets. The state-owned Food City has been playing a central role in keeping prices as low as possible.
care products. The Ministry of Trade is now publishingin the newspapers comparative prices on these items
from the various supermarkets. The state-owned Food City has been playing a central role in keeping prices as low as possible.
(5) Regional Action: A Prices Review Task Force has already been established by the Eastern Caribbean
Central Bank to address this matter. The Government of St. Vincent and the Grenadines has a technical person
on this Task Force. A similar body has been established at the CARICOM level. Its work will be considered at a
meeting of the Council of Ministers for Trade and Economic Development (COTED). The role of the
Common External Tariff (CET) in pushing up prices on imported commodities from extra-regional sources will be assessed for remedial action.
These five bundles of responses demonstrate the seriousness with which this Government views the recent rush of price increases on food and personal care products, largely due to the spurt in commodity prices internationally. This government, too, is providing relief by way of pay increases, salary enhancements consequent upon the completion of the reclassification exercise, bonuses to government employees and the recipients of public assistance, and increases to the monthly stipends for persons on the NIS non-contributory aged-pension and on public assistance. The substantial package amounting to roughly $65 million over two years in pay increases, enhancements, bonuses, benefits, and tax relief, would undoubtedly soften the impact of the increase in prices on food and other commodities.
Mr. Speaker, since 2001, this Government has waged a manysided war against poverty with much success; and this war continues. A serious challenge to our efforts has arisen from the sharp erosion of the market preferences for bananas in Europe. Strategically, the Government is meeting this challenge with a mix of policies lodged within the frame of agricultural diversification, including the further restructuring
of the banana industry; alternative sustainable livelihoods including for forest users; the programmes of socio-economic development generally; and targeted interventions, to lift our people out of poverty. Littered throughout the Estimates for 2008 are programmes directed at sharpening the battles
against poverty. Moreover, a poverty assessment, which includes a household expenditure survey of living conditions, a participatory poverty assessment and an assessment of the various institutions, involved in the poverty reduction drive, has been initiated by the government so as to guide public
policy better and further.
of the banana industry; alternative sustainable livelihoods including for forest users; the programmes of socio-economic development generally; and targeted interventions, to lift our people out of poverty. Littered throughout the Estimates for 2008 are programmes directed at sharpening the battles
against poverty. Moreover, a poverty assessment, which includes a household expenditure survey of living conditions, a participatory poverty assessment and an assessment of the various institutions, involved in the poverty reduction drive, has been initiated by the government so as to guide public
policy better and further.
Mr. Speaker, the 12-year National Economic and Social Development Plan is well underway. A draft is ready for imminent circulation. This Plan, which will run from 2008 to 2020, constitutes a veritable 2020 Vision for socio-economic take-off and socio-economic transformation.
DOMESTIC ECONOMY
St. Vincent and the Grenadines’ economy recorded a positive growth during 2006. Preliminary estimates indicate that in real terms, GDP grew last year significantly by 6.9 percent, compared with 2.6 percent recorded during 2005. This significant growth was due to improvement in activities in the
Construction, Wholesale and Retail Trade, Transportation, and Agricultural sectors. In general, all sectors exhibited positive growth.
The Construction sector recorded growth of 11.4 percent, compared with 0.4 percent in 2005 as implementation of major public and private sector projects accelerated. Among these were the Canouan Jet Airport project, the Correctional Facility, Learning Resource Centres, the Lowmans Bay Generation Expansion Project, the Rehabilitation of the Windward Highway, the upgrading of the Arnos Vale Playing
Field, and tourism- related construction projects by the private sector.
Value-added in Wholesale and Retail Trade increased by 6.8 percent compared to 4.4 percent in 2005.
Meanwhile, the Transportation sector registered an increase of 18.0 percent
compared with a decline of 0.7 percent in 2005.
compared with a decline of 0.7 percent in 2005.
Output in Agriculture exhibited growth of 7.6 percent compared with a decline of 3.9 percent in 2005. The impetus for this improved performance came from the other crops subsector, which grew by 16.8 percent, and fishing, which grew by 10.0 percent in contrast to a negative 3.1 percent in 2005.
In 2006, estimates showed the external current account deficit widening to $324.3 million (24.0 percent of GDP). The merchandise trade deficit grew by 16.9 per cent and net inflows on the services account declined. The surplus on the capital and financial account improved to $326.2 million (24.1 percent of GDP) compared with $208.3 million (17.3 percent of GDP) in 2005. This performance was driven mainly by higher inflows from foreign direct investment and portfolio
investment.
investment.
The overall Balance of Payments improved, with a surplus of $32.7 million (2.4 per cent of GDP) in 2006 in contrasted with the deficit of $7.8m (0.7 percent of GDP) in 2005.
The average inflation rate for the year 2006 was 3.0 percent compared with 3.8 percent in 2005. The rise in prices during the year 2006 was significantly influenced by increases in the following groups: “Food” (5.7 percent), “Transport and Communication” (11.5 percent) and “Fuel and Light” (9.3 percent).
The “Transport and Communication” sub-index, which includes air transport, recorded the largest increase during the year as a result of a 25.5 percent increase in the price of petrol. Meanwhile, a higher fuel cost resulted in increases in the group “Fuel and Light”.
For the fiscal year 2006, actual capital expenditure amounted to $117.4 million, an excellent performance. This reflected an implementation rate of approximately 60 percent. A considerable amount of this expenditure was spent on further development of the social sector such as education ($14.0 million), the improvement of the transport sector including the rehabilitation of the Windward Highway ($18.0 million) and the development of the Canouan Airport ($10.3 million). A huge amount was also spent on the upgrading of the Arnos Vale Playing field at $26.6 million. Financing of the capital expenditure came mainly from
external sources which amounted to $62.4 million or 53 percent of the total financing. The remaining 47 percent or $54.9 of financing for the capital budget lat year was sourced locally.
It must be noted that approximately 73 percent or $45.4 million of the external sources comprised of external loans while $17.0 million was grant financing. This grant financing came mainly from the Republic of China on Taiwan.
OVERVIEW OF THE DOMESTIC ECONOMY FOR 2007
The economy is expected to strengthen further in 2007. Construction activities, Wholesale and Retail Trade,
Transportation and Government services have boosted the growth of the economy. During the first nine months of the year, indicators point to good performance of these sectors. By year’s end projections are for growth in excess of 5 percent. Performance in the construction sector will be further boosted by an acceleration in the implementation of major public and private sector projects already identified. For this period, expenditure on the Public Sector Investment Programme by the Central Government amounted to an increase of 64.3 percent over the comparative period of 2006 which itself was
an excellent year.
On average, consumer prices rose by 6.3 percent during the period January to September 2007. The rise in prices during this period has been significantly influenced by increases in the groups mainly “Food”, “Housing”, “Clothing”, “Transport and Communication” and “Fuel and Light”.
Mr. Speaker, I am pleased to report that the fiscal operationsof the Central Government for the first nine months in 2007 showed a marked improvement over the operation for the corresponding period in 2006. Projections to the end of 2007 show that the Central Government is expected to realize a current account surplus of approximately $42 million this year (3 percent of GDP) and an overall deficit amounting to 4
percent of GDP, well below the fiscal deficit of 4.9 percent of GDP and 6.1 percent of GDP realized in 2006 and 2005 respectively. Mr. Speaker, the current account surplus for2007 has been achieved despite heavy expenditure outlays in excess of $25 million in back-pay, the reclassification exercise, bonuses for public employees and persons on public assistance, and other transfers.
percent of GDP, well below the fiscal deficit of 4.9 percent of GDP and 6.1 percent of GDP realized in 2006 and 2005 respectively. Mr. Speaker, the current account surplus for2007 has been achieved despite heavy expenditure outlays in excess of $25 million in back-pay, the reclassification exercise, bonuses for public employees and persons on public assistance, and other transfers.
For the first ten (10) months of 2007, capital expenditure amounted to approximately EC $107.9 million. Approximately 62 percent or $67.0 million was spent on developing the social sectors such as education and training ($21.5 million) and enhancement of national security ($3.3 million). Other major capital projects were in the areas of transport and communication mainly the Windward Highway ($16.4 million), the Cross Country Road ($4.1 million) and the improvement of the Canouan Jet Airport ($17.2 million). A significant amount was also spent on the upgrading of the Arnos Vale Playing field ($16.5 million).
Mr. Speaker, approximately 58 percent or $63.0 million of the financing came from external sources with grant funds and external loans amounting to $33.5 million and $29.5 million respectively. The remaining 42 percent or $44.9 million was raised locally. Approximately 40 percent or $17.0 million of this local amount was spent on the Canouan Jet Airport, while the remaining 60 percent or $27.9 million was spent on development of various sectors of the economy such as health, transportation, and education.
Grant financing contributed significantly to the capital programme for the first ten months of 2007. The Republic of China on Taiwan and the European Union were the main donors to the investment programme. Together, they contributed approximately $29.0 million to the Public Sector Investment Programme. These funds were used mainly to continue the rehabilitation of the Windward Highway, the construction of the Cross Country Road, and the enhancement of the education sector. Other grant contributions came from the governments of Trinidad and Tobago and Venezuela, the Caribbean Development Bank and the World Bank and in kind contributions from the Government of Cuba.
Money and Credit
The broad money supply increased by 5.0 percent to $986.4 million during the first nine months of 2007, consistent with the expansion in economic activity. Growth in quasi-money resulted from a 7.8 percent ($34.4 million) expansion in private sector savings deposits. Of the components of narrow
money, increases were recorded in private sector demand deposits (6.5 percent) and currency with the public (5.0 percent). The counterpart to the increase in broad money was growth of 4.0 percent to $790.7 million in domestic credit. The expansion in credit was influenced in part by increased borrowing by the private sector of 11.0 percent. Under this rubric, outstanding loans to businesses rose by 22.5 percent and credit to households increased by 4.8 percent. The net indebtedness of the Central Government to the banking system fell to $21.2 million, influenced by a 13.7 percent growth in deposits and a 9.7 percent reduction in commercial bank credit.
The distribution of credit by economic activity shows increases in outstanding loans to tourism by 17.8 percent, and to agriculture and fisheries by 11.8 percent. Outstanding loans for personal use rose by 4.1 percent, attributed to growth in credit for home construction and renovation and purchases of
consumer durables.
Liquidity in the commercial banking system declined although remaining at a high level. The ratio of liquid assets to total deposits plus liquid liabilities fell by approximately 1.0 percentage point to 42.1 percent.
Meanwhile, the loans and advances to total deposits, ratio increased by 2.0 percentage points to 80.4 percent.
Mr. Speaker, I now turn to the sectoral developments for 2007.
AGRICULTURE AND FISHERIES
Agriculture continues to play a significant role in the economy of St. Vincent and the Grenadines despite the reductions in its contribution to GDP relative to the growing sectors of tourism and other services.
The balance between food imports and exports has been widening. Total food imports increased from $119.3 million in 2005 to $125.1 million in 2006, while total agricultural imports (meat and meat products, crops, fish etc.) increased from $54.1 million in 2005 to $57.5 million in 2006. Total agricultural exports declined from $49.2 million in 2005 to $45.2 million in 2006 with bananas declining from an income mof $32.1 million in 2005, to $27.5 million in 2006.
This indicates that there are significant opportunities for domestic investment in the sector, since there is already an available home market. The maximization of such opportunities requires a new look at investment and technical support to stimulate a modern commercialised agricultural sector. In response to this, the Government has formulated a National Food Production Plan.
Policies in the sector will focus on ensuring national food security, the production of selected commodities and products where there is comparative advantage for import substitution, and export expansion. Greater emphasis will be on the transformation of primary commodities into higher value added products that are internationally competitive.
Mr. Speaker, the production of root crops, fruits, vegetables and livestock inevitably demands firm measures to curtail or stamp out the theft of these commodities. The recently passed law in this regard and the recruiting of more police and rural constables are designed to assist in tackling this problem.
Mr. Speaker, the production of root crops, fruits, vegetables and livestock inevitably demands firm measures to curtail or stamp out the theft of these commodities. The recently passed law in this regard and the recruiting of more police and rural constables are designed to assist in tackling this problem.
The strategies for growth and development will continue to be agricultural diversification, with and around bananas, the modernisation of the sector through the process of industrialisation where each commodity is transformed into light rural-type, labour intensive agro-processing industries that will result in higher value-added, and most importantly, the creation of a sound investment climate. The role of the private/public sector in joint venture investments will be promoted in keeping with the national and regional policy objectives for agriculture; while education, training and skills development through information technology and technological innovations, will be used as a stimulus to encourage young persons to participate in the sector.
The modern agriculture will be built on the fundamental principles of education and training, skills development, technological innovations including a marketing and production information system and market research, development in biotechnology, value-addition, and mechanisation where practicable.
In 2008 and continuing Mr. Speaker, other priority emphases will be:
A special land-lease programme (Land Bank) which will make lands available to farmers, including those whose farms are affected with the moko disease and have no alternative lands, and to young farmers/entrepreneurs to be fully engaged in agricultural production.
Revisiting the land tenure arrangements so as to allow persons leasing Government lands (on land reform estates) the opportunity to have legal title to land. This arrangement is to empower farmers to secure loans for investment in agriculture and to promote the reallocation of lands not utilised.
To assist in the preparation of young farmers and other agricultural workers to benefit from these initiatives, we are establishing the Agricultural Training Institute.
The St. Vincent Banana Growers’ Association continues to operate under much financial strain. Although the export earnings for the first half of 2007 have been much more than for the same period in 2006, the volumes exported are not enough to cover the operating costs and to meet the loans and other commitments.
With the greater volumes of banana being sold under the Fairtrade label, the WINFA/Fairtrade and the
Government are of the view that their organisation should play a greater role in the administration and management of the banana industry. Preparatory work to that end is already in train.
Government are of the view that their organisation should play a greater role in the administration and management of the banana industry. Preparatory work to that end is already in train.
Fisheries
Fisheries development remains an integral part of the economic diversification policy. The development of the requisite infrastructure is for the stimulation of growth and economic activity in the sector. Moreover, it is felt that interventions in the artisanal fisheries sector are critical to the enhancement of incomes in the rural coastal communities, especially those with a strong tradition in fishing. It is for this reason that the creation of a commercially viable fishing industry, while ensuring the sustainability of fisheries
resources, remains a fundamental policy of this Government.
Work on the project for the construction of the Owia Fisheries Complex commenced earlier this year and the first phase is scheduled for completion in March 2008. This phase includes the clearing and excavation of the project site, the construction of retaining walls, jetty, slipway and breakwater, and the installation of sea defenses for the facility. This project is estimated to cost $33 million dollars and is expected to accrue significant benefits, not only to Owia and the surroundings communities but to the fishing industry as a
whole. It is also anticipated that this project will provide a critical link with the tourism sector as well as be a port for emergencies where sea travel is necessary.
whole. It is also anticipated that this project will provide a critical link with the tourism sector as well as be a port for emergencies where sea travel is necessary.
In recognition that commercialisation must be accompanied with strategic interventions within the fisheries sector, an allocation of million dollars $6 million was made available as a revolving fund to the fishing industry stakeholders to facilitate access to loans with favourable terms and conditions to enhance their fishing fleet. These funds were made available to three indigenous lending institutions, with which the
Ministry of Agriculture and the National Insurance Services have established memoranda of understanding. Loans of up to $400 thousand and in special circumstances over $400 thousand are now available at an interest rate of 8 percent per year. Moreover, mechanisms have been put in place to ensure
that sustainable commercial fishing enterprises are established by fishers. To this end, a committee was set up to assess the applications and to monitor the continuing eligibility of borrowers.
Ministry of Agriculture and the National Insurance Services have established memoranda of understanding. Loans of up to $400 thousand and in special circumstances over $400 thousand are now available at an interest rate of 8 percent per year. Moreover, mechanisms have been put in place to ensure
that sustainable commercial fishing enterprises are established by fishers. To this end, a committee was set up to assess the applications and to monitor the continuing eligibility of borrowers.
Efforts to ensure that infrastructural development projects contribute to the economic viability of the fishing industry continued throughout 2007. We continue to provide theNational Fisheries Market Limited with the financial and human resources to facilitate effective and efficient management of the operations at the Kingstown Fish Market.
Efforts to provide training in fish handling and processing for plant personnel, fishers, and vendors continued throughout 2007, particularly so, at the Kingstown and Bequia Fisheries Centres. A number of Vincentians drawn from various fisheries centres and government departments have received training in HACCP standards and are accordingly certified.
TOURISM
Mr. Speaker, tourism is the lead economic sector in St. Vincent and the Grenadines. Its contribution to every aspect of the economy, including linkages, is immense. Still, given the potential of our multi-faceted tourism product, much more can be achieved. It is the duty of the Government and all stakeholders in tourism to realise fully our tourism’s enormous potential.
To be sure, there are some structural constraints such as the lack of adequate air access occasioned by the limitations, currently, of air transportation and the absence of an international airport. But these air access issues are being addressed in a focused way for a tourism take-off. However, even the current air access constraints do not fully explain an insufficiency of the tourism sector development which, until recent years, was accorded a second-class status in St. Vincent and the Grenadines. It is not that progress has not been made, but better could have been done, and ought to be done. The challenges are many but with concerted efforts by all the relevant stakeholders, within the context of a creative and sensibly-focussed public policy and transformational, as distinct from transactional leadership, these challenges can be
overcome in the medium-term. It is for this reason, centrally, that the Government piloted the National Tourism Authority Act a few months ago. And before the end of the first half of 2008, the Tourism Authority will be fully established and operational to provide the requisite transformational leadership of this vital sector.
overcome in the medium-term. It is for this reason, centrally, that the Government piloted the National Tourism Authority Act a few months ago. And before the end of the first half of 2008, the Tourism Authority will be fully established and operational to provide the requisite transformational leadership of this vital sector.
In my Budget address last year, I listed a dozen transformational items, which among others, ought, with
urgency, to be addressed in the tourism sector. I shall not repeat here save and except to say that:
urgency, to be addressed in the tourism sector. I shall not repeat here save and except to say that:
“The transformation of our nation’s tourism from the
traditional ‘sun, sea and sand’ model to a more allembracing
destination model is required. Part of our
nation’s challenge is to refresh our tourism before its
maturation, to consolidate its core business, and to extend
it to take advantage of emerging market segments”.
traditional ‘sun, sea and sand’ model to a more allembracing
destination model is required. Part of our
nation’s challenge is to refresh our tourism before its
maturation, to consolidate its core business, and to extend
it to take advantage of emerging market segments”.
Last year, 2006, and so far this year, 2007, much progresshas been made in tourism but it has been uneven. Some of the limitations and weaknesses have been occasioned bymatters outside of our national control, others not.
Matters which we can and must correct include: The lack of a sufficiently aggressive, focussed marketing in the Caribbean and elsewhere; the absence of, or too few, “special holiday packages” offered by the hotels; the over-priced nature of some of our tourism facilities or services; the harassment of, or even crimes against, visitors, by a tiny minority of lawless persons; the under-developed condition of some of our tourism sites;
the less-than-optimal coordination between the various agencies of the State which interface on tourism issues; and the lack of a sufficient public consciousness about the vital importance of tourism to our lives, living, and production.
the less-than-optimal coordination between the various agencies of the State which interface on tourism issues; and the lack of a sufficient public consciousness about the vital importance of tourism to our lives, living, and production.
Mr. Speaker, visitor arrivals in 2006 to St. Vincent and theGrenadines totalled 306,578, an increase of 19.7 percent over 2005. The growth areas were as follows: cruise arrivals by 52.6 per cent; yacht arrivals by 14.3 per cent; stay-over visitors increased by 2 percent and same-day visitors by 1.2 percent. The total gross visitor expenditure in 2006 was $305.8 million compared with $280.5 million in 2005. The figure projected for 2007 is $324.4 million.
Mr. Speaker, during the period January to August 2007, total visitor arrivals to St. Vincent and the Grenadines jumped by 25.7 percent over the corresponding period last year, from 201,388 to 253,112 visitors. The performance, however, has been mixed: There were declines of 4.7 percent in the stay over
category and of 19.6 percent of same-day visitors. On the other hand, large increases were recorded for yacht arrivals (23.1 percent) and cruise ship visitors (66.1 percent). The Minister of Tourism will elaborate in his contribution later in this Budget Debate on the specific reasons for this mixed performance.
category and of 19.6 percent of same-day visitors. On the other hand, large increases were recorded for yacht arrivals (23.1 percent) and cruise ship visitors (66.1 percent). The Minister of Tourism will elaborate in his contribution later in this Budget Debate on the specific reasons for this mixed performance.
Mr. Speaker, the 2008 Estimates have earmarked significant resources directly to the promotion and development of tourism. This continues the trend set by this administration since 2001. The recurrent budgetary allocation to the tourism sector for 2008 amounts to $14.2 million or 3.2 percent of the
total recurrent expenditure budget. Included in this recurrent allocation is the sum of $8.3 million earmarked for the promotion of St. Vincent and the Grenadines as a tourism destination.
total recurrent expenditure budget. Included in this recurrent allocation is the sum of $8.3 million earmarked for the promotion of St. Vincent and the Grenadines as a tourism destination.
This sum is almost three times the figure allocated by the former administration in its last budget for 2001. Moreover, currently, when the promotion budget of the state-owned National Investment Promotions Incorporated (NIPI) is taken into account, a total of $9.8 million is available for the marketing and promotion of St. Vincent and the Grenadines.
In the capital budget for 2008, the Ministry of Tourism has been allocated $7.4 million or 3.1 percent of the total capital budget. Of this sum $4.9 million is budgeted for the development of recreational sites and to establish the operational framework for the National Parks and Beaches Authority, and the National Tourism Authority. This project has a total project cost of $17.7 million to be financed largely by a grant from the European Union. Another grant from the European Union in the sum of $1.6 million is to be utilised in 2008 to develop a Tourism Master Plan to be implemented through the National Tourism Authority.
Mr. Speaker, outside of the budgetary allocations to Tourism through the Ministry of Tourism, there are big capital allocations to Tourism through other Ministries and State agencies. For example, the $50 million Jet Airport at Canouan project is essentially a tourism project; so, too is the $1.5 million for the rehabilitation of the Union Island Airport; and, of course, the largest tourism project ever undertaken in St. Vincent and the Grenadines is the international airport project at Argyle estimated to cost some $475 million. Similarly,
expenditures on national security, LIAT, health and sanitation, education and culture, sports and transportation, water and electricity, are intimately connected to tourism development.
expenditures on national security, LIAT, health and sanitation, education and culture, sports and transportation, water and electricity, are intimately connected to tourism development.
Mr. Speaker, there are several large and small on-going, and immediately prospective investments, both foreign and local, in the tourism sector. Ongoing are the following among others:
• the Buccament Resort, a project estimated to cost US$200 million overall, which is targeted to complete its
first phase of 81 cabanas in April 2008;
• the BM Resort (formerly Blue Tropic Hotel);
• the renovated and expanded Anchorage Hotel in Union Island, which will carry over 100 rooms;
• the Isle รก Quatre Resort Development;
• the further expansion of the Canouan Development Project;
• the hotel development for Friendship, Bequia; and
• the resort development for Adams Bay, Bequia.
Further, plans are far advanced for hotel and tourism investments at Mt. Wynne/Peter’s Hope; St. Hillaire, Bequia; Balliceaux; Petit Mustique; and a joint venture marina project at Canouan between the Government of St. Vincent and the Grenadines and the Developers on that island, among others.
These investments, on-going and immediately prospective, will add a considerable number of rooms to the current number of almost 2,000 in the tourism plant of hotels, apartments, cottages, villas, and guest houses.
Mr. Speaker, contrary to those who sneer disapprovingly at the cultural products available in St. Vincent and the Grenadines, this government is satisfied that our nation’s musicians, entertainers, and cultural workers of the creative imagination have made, and are making, a splendid contribution to our nation’s creative soul and to tourism development. Clearly, a more efficacious partnership between the State, the private sector, and the creative personalities needs to blossom fully.
This Government stands ready to be so productively engaged.
Moreover, our national festivals have been developed and marketed since 2001 in a more focused way for the enjoyment of, and appreciation by, the visitors and ourselves. As always, of course, much better can be done. But undoubtedly there has been immense progress as witnessed through festivals such as the “Blues Fest”, Carnival, “Gospel Fest”, Heritage Month, Emancipation Activities, and “Nine Mornings”. The Government intends to develop these festivals further for our nation’s benefit and for commercial tourism rewards.
Mr. Speaker, our country has been the recipient recently of several tourism accolades in 2006, including, “the Most Improved Destination” issued by the prestigious US-Magazine, Dream World Cruise Destinations, in March 2007; and the “Best Diving Island of the Year Award” awarded by the Caribbean World Magazine.
Clearly, we are doing many things right but we must do better.And while we are doing so, let us remember to keep our cityand environs clean, and ensure that the handful of lawless persons do not harass or abuse our visitors.
AIRPORT DEVELOPMENT AND AIR TRANSPORT
The Government of St. Vincent and the Grenadines is
cognizant of the economic and social impact of airport
development. Hence current policies are based on the premise
that airport development has an important bearing on the
movement of goods and people. It is within this context that
Government has embarked on several initiatives aimed at
enhancing airport development throughout the State.
Argyle International Airport
The team of Cuban and Venezuelan engineers and technicians
have completed their work on the final designs for the airport
36
and will soon make a presentation to the International Airport
Development Committee. These designs will be used, among
other things, to guide the earthworks, scheduled to begin in
early 2008. For the first 12 months of earthworks, the plan is
to concentrate on the first kilometre of runway which covers
the area from the Southern end of the runway (Stubbs Bay
end). The heavy-duty equipment, courtesy the Government of
Venezuela, is being mobilised for trans-shipment to St.
Vincent and the Grenadines and the team of technical workers
from Cuba are already selected and are on stand-by to come to
our country to commence the earth works.
In June 2007, representatives of the Eastern Caribbean Civil
Aviation Authority (ECCAA) visited St Vincent and the
Grenadines and indicated their approval of the plans for the
Argyle International Airport as contained in the preliminary
report submitted to them. They have, as expected, sought
clarification on a few minor points, which the IADC will
address in a follow up meeting with them in early 2008.
The new segment of the Windward Highway - the bypass road
- is being done and is scheduled to be completed by July 2008.
This project involves about 3 kilometres of road from Mt
Pleasant to Peruvian Vale and a new reinforced concrete
bridge. This component is estimated to cost US$5.2 million,
and is funded by a loan received from the Caribbean
37
Development Bank. The bypass road would be ready for public
use before the existing Argyle main road is disrupted by
earthworks on the second kilometre of the runway.
The IADC is also coordinating the building of a road that
begins at Stubbs, crossing the airport zone at the southern
end of the runway, and terminating in Argyle. This road is
being done to provide access to homeowners who would
continue to reside in the Mt Pleasant area, on the eastern side
of the Argyle International Airport as well as the property
owners and visitors to the recreational pond at Rawacou. At
present, work on the road is at the design stage; the road
should be completed by the last quarter of 2008.
In implementing the Argyle International Airport project, one
of the responsibilities of the IADC is to identify and assess the
potential environmental impacts of the airport and to put
measures in place to prevent or reduce the negative impacts
and amplify the positive ones.
In consideration of this responsibility, IADC signed a contract
with Kocks Consult GMBH of Germany in September 2007, to
undertake an Environmental Impact Assessment (EIA) of the
airport construction. Kocks Consult is a highly recognised
international firm with proven expertise in making
environmental impact assessments of airport projects.
38
The IADC is in the process of making final payments to
property owners for built properties and is also making final
arrangements to pay for the vacant land parcels in the airport
zone.
The Government, through the IADC’s land sales, being done
by National Properties Limited, a state-owned company is
meeting the cost of site acquisition. The financial plan
elaborated at the inception of the project is to use bridging
finance. So far the IADC has attracted two bridging loans: $20
million from the National Insurance Services, and $30 million
from First Caribbean International Bank. These loans will be
repaid over 5 years and 4 years respectively from proceeds of
land sales.
The relocation and rebuilding efforts have been going well.
During the year, in addition to the 21 acre parcel of land at
Harmony Hall, the IADC has also bought and is in the process
of developing for sale to affected Mt Pleasant and Argyle
property owners, 3½ acres of land at Carapan, and 3 acres at
Diamond.
We are in the process, too, of negotiating with the Malaysian
Airport Authority (Malaysian Airport Holdings Berhad), which,
on our invitation, has formally expressed an interest in
39
providing management consultancy services for the Argyle
International Airport. Though the details of the consultancy
have not yet been fully worked out, it is expected that the
consultancy services would include airport planning design,
facilities planning, and operation and maintenance. The
Malaysian Airport Authority has extensive experience in the
management of airports both inside and outside of Malaysia.
Their willingness to partner with us would ensure that the
Argyle International Airport receives the quality management it
needs for us to realise the return from the huge investment
being made in this infrastructure. At the same time, the
Government is addressing the training and recruitment of
suitably qualified Vincentians to work in this area.
In July 2007, Government received an additional grant of
US$5 million from the Republic of China on Taiwan towards
the Argyle International Airport project. This grant brings
Taiwan’s total contribution to the project, so far, to US$30
million: US$20 million as grant funds and US$10 million as
soft loan. Taiwan’s contribution is earmarked mainly for the
funding of the terminal building, control tower, roads and
other support services of the airport project.
The financing arrangements spelt out by me in my speech to
the Nation on August 8, 2005, on the Argyle International
40
Airport continues to form the basis of the financing approach
to this project.
Canouan Airport
Work on the extension and upgrade of the Canouan airport as
a jet airport started in August 2006. This project includes
among other things the lengthening of the runway from 1,005
m to 1,790 m, in order to upgrade the airport to a category C
in accordance with ICAO standards, for the accommodation of
jets. The project also includes a component to expand and
upgrade the terminal building, and the upgrading of
navigational and communication equipment to improve safety.
This project should be completed early in the first quarter of
next year. Its estimated cost, almost $50 million.
Air Transport
Over the past year, significant developments have occurred in
the regional air transportation sector, not least among these
has been LIAT’s acquisition of the assets of Caribbean Star.
This solution to what was hitherto a fragmented and chaotic
situation has taken a somewhat circuitous route with good
reason. Initially our early discussions centred on a merger
between both airlines, but after many sessions of negotiations,
it was finally determined that the purchase of Caribbean Star’s
41
assets with certain covenants, was the best option. To
facilitate this decision, the three shareholder governments,
including St. Vincent and the Grenadines, were able to secure
a loan of US$60 million dollars from the CDB with St. Vincent
and the Grenadines being responsible for US$5 million. The
CDB loan is also accompanied by a technical assistance grant
of US$500 thousand to LIAT to be used for the purpose of
organisational restructuring.
The transformation and restructuring process will see LIAT
customising its services to meet market needs; enhancing its
products to address past problems, including the vexing issue
of customer service; rationalizing its route network strategy
which will be based on three (3) hubs (Antigua & Barbuda,
Barbados and Trinidad and Tobago) with a view to offering the
highest levels of regional and international connectivity - a
matter which is of strategic importance to us in St. Vincent
and the Grenadines; refining its pricing strategy to reflect the
cost of operation while being sensitive to the region’s needs.
In this regard, it is imperative that the other countries that
benefit from LIAT’s services begin to make provisions for some
form of market support where it is evident that the cost-based
fares are too high for the particular routes. Government
action is also required to address the travel taxes where these
appear to be onerous.
42
EDUCATION
Since the launch of the Education Revolution in 2001, this
nation has witnessed monumental accomplishments in every
area of education in St. Vincent and the Grenadines. Still, as
always, there is much more to be done and there are many
weaknesses and limitations to be efficaciously addressed; and
the strengths and possibilities are to be further enhanced to
the fullest.
As a Government, we believe that the State has an over-riding
obligation to put everything in place to deliver a quality
education, with universal access, consistent with the
resources at hand. And on this matter we must go the extra
mile, pushing always the margins of achievement. The
purpose of this quality and accessible education is basically
three-fold:
(1) To train critical minds in such a way as to educate the
whole person to receive and transmit universal
culture, including science and technology, but with a
particularity resonant with, and grounded in, the
ethos of our Caribbean civilisation;
(2) To produce sufficiently skilled and trained persons in
the requisite numbers to man and enhance, in the
43
most satisfactory way, our productive apparatuses at
home, and for employment in the overseas market of
this increasingly globalised world; and
(3) To facilitate and foster the building of a many-sided,
modern competitive post-colonial economy which is at
once national and regional. In short, the education
system must be linked appropriately with the
manpower needs of the country.
From these fundamental truths, beliefs, and purposes spring
our mantras: “No child must be left behind; no teacher must
be left behind; no parent must be left behind”; “let the youths
soar like eagles with their wings unclipped”; and “each one
must teach one” in our celebrated chorus: “Education,
Education, Education”.
Mr. Speaker, at each stage of this glorious Education
Revolution, at each phase of this uplifting process, at each
articulation of this or that creative educational initiative, the
perpetual naysayers find fault amidst their debilitating
evangelism of learned helplessness, negativism, and even
paralysing despair. This Government, this people’s
government, will never ever embrace the caution of those,
whether in St. Vincent and the Grenadines or elsewhere in
international financial institutions, who want to slow down or
44
encumber the education train which is well on its
revolutionary journey. This Government embraces an
educated, trained, knowledgeable, and enlightened population.
We turn askance against ignorance and unknowing which are
the real weapons of mass destruction.
Mr. Speaker, this restatement of our government’s unequivocal
policy stance in this the sixth year of the Education Revolution,
provides an on-going reaffirmation of our central priorities:
Education and, inextricably linked to it, Poverty Reduction.
Every home in this land has been positively touched by these
policies.
So, for the year 2008, we embark upon the process of further
consolidating and extending the Education Revolution. And we
have put the resources in the Budget for this on-going
monumental enterprise.
In the Budget, both recurrent and capital, the sum of $126.5
million or 17 per cent of the total Budget of $757.1 million is
allocated to be spent by the Ministry of Education: But,
through other Ministries, significant additional expenditure is
effected on Education to the tune of another $25 million,
approximately. Thus, recurrent and capital spending on
education and training for 2008 amounts to $152 million or
some 20 per cent of the entire Budget. The principal items of
45
additional expenditure on education outside of the Ministry of
Education, include the following: $4.5 million to the University
of the West Indies; $4 million for nursing education; $4 million
for training through the Public Service Commission; $7.2
million for the construction of Modern National Library and
$1.5 million for constructing additional learning resource
centres. Indeed, capital spending in the educational sector for
2008 amongst to $53.9 million or 21.9 percent of the capital
budget. This represents an actual increase of $18.3 million or
51.4 percent over the 2007 capital budget.
Mr. Speaker, all these sums are augmented by university
scholarships, through bilateral agreements with Cuba, Mexico,
Venezuela, Taiwan, and Malaysia, among others and by the
special loan programmes for tertiary education, including that
for economically disadvantaged students.
Mr. Speaker, this year 2008 again holds great promise in the
process of consolidating and extending the Education
Revolution.
Permit me Mr. Speaker to highlight several of the sub-sectors
within the Ministry of Education:
First, Adult and Continuing Education: During 2008, a
comprehensive study will be conducted on this sub-sector to
46
guide its work more coherently and to build upon its
remarkable successes thus far. This sub-sector is currently
engaged in the implementation of activities in basic integrated
literacy, numeracy, a life-skills programme, technical and
vocational training, and a certification of sections of the skilled
workforce. In the latter regard, in 2008, under the Special
Framework of Assistance (SFA 2003), adult educational
centres are to be constructed and equipped at a cost of $4.5
million.
Secondly, the Early Childhood Education: Historically, in
St. Vincent and the Grenadines, early childhood education has
been within the domain of private operators of uneven quality
and limited range. The Government, through the Education
Act of 2006 and other authoritative policy pronouncements,
has made it clear that a markedly enhanced early childhood
Education programme is one of its central platforms. A policy
framework, regulations and standards are being elaborated
and refined. Further, the Early Childhood Division in the
Curriculum Unit will build upon, and extend, its range of
educational activities in this sector. The goal is to achieve, in
practical terms, universal early childhood education by the
end of 2010.
It is to be noted, in this regard, that all new primary schools
are being constructed with an appropriate wing for early
47
childhood learners. Meanwhile, teachers are being trained in
increasing numbers at all levels, including post-graduate
university training, in early childhood education. Each child
between the ages of 3 – 5 years, however economically
disadvantaged its parents, must be afforded the practical, as
distinct from a theoretical, opportunity for a quality early
childhood education. To assist in this regard, an Education
Access Fund for needy students is being created.
Thirdly, Special Education: Our nation’s children and other
persons with learning or special disabilities deserve the full
attention of the education system. Some students with certain
learning disabilities are quite properly schooled in the regular
primary and secondary educational structures. Others, with
more special needs are accommodated in special schools.
Both the range and quality of the special education are being
enhanced through numerous initiatives and programmes for
the students, teachers, and parents alike. More and better
quipped physical facilities are being provided. In 2008, further
improvements will be effected at the Schools for Children with
Special Needs at Kingstown, Georgetown, and Bequia.
Moreover, the Ministry of Education, in keeping with best
practices internationally, will further elaborate alternative
models of special education in order to maximise the returns
on scarce resources.
48
Fourthly, Primary Education: The Result Indicators in the
Estimates for 2008, which were approved last week in this
Honourable House, emphasise a continued focus on primary
education as part of the basic foundation for the entire
educational superstructure. The 61 primary schools providing
universal primary education to over 16,000 students through
a teaching staff of some 1,200 and some 20,000 parents, and
a recurrent budget of $32.8 million for 2008, constitute a
massive and complex undertaking.
Mr. Speaker, in terms of the pedagogics at the primary level,
the Ministry of Education plans in 2008 to effect the following,
among other things:
Refurbish school plants in order to make available modern
technologies, library and information centres, adequate
classroom space, playing facilities, improved sanitation,
and other facilities for students and staff;
Continue to monitor the curriculum and to ensure an
optimal delivery of it;
Pursue a programme of on-going remedial education for
relevant student sub-sets so as to manage better the
transition to secondary education;
49
Establish all necessary mechanisms to ensure that
teachers are held accountable for each child’s learning
and development; and
Complete the construction of three primary schools at
Bequia, Ebinboro, and Fair Hall.
Fifthly, Secondary Education: Mr. Speaker in 2001 when
this government came to office, only 39 per cent of the 12-year
olds were at secondary school. Within four years thereafter,
all the 12-year olds entered secondary schools as access
became universal and the quality enhanced. This remarkable
achievement defanged the assorted partisan political critics
and elitists who had prophesied, wrongly again, that this
magnificent venture would fail. This government is rightly
unrepentant for having taken the historic initiative to make
available secondary schools places for all children of
secondary school age. The children and their parents,
especially the poor and working people, have responded with
enthusiasm to this flag ship programme of the ULP
government.
As was expected Mr. Speaker, the introduction of universal
secondary education has created some unique challenges for
the educational system. Many secondary-aged students who
have not met the baseline academic requirements are at risk
50
because of their learning limitations. Accordingly, remedial
intervention has had to be undertaken in many subject areas
to assist these students. These interventions will continue
and be sharpened in 2008.
Currently, three new modern, well-equipped secondary schools
are at various stages of construction: A replacement for the
Barrouallie Secondary School with funding from the Caribbean
Development Bank and the Government of St. Vincent and the
Grenadines; a replacement secondary school at Union Island
with funding from the European Union and the Government of
St. Vincent and the Grenadines; and construction of a “brandnew”
West St. George Secondary School, financed from a loan
from the World Bank and the Government of St. Vincent and
the Grenadines, is expected to commence in the second half of
next year after regrettable delays which were beyond this
administration’s control. Meanwhile, work will continue on
rehabilitating and upgrading other secondary schools
including the completion of the construction of the
Intermediate High School.
Additionally, the modern National Library, under construction,
has been allocated $7.2 million for spending in the 2008; $6.5
million being part of a grant from the Government of Taiwan;
and the sum of $3.2 million has been earmarked for
51
educational improvements through Information
Communications Technology.
In the meantime, the secondary education programmes will
continue to be upgraded for better delivery and results,
especially in mathematics, science, ICT, english, and foreign
languages. More resources have been made available for this
purpose.
Mr. Speaker parallel to secondary education is an ever-more
varied and relevant programme of technical and vocational
education for students of secondary school age who opt to
pursue their training at one of the Technical Schools (formerly
called Multi-Purpose Centres) in Kingstown, Campden Park,
Georgetown, Layou, Barrouallie, and Petit Bordel. The twostorey
modern facility at Kingstown, located in the premises of
Bishop’s College, is part and parcel of the improved facilities
for training in the Technical Vocational and Educational
Training programmes being offered. This is a vital area of the
Education Revolution since it provides students with practical
technical skills and a sound basic education for living and
production.
Sixthly, Post-secondary Education. In each area of postsecondary
education in St. Vincent and the Grenadines, there
has been considerable progress: The numbers of students
have more than doubled; in the case of School of Nursing, the
52
annual student intake has increased five times; the quality
and range of the education offered have improved markedly;
and the physical facilities have developed to accommodate the
student demand; the legislative and management
arrangements have been put in place for a better functioning
of the integrated Community College; and a strategic plan for
the College is being refined, elements of which are already
being operationalised. Throughout 2008, these initiatives, and
others, will be pursued for the further development of the
Community College and the School of Nursing.
Mr. Speaker, in the 2008 Estimates, the integrated
Community College has been allocated $6.3 million for
recurrent spending; and $4.05 million from the recurrent
budget has been earmarked for the School of Nursing, a figure
some ten times what it was in 2000.
Among the many initiatives for 2008 for the Community
College, I mention two for which there are allocations in the
capital estimates:
(1) The Community College Development Programme, for
which $270 thousand has been allocated to pilot a
University of the West Indies franchise to pursue an
associate degree at the College. This programme will
enhance opportunities for those students who wish to
53
pursue the “university degree track” immediately,
commencing at the associate degree level rather than
proceeding to the traditional Advanced Level or CAPE
Examinations.
(2) There is a huge programme for Information
Communication Technology training being designed for
the Community College. A sum of $2.7 million has been
allocated in the 2008 capital budget for this. This project
has a cost of in excess of $20 million and is expected to
be completed in 2010. It is part and parcel of a much
larger many-sided educational project, with ICT training
at its core, of over $40 million, financed almost entirely
by a grant from the European Union under the 9th
European Development Fund (EDF) programme.
Seventhly, University Education: Since 2001, the number
of Vincentians receiving university training has increased
almost 10 times. The target of this government is to have, on
average, at least one university graduate for each of the
33,000 households in St. Vincent and the Grenadines by the
year 2025, at the latest. This will be achieved by face-to-face
education in universities and colleges overseas and at our
Community College and by way of distance education made
available to students right here in St. Vincent and the
Grenadines. The resources are accordingly being allocated in
54
the 2008 Budget and will continue so to be allocated so long
as this government is in office.
Mr. Speaker, when this government came to office in 2001, St.
Vincent and the Grenadines was ranked number five of the
non-campus countries in terms of student admissions at the
University of the West Indies. By 2005 this country was
number one of the non-campus countries, in student
admissions. This was achieved, and the achievement is being
consolidated and extended, through increased budgetary
allocations to UWI, an increase in the number of national and
other scholarships, increased resources made available as
grants through the Training Division of the Government, more
monies allocated to the regular student loan programme, and
the institution of the specially-designed university student
loan programme for economically disadvantaged students
under which the Minister of Finance signs as the guarantor of
the loan for each student up to a maximum of $120 thousand.
Incidentally, this economically disadvantaged student loan
programme has had a delinquent loan portfolio of under two
per cent!
Beyond the University of the West Indies, St. Vincent and the
Grenadines has hundreds of students at universities and
colleges elsewhere in the Caribbean, Mexico, Taiwan,
Venezuela, Malaysia, the USA, Canada, the United Kingdom
55
and France and of course Cuba. We are in the process of
finalising negotiations for our students to pursue university
training at universities in Turkey and Morocco. Personally, I
want to see Vincentians at universities in every corner of the
globe.
Mr. Speaker, distance education is becoming more and more
important in university education. To this end, St. Vincent
and the Grenadines is part of a regional initiative, known as
the Caribbean Knowledge Learning Network (CKLN), partly
financed by the World Bank. Moreover, St. Vincent and the
Grenadines through the 9th EDF of the European Union is
elaborating its own programme of distance learning at the
post-secondary level. Enormous opportunities are being
further opened up for our nationals for university/college
education.
Mr. Speaker, Honourable Members, there are two other issues
touching and concerning the educational system which I must
address, namely, its management, and school safety.
Managing any educational enterprise of the magnitude and
with the extant limitation of resources like the one in St.
Vincent and the Grenadines is a huge challenge. To do so
with the massive Education Revolution in progress is surely a
monumental task. Clearly, further managerial reform is both
necessary and desirable in order to deliver more efficaciously
56
the education product. For 2008, this matter is on the agenda
for urgent action.
Regarding school safety Mr. Speaker, the Government has
moved to stamp out violence in schools. The Ministry of
Education has assembled a team of counsellors who will work
in conjunction with the professionals in the Ministry of Social
Development on this matter. Joining them is a fine police
officer, Superintendent Hackshaw of the Royal St. Vincent and
the Grenadines Police Force, who has been assigned to the
Ministry of Education to assist in elaborating a “school safety”
strategy and to aid in its implementation. The Cabinet has
already received an oral report from Superintendent Hackshaw
and it will shortly be sent a written preliminary assessment
with recommendations for urgent action. Further, the
Ministry’s officials and I have met a delegation from the
distinguished John Jay School of Criminal Justice of New York
to discuss its possible assistance on school safety.
Mr. Speaker, it is true that the violence in our schools do not
reach anything near to the level in other Caribbean countries,
but this Government is absolutely determined that students
and teachers must be able to function at our educational
institutions in peace and with civilised standards. Let no one
doubt our resolve in this regard!
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HEALTH
St. Vincent and the Grenadines continues to progress in the
delivery of health care services to its citizens. Last year, we
reported on the overwhelming success of our Primary Health
Care Programme and positive Vital Health Indicators, which
continue to show improvements. Dental services have been
extended; counselling services expanded into institutions and
schools, and emergency medical services strengthened by
equipping the district facilities and training staff.
The National Eye Screening Programme- Vision Now- a success
story of the Government’s foreign policy, took on a new
dimension. No longer are patients required to travel to Cuba
for corrective eye surgery. Instead, many of these services are
being provided locally at the Milton Cato Memorial Hospital
through the continuing effort of medical personnel from Cuba.
Over 300 surgeries were completed in one (1) month. The
whole Vision Now Programme is made possible through a $30
million grant in kind from the Government of Cuba to whom
we owe a debt of gratitude for their generousity.
Notwithstanding these achievements, there has been a rapid
increase in the incidence of lifestyle diseases such as obesity,
diabetes, hypertension, heart diseases, strokes, cancers and
drug abuse. Sparing no effort, our government has responded
to this scenario by signing the Port-of-Spain Declaration on
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non-communicable diseases earlier this year. We have also
appointed an Epidemiologist who will play a vital role in the
fight against the epidemic of non-communicable diseases in
this country.
This administration continues to recognize the importance of a
healthy population to social and economic development. For
the first time, the Ministry of Health and the Environment can
boast of a National Strategic Health Plan (2008-2013) to be
launched very early in the New Year, which forms the basis for
the development of the Health Sector and the targeted success
of the many-sided Wellness Revolution which will be formally
launched early next year. The Wellness Revolution is a most
welcome, and natural companion, to the Education Revolution.
In this regard, we have identified several challenges which I
outline below.
The first major challenge is to strengthen the health system in
order to scale up disease prevention and control programmes.
Accordingly, the primary health care strategy continues to be
the main axis of the health care delivery system within the
country, offering free health care to all, with the emphasis on
the promotion of health and the prevention of illnesses. This
service will be greatly enhanced in 2008/2009 with the
improvement of various health centres. Already the
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refurbishing of the Nurses Quarters at Barrouallie is complete.
Construction will continue on the Lowmans Windward Health
Centre; and the Clare Valley Health Center will be upgraded to
a model facility with the addition of an ambulance service and
other amenities. District doctors will be available five (5) days
per week at this and other specialist medical outpatient
clinics.
Further, the Government continues to upgrade the delivery of
Secondary Health Care service to the people of the state. The
project to improve the Mental Health services within the State
will commence early in 2008 with the introduction of
comprehensive community psychiatric services. The objective
here will be to strengthen the mental health outreach
programme.
The shortage of health personnel has been addressed with
seriousness as never before and this Government has
managed to close successfully the gap between the necessary
and the available nursing staff. There are presently two
hundred and ten (210) persons being trained as registered
nurses at the St. Vincent and the Grenadines School of
Nursing and almost ninety (90) persons are pursuing similar
training in the Republic of Cuba. Additionally, through the
reclassification project and salary increases, we have improved
the remuneration of nurses, doctors and healthcare
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professionals in order to retain our health care personnel.
Having quality health care professionals is critical to any
health care system.
As promised in the last Budget Address, technical plans for
the state-of- the-art Medical Complex in Georgetown have
been completed and construction has started. With assistance
from the Government of Cuba this modern medical complex is
expected to be a showpiece in health infrastructure. This
extensive facility will provide Vincentians with vital medical
services including the much-needed diagnostic and dialysis
capabilities. The presence of this facility will enhance our
prospect of attracting another medical school. This Medical
Complex is targeted to cost some $15 million in construction
and equipment.
The second major health challenge is to ensure that health is
prioritized in the overall development policies. This means that
we must address the broad determinants of ill health, which
among other things, includes, low levels of education, poverty,
unequal gender relations, high-risk behavior and an unhealthy
environment. We are mindful of the cross - sectoral nature of
health determinants, and the fact that they must be addressed
within a broad economic and political framework. We
recognize that good health is a measure of well-being. It is also
a driver of growth. Carefully- targeted investment in health
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would always deliver positive benefits for individuals, the
economy, and society.
The third major health challenge is to develop health strategies
that respond to the evolving needs of the population. This
means developing cost-effective strategies, which address
those diseases and conditions, that account for the greatest
share of the burdens of diseases. Efforts are being made to
reduce violence and injuries as well as non-communicable
diseases. This is part and parcel of the Wellness Revolution.
A health related challenge is the management of the delivery of
health services. Thus, the decision to alter the structures of
management at the Milton Cato Memorial Hospital and to
effect other managerial reforms in the health system.
Mr. Speaker, the recurrent budget on Health in 2008 is $55.2
million and capital spending is put at $18.8 million.
Altogether a figure of $74.1 million and is targeted to be spent
on Health in 2008.
HIV/AIDS
The Government of St. Vincent and the Grenadines continues
to work with local regional and international partners in the
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fight against the HIV pandemic and has seen tremendous
gains, this year.
Through the World Bank Project the Government has in
2007 spent over four million Eastern Caribbean dollars
(EC$4,000,000) on the construction of the National AIDS
Secretariat; the refurbishment of health centres and
schools to facilitate the Voluntary Counselling and Testing
programme; and the commencement of works on the
Health Information System.
We have also received assistance from the Global Fund
against AIDS, Tuberculosis and Malaria.
The Government will continue to implement in every material
particular its well articulated National Strategic Plan on
HIV/AIDS. The Minister of health will elaborate later in the
debate.
DISASTER MANAGEMENT AND CLIMATE CHANGE
Evidence has been mounting over the past decades that the
global climate is indeed changing. This is largely attributable
to human activities. While changes in environmental
conditions have serious consequences, these anthropogenic
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greenhouse gas emissions also contribute to climate variability
and weather extremes.
Here in our country, we are not immune to these phenomena.
The potential devastating effects on the coastal areas, the
spawning of mega hurricanes, and extremes of temperature
are some of the manifestations of global warming.
In addition we have experienced changes in the rain pattern
which could be attributed to global warming. The number of
rain days is decreasing while the intensity of the rainfall on
those rain days is significantly increasing. This must not be
taken slightly, as it poses serious implications for the
availability of water for domestic, commercial and agricultural
use. Consequently, larger water storage tanks must be
constructed. On the other end of the spectrum, intense rainfall
could have devastating effects on the environment through
flooding and landslides. Notwithstanding that there is little
this country can do by itself to limit global green house gas
emissions, we have to position ourselves to respond and
mitigate as far as possible, the negative impacts. As such,
government has embarked on a number of initiatives.
These include the implementation of the Global Environment
Facility funded “National Resource Management Project” which
would ensure that St. Vincent and the Grenadines complies
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with requirements of the climate change convention and the
Montreal Protocol. Additionally, the Caribbean Community
Climate Change Centre (CCCCC) would implement the GEFfunded
Special Programme on Adaptation to Climate Change
Project (SPACC), aimed at integrating climate adaptation
principles into the eco-system management in Spring Village,
Union Island, and Bequia.
St. Vincent and the Grenadines, along with other CARICOM
member States joined the Caribbean Catastrophic Risk
Insurance Facility (CCRIF), in 2007. It functions as a
business-interruption insurance, which would provide the
government with short-term liquidity if the country is hit by a
category 5 hurricane or catastrophic earthquake. The main
aim is to provide immediate liquidity to the State allowing it to
function until additional funds can be accessed from other
sources.
In 2008 and beyond, Government will:
Finalise the National Physical Development Plan. This
seeks to ensure among other things, the optimum use of
land, in an effort to prevent flooding, land-slippage and
damage to property.
Improve data collection capacity amongst environmental
and disaster management agencies. This will be done
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through personnel training and the acquisition of vital
pieces of equipment.
Enhance the public’s awareness to disaster management
and climate change.
Further strengthen disaster mitigation strategies through
hazard mapping.
Promote the integration of climate change considerations
into the lifestyle of all citizens.
The National Emergency Management Office (NEMO) provides
the leadership in the area of disaster preparedness and
management. It will step up its excellent work further not
only in the areas connected to hurricanes, storms, and
landslides but also in respect of earthquakes and any possible
volcanic activity.
ROADS
Adequate road access is essential to achieve economic growth
and development. In recognition of this fact, Government sees
the need to upgrade, expand and maintain the road network
throughout the country. In 2008 in our Estimates,
approximately $51 million have been allocated for road
improvement and rehabilitation, including the Windward
Highway from Fancy to Kingstown with funding from the EU,
CDB and the Government of St. Vincent and the Grenadines.
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Additionally, work valued at nearly $130.0 million for a
comprehensive road programme over the next 5 years would
be implemented on a phased basis.
WATER AND SOLID WASTE
The CWSA continued its steady operational and financial
performance in 2006-2007, recording an overall surplus of
$416 thousand despite suffering a substantial foreign
exchange loss and while subsidizing the Solid Waste
Management Unit in the sum of $1.1 million.
Over the last financial year the CWSA’s assets have grown
from $83 million to $88 million, while its receivables have
been significantly reduced from $4.4 million to $3.6 million
dollars.
Notwithstanding the excellent operational performance the
CWSA is now faced with three (3) substantial challenges in the
upcoming year:
1. A significant increase in its debt servicing requirements
for important projects already serving the population,
including the Dalaway and Windward Water Supply
projects.
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2. The necessity to transform the Solid Waste Management
Unit into a viable operation.
3. The provision of finance for several important expansion
and improvement projects in both the water and solid
waste sectors, to which the government of St. Vincent
and the Grenadines will continue to make its
contribution. These projects include: the implementation
of the Grenadines Solid Waste Management Project; and
the upgrade of water systems at Perseverance, Fancy,
Dalaway, Layou and Green Hill. There will also be
significant capital investment in computer technology
aimed at improving the overall operational efficiency of
the Authority.
ENERGY
Buoyed by rapid economic expansion, electricity sales in St.
Vincent and the Grenadines have increased by an annual
average of 6.5 percent over the last five years. This increase
in demand coupled with an aging plant has precipitated the
need for more generating capacity and for improvements in
the transmission and distribution systems. The growth in
demand is expected to continue into the foreseeable future
with the coming on stream of major tourism projects, such
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as the Buccament Project, and with continued
improvements in our people’s living standards.
Accordingly, Vinlec has already drawn up plans for the
installation of two additional engines with a total capacity of
8.6 megawatts. The addition of these engines along with
the continued expansion of the 33 KV lines and several
other small capital projects would require an additional
capital investment of approximately $70 million over the
two years.
The increase in demand for electricity comes at a time when
the cost of fuel has skyrocketed, with crude oil prices
reaching record highs in November this year. Over the last
four years, the price of oil has more than tripled with Brent
Crude oil moving from an average of US$30 per barrel in
2003 to over US$90 per barrel in November 2007. Vinlec’s
excess fuel cost which amounted to $12.9 million in 2002 is
expected to surpass $47 million this year. This cost has to
be met by the consumers in the form of a higher fuel
surcharge and the impact on other areas of the economy.
As a result, the fuel surcharge which amounted to 14.4
cents per unit in 2002 increased to 34.4 cents per unit in
2006 and 35 cents per unit in the first eleven months of
2007.
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Now that Government has received the report on the cost of
service study, we are, among other things, reviewing the
methodology used to calculate the fuel surcharge. The
proposed new formula will give Vinlec an incentive to reduce
its fuel cost by operating at a better heat rate, which
measures the number of units produced from each gallon of
fuel.
Rising energy cost is one of the principal economic
challenges facing the country. We must therefore seek to
formulate and implement strategies to minimize its adverse
impacts on the economy and the population. This is why
the Government is establishing an Energy Conservation and
Development Unit in the Office of the Prime Minister to
formulate appropriate responses to the existing global
energy situation. This Unit will, among other things:
(1) Collaborate with the private sector and international
agencies, to examine the feasibility of further developing
renewable energy sources including biomass, wind and
geothermal. We have already received a number of
proposals from interested groups and look forward to
further work in this area with practical urgency.
Indeed Mr. Speaker, preliminary data from the study of
the Ribishi Point site have shown that there are great
70
prospects for the establishment of a wind farm and
Vinlec has received expressions of interest from several
investors.
(2) Examine the feasibility of placing solar panels on all
government buildings, within a five-year time frame, in
order to generate a portion of the electricity consumed in
these buildings.
(3) Work with the Bureau of Standards to develop energy
efficiency standards for motor vehicles, household
appliances and equipment that are imported into the
State.
(4) Promote conservation and the use of renewable energy in
private businesses, homes and government offices.
A Capital sum of $1 million has been allocated in the 2008
Estimates for the establishment of an Energy Conservation
Fund to develop an Energy Conservation Programme
through this unit. Through this programme, we intend to
convert the threat from high-energy prices into
opportunities - opportunities to utilise more of our natural
resources to provide for our energy needs, to provide more
training and jobs for our people, to clean up our
environment, to secure the transfer of technology, and to
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develop further our Small Medium Enterprises and microfinance
programmes.
TELECOMMUNICATIONS
During 2007, a number of activities aimed at bolstering the
telecommunications sector has been undertaken. Some of
these activities should result in declining costs, all part of the
aim to fully liberalise and modernise the sector, in order to
place the economy on a more competitive footing.
During the year, work continued on modernising the legal
framework and in establishing the electronic and manual
systems to enable the functioning of dispute resolutions.
When this is completed, consumers would be provided with an
avenue to have their disputes with service providers settled in
a more efficacious manner than hitherto existed.
Other regulations such as those that relate to the provision of
quality service are also in the final draft stages. With these in
place, providers would be responsible for the provision of an
agreed minimum level of service.
Building on work completed in 2006 and 2007, the final draft
of the Universal Fund Regulations is undergoing its final
72
review. It is expected that these regulations would be
gazetted in early 2008 to operationalise the Fund.
The growth in fixed line telephones remained flat during 2007
and this is of some concern to the government, mainly
because this sub-sector is the main medium through which
high-speed internet access is available. It is therefore
anticipated that with the full implementation of the Universal
Fund, persons in the lower income bracket would have greater
access to the internet. Mobile customers would also benefit
from the declining rates. The impact should be significant as
statistics indicate that around ninety percent of the population
utilise this mode of communication.
Work has already commenced on the 4.5 million euros ICT
Development Programme funded by the European Union and
activities would move into high gear in 2008. As I noted in my
2007 Budget Speech, this project, among others things, would
be for the establishment of a national e-business incubator
centre, building capacity (especially among those of the
population who were dependent on bananas), modernising the
legal framework for the ICT sector and the computerisation of
the Lands and Commercial Registry.
Telecommunication would be improved in 2008 in the Public
Service, with the procurement of a modern PBX system. The
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current system is obsolete and is not capable of providing the
service that is required in a modernised, competitive economy.
It will cost about EC$1 million and should impact positively on
government’s communication bill, especially as it will possess
the ability to utilise voice-over-internet-protocol (VOIP).
YOUTH
The youth constitutes 58 percent of the population in St.
Vincent and the Grenadines. This large segment presents
great challenges but by the same token, magnificent
opportunities for transforming our economy and society if we
can channel this youthful vigor towards productive ends. The
youth development policies will have several broad themes.
First, there is a renewed focus on human capital development
and opportunity - creation for our young people. Through
programmes which are being implemented by the Ministry of
Education, the Government ensures that the young people of
our nation have ample opportunities to enhance their ability to
compete successfully in the job market and to develop
themselves as rounded persons.
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Human capital development is more than simply widening the
knowledge base and skill of our young people. It also includes
ensuring that we have a healthy youth population particularly
with the prevalence of communicable diseases such as
HIV/AIDS. In this regard, the Ministry of Health, under the
HIV/AIDS Project, will continue several youth driven activities
in collaboration with non-governmental and community based
organizations. These include peer counselling programmes,
mass media programmes, and youth-targeted community
outreach services.
There will also be a focus on developing the capabilities of the
youth to participate in national decision-making processes.
Through programmes such as “Youth now”, and “As the Youth
See It” the young people of our nation will have the
opportunity to speak up and debate issues of national
importance. The Youth on the Block programme will be fully
implemented in 2008. It has enormous potential for job
creation, entrepreneurship, culture and sports.
SPORTS
This Government views sports as an important vehicle for
national development, both in terms of its potential for
building our youth and for the opportunities it can offer in the
area of tourism.
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The National Stadium remains high on the development
agenda of this administration. In this regard, in the 2008
budget, a sum of $1.5 million has been allocated to this
project and construction work is expected to commence by
mid-2008.
There are, too, budgetary resources allocated to rehabilitating
community playing fields, which complement similar works
done through the Social Investment Fund with substantive
monies provided by the Alba Caribe Fund of Venezuela.
Combined with these capital projects, the Sports Division will
work in close collaboration with the other ministries
particularly the Ministry of Health and the Environment to
further consolidate its national programme geared toward the
enhancement of wellness and fitness in our country. This is
part of the Wellness Revolution. The Minister of Youth and
Sports will elaborate on these matters further in this debate.
NATIONAL SECURITY
The ULP government takes its responsibilities regarding
national security most seriously. The safety of our citizens,
residents, investors and visitors is vital for any civilised living
or productive activity. The maintenance of law and order at a
level consistent with democratic life, liberty, and the pursuit of
76
happiness is of paramount importance. A derogation from this
takes a society down a road, which may lead to a veritable
Hobbesian state of nature where life is “nasty, brutish, and
short”. This government will never permit such a descent; it
will not flinch in being tough on crime and tough on the
causes of crime. All law-abiding citizens have an obligation to
work in concert against criminal activities and to bring the
perpetrators of crime to justice. And no one should ever be
allowed to profit from crime, especially serious crime, in a
civilised society.
These are bedrock propositions which must be restated in a
context where crimes of violence have been rising in St.
Vincent and the Grenadines and our nation finds itself living
in an increasingly dangerous Caribbean, Latin American, and
yes American neighbourhood.
Mr. Speaker, in February 2003, this Honourable House
endorsed the government’s 14-point Strategy on Fighting
Crime. Within this Strategy are lodged a series of practical
policies and programmes. Appropriate, and consequential
work plans have been devised.
Mr. Speaker, the several institutions in the formal security
apparatus of the State are: The National Security Council; the
St. Vincent and the Grenadines Police Force, including the
77
Coast Guard and Fire Service; the National Commission on
Crime prevention (NCCP); the Prisons; the Regional Security
System (RSS) and other regional or international entities of
which St. Vincent and the Grenadines is a part, or to which
our country is linked by treaty arrangements. Each of these
institutions plays a vital role in the delivery of national
security service. And each is being beefed up so as to combat
crime.
Central to the organised fight against crime is the Police Force.
The reform of the Police Force in keeping with certain
recommendations from the Durant Report of 2005 will
continue in 2008. Among the central initiatives to be pursued,
in this regard, relate to enhanced training, community
policing, manpower development, an increase in salaries and
an improvement in working conditions, the better equipping of
the Police Force, and the rehabilitation or construction of
Police Stations.
Mr. Speaker, the 2008 recurrent budget for the Police reveals
that there has been a substantial improvement in pay for
policemen/women as a consequence of the reclassification
exercise and the salary increases. The Police Service itself has
been allocated 73 new posts in the 2008 Estimates.
Additionally, there are 12 new posts in the Fire Service and a
provision of $172 thousand to employ 20 Rural Constables to
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assist in the fight against praedial larceny. All told this adds
105 new posts to the security forces.
The recurrent budgetary allocation to “national security”
amounts to a more than commendable 10.3 percent of the
total recurrent budget. On the capital side of the budget
$17.9 million or 7.5 percent of the entire capital estimates has
been allocated to “national security”.
Among the principal capital items of expenditure on national
security are: National Security Enhancement; Advance
Coastal Surveillance System; the refit of a Coastguard Vessel;
the construction and renovation of Police Stations; the ongoing
construction of the Modern Correctional Facility; and the
purchase of Fire Trucks.
Mr. Speaker, the National Commission on Crime Prevention
(NCCP) and other State agencies have been working
assiduously to lift the disciplined organisations such as the
Cadet Corps, Marine Cadets, Police Youth Clubs, Girl Guides
and Boys Scout. The expansion of the Cadet Corps from
around 75 in 2001 to over 400 today and the formation of the
Marine Cadets have been particularly impressive.
Accordingly, the government will be facilitating the hosting of
the 19th Caribbean Cadet Camp next year. Further, in 2008,
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the Project Brief and draft design for a Modern Cadet
Headquarters will be developed. It is the goal of the
government to have in excess of 1,000 Cadets by the year
2012. I encourage the eligible young persons to join the Cadet
Corps or other disciplined organisations.
Mr. Speaker the NCCP and the Police Force continue to work
with the church and community groups in the battle against
crime. In 2008, another initiative called “Pan Against Crime”
will be unveiled. The Youlou Pan Movement will be central in
this programme. A sum of $150 thousand has been allocated
for “Pan Against Crime”.
FINANCIAL SECTOR
Mr. Speaker, financial sector development is a component of
the modern, competitive economy. Accordingly, the
Government has been working with the Eastern Caribbean
Central Bank and other Eastern Caribbean Currency Union
(ECCU) governments in fostering the establishment of a
modern, highly sophisticated and efficiently regulated financial
system. The foundation of this system has been laid in a
stable currency, fairly low inflation and a widening range of
financial products and institutions.
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During 2008, our focus will shift to the retail payment system
which refers to the collection of procedures, rules, standards,
instruments, institutions and technical means used to
exchange financial value between two parties discharging an
obligation. The soundness and efficiency of the payment
system are fundamental factors in sustaining economic
activity and economic development. The payment system is
also indispensable for the stability of financial markets and
the stability of the currency.
In St. Vincent and the Grenadines payment instruments are
used in a sub-optimal manner, from the efficiency point of
view. There is excessive use of cash and an insufficient use of
electronic instruments, and e-money. Further, conditions
applied to payment services are usually not transparent nor
clear to the stakeholders and the public, nor in concert with
the policies pursued by the authorities.
We will therefore seek passage of a new Payment Systems Act
and amendments to the Bills of Exchange Act, in order to:
(i) Ensure that the infrastructure and the market for
payment services work smoothly, efficiently, and fairly
to all participants and users.
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(ii) Minimize the risk of transmitting shocks across the
economy such as a failure to settle payment
obligations by individual participants.
(iii) Pursue the level of technology and institutional
development necessary to satisfy the payment needs of
a growing and open economy.
(iv) Enhance the role of the Central Bank as the
supervisor and regulator of the payment system.
In 2008, we will also pay close attention to the system for the
regulation and supervision of building societies and credit
unions and bring into effect the Motor Insurance (Third Party)
Act. These activities Mr. Speaker, were planned for 2007, but
unfortunately were not implemented by Ministry due to a
heavier than normal work load for the Ministry of Finance and
Economic Planning, in particular the introduction of the Value
Added Tax.
Another area of the financial system that will be subject to
close scrutiny in 2008 is the Anti-Money
Laundering/Combating Terrorist Finance Regime (AML/CTF).
In 2009, the International Monetary Fund (IMF) will carry out
an evaluation of St. Vincent and the Grenadines’ AML/CFT
regime. More particularly, the IMF would assess our
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compliance with International Standards. Over the last six
years or so, the Government has mainly, through the
Financial Intelligence Unit (FIU), made tremendous strides in
developing our AML/CFT regime and has also made several
important legislative changes to bring our laws in line with
International Standards.
We are therefore confident that we will obtain a positive
outcome from this assessment. We must nonetheless make
the necessary preparations and ensure that officials and other
persons involved in the exercise are fully appraised of their
role in the process and understand the methodology to be
used by the assessors.
NIS and Pension Reform
One of the central planks in the evolving Wellness Revolution
is the provision of social security services for the population.
This is why the government continues to pay so much
attention to the operations of the National Insurance Services,
to seek its further development and extend its benefits to
workers and self-employed persons. The NIS is an important
vehicle for the well-being and security of a significant portion
of the population.
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The last actuarial valuation of the NIS showed that the NIS
was actuarially and financially sound and had enough
reserves as at the end of 2004 to pay expenses for the next 12
years. The report however pointed out that cost was projected
to increase rapidly and to surpass current contributions by
the year 2012. The NIS would still have more than enough
funds to pay its future expenses, but some of the investment
income, instead of being used towards the build-up of reserves
will have to supplement the contribution income to cover its
expenses. This would obviously lead to a decreasing net
income and consequently a depletion of fund reserves if
suitably ameliorative measures are not taken.
At the end of 2006 total reserves in the NIS amounted to
$339.2 million, having grown by $21.5 million during the year.
These funds were invested in a variety of instruments with
approximately 41 percent of the assets held in cash and
marketable securities and another 50 percent invested in
longer-term assets, including bonds, loans, mortgages,
equities and real estate. The remainder was invested in
property, plant and equipment. As at 31st December, 2006
total assets in the institution amounted to $341.1 million.
In order to avoid any future problems relating to the NIS, the
Government is currently reviewing various options for reform
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of the system. These options include but are not limited to the
following:-
(i) a gradual increase in the contribution rate for the
long-term benefit branch;
(ii) a gradual increase in the retiring age;
(iii) automatic price indexations of benefits in lieu of
periodic, ad hoc adjustments;
(iv) a change in the calculations of survivors benefits to
better protect the families of young workers.
Government will also be exploring options for reform of the
Public Service Pension System. Because the NIS and Public
Service Pension System operate in parallel, public servants
can get full pensions from both, which would potentially make
their combined pensions higher than their income at
retirement. This is clearly not a sustainable proposition and
government will examine the feasibility of aligning the NIS and
Public Service Pensions but in such a way not to place public
servants at any disadvantage.
The need to reform the legal and regulatory framework for
private pension plans is a closely-related concern. A properly85
regulated private pension system not only provides income
security for the elderly, but can also have a positive impact on
aggregate savings and investment. The Insurance Act of 2004
makes provision for regulating the operations of Pension Fund
Plans in St. Vincent and the Grenadines, with the Ministry of
Finance and Economic Planning charged with this
responsibility. Confidence in the security of private pension
plans is greatly enhanced by a sound regulatory framework.
There are still too many persons who are failing to operate in
accordance with the law. Therefore, the Ministry of Finance
will step up its efforts to ensure that our pension fund meets
the relevant regulatory and prudential guidelines. In
particular, the Ministry will ensure that the licensing
requirements, disclosure standards, governance standards
and minimum capital requirements are met.
Public Debt
The disbursed outstanding public debt was estimated at $1.12
billion as at 30th September, 2007, the equivalent of 77.0
percent of GDP. This figure includes an amount of $164.8
million for the Ottley Hall Shipyard Project, (which was
written-off in October 2007). When the adjustment is made
for the Ottley Hall loan the total public debt for St. Vincent
and the Grenadines amounted to $998 million, the equivalent
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of 66 percent of GDP. This is $76.5 million less than the
public debt at the end of December 2006.
Other major developments during the year include the
following:-
(i) Repayment of the 2006/2007 $30 million bond issue
from the sinking fund established for that purpose.
(ii) A loan of $25 million from the National Commercial
Bank to refinance the Ottley Hall loan and some other
debts, including an amount of approximately $2
million for the redundant traffic lights in Kingstown.
(iii) A loan of $30 million through a bond issue on the
Regional Government Securities Market to partially
finance the 2007 Public Sector Investment Programme.
(iv) Disbursement of approximately $11.0 million by the
Caribbean Development Bank for the Windward
Highway Rehabilitation, the Basic Education and the
Lowmans Bay Power Projects.
(v) A loan of $30 million by the International Airport
Development Company from First Caribbean
87
International Bank to be used for bridging finance on
the Argyle International Airport Project.
For 2008, we plan to borrow an additional $100 million of
which $30 million relate to the 2007 Public Sector Investment
programme and $25 million is for the 2009 Public Sector
Investment programme. By structuring the loan in this fashion
we would obtain better terms and conditions and we would be
able to attract international investors.
As pointed out in my last Budget address, over the mediumto-
long term the Government aims to restrict the public debt
and to bring it as close as possible to the benchmark level,
recommended by the Monetary Council of the Eastern
Caribbean Central Bank. This will be achieved by containing
the fiscal deficits and by increasing the growth potential of the
economy. A key consideration in this process is how far to cut
the overall fiscal deficit. This involves difficult choices.
Mindless cuts in expenditure, without concerns for the
consequences may yield short-term fiscal savings, but they
can also result in substantial long-term cost. To achieve an
ongoing reduction in the debt level requires a strategy that is
measured, thoughtful and responsible. That is what this
Government is pursuing.
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Resource Requirements
The expenditure budget for 2008 amounts to $757.3 million
comprising of recurrent expenditure (including amortization) of
$517.5 million and capital expenditure of $239.8 million. The
total budget is some $127.2 million or 20.2 percent more than
the 2007 approved estimates.
The 2008 estimates of current expenditure (excluding
amortization), is $447.53 million, which is some 13 percent
more than the current estimates for 2007. This is a fairly large
increase, which results from the convergence of several
factors. First, the 10 percent salary increase for public
servants which was recently announced, coupled with the
reclassification of the public service, have added in 2008 $24.9
million (12.9 percent) to the allocation for wages and salaries.
We, however expect that with this improved remuneration
there will be a commensurate increase in productivity in the
public service and that less of our trained professional will be
enticed to seek job opportunities beyond our shores. This will
more than compensate for the higher personnel costs.
Secondly, the provision for interest on the public debt was
increased by $8.62 million (18 percent), notwithstanding the
decline in the size of the public debt. The increase in debt
89
servicing cost stems from the need to service the $25 million
loan obtained for repayment of the Ottley Hall and other loans,
the higher overdraft and the new loan of $100 million which
will be raised to finance the Public Sector Investment
Programme.
Thirdly, there has been a $9.30 million (12.9 percent) increase
in the provision for Transfers.
In spite of this increase in the estimates of current
expenditure the budget includes a small current account
surplus of $0.16 million, as there was a similar increase (12.2
percent) in the projections of current revenue. The projected
growth in revenue for 2008 will come primarily from growth in
GDP, a more efficient tax collection and from the full year
impact of the VAT. Preliminary assessment of the VAT and
Excise Tax, show that the combined taking on a monthly
basis, is approximately $2.5 million more than the taxes that
they replaced. Of course some of this additional revenue is
attributable to growth in GDP and increases in imports.
Financing of the budget will come from current revenues of
$447.82 million, capital grant of $116.17 million, capital
revenue of $4.0 million, loans of $113.45 million and other
capital receipts of $75.82 million. We once again are placing
reliance on grant financing for the Public Sector Investment
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Programme. For 2008, over 48 percent of the capital budget is
to be financed from grants up from 44 percent in 2007.
The main source of these grants is the European Union from
which we expect to receive $62.5 million in 2008. Many of the
projects to be financed here are ongoing projects for which
Financing Agreements have already been signed. These
include the Union Island Secondary School $5.00 million, EU
Education Support $5.5 million, Improvement of Education
Programme $2.70, Windward Highway Rehabilitation $25.7
million, Private Sector Development $1.5 million, ICT
Development Programme $1.0 million, National ICT Training
almost $1.0 million, Tourism Development $4.3 million and
many more. Additionally, we have programmed some EC$15
million from budgetary support.
Other major sources of grant funds are the Republic of China
on Taiwan $19.07 million, Trinidad and Tobago $11.5 million,
Japan $10 million, Cuba $8.0 million in kind, Venezuela $2.1
million, CDB $1.1 million and Global Environmental Facility
$1.0 million. There is absolutely no doubt that with proper
sequencing of works we would be able to realize and efficiently
utilize most of the grants funds budgeted for 2008. This will go
a long way in helping us to reduce the level of borrowings,
without having to reduce overall capital spending.
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With such a large pipeline of grant-financed projects we will
naturally have fairly large local counterpart requirements.
Indeed a large portion of the borrowing requirement for 2008
is to finance counterpart contributions particularly in
education, road construction, and security. The Ministries
responsible for these three areas account for over sixty eight
percent (68%) of the 2008 loan-financed expenditure.
Of the $113.5 million in loan expenditure for 2008, some $25
million or so will come from borrowing in previous years with
the Canouan Airport Development project accounting for
$18.6 million of this amount. Another $21.5 million will be in
the form of concessionary loans from the Caribbean
Development Bank and the World Bank. This means that only
$67.4 million will be required to be raised on local, regional
and international capital markets.
FISCAL MEASURES
Mr. Speaker, for 2008, we have designed a comprehensive
package of fiscal measures which are intended to bring a
measure of relief to workers and businesses and to improve
the country’s competitiveness. This is of critical importance
with the advent of the CSME and as the country tries to
attract and retain skilled professionals and investment.
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Income Tax
I propose to implement a further reduction in income tax
effective from the income year beginning in January 2008.
For individuals the threshold will be increased from $15
thousand to $17 thousand and the top marginal rate will be
reduced from 37.5 percent to 35.0 percent. For companies
the standard rate of tax will also be reduced from 37.5
percent to 35 percent.
This is the second consecutive year that we are reducing
income taxes and Vincentians can look forward to further
reductions in the coming years as we fulfill our commitment
of lowering the highest tax rate to thirty percent or less.
The estimated cost of this measure is approximately $9.5
million per annum, and it comes at a time when the
government has large expenditure commitments on both
the recurrent and capital sides of the Estimates, as I have
just outlined.
VAT
Notwithstanding the very successful implementation of the
VAT and modern Excise, a number of problems have been
identified which now require corrections. Accordingly, I
propose to amend the VAT Act to:-
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(i) Require all hotels to register for VAT regardless of
threshold;
(ii) Zero-rate the following: -
(a) Water supplied by CWSA to domestic consumers
(this was previously exempt)
(b) The surcharge or service charge impose by
producers of hotel accommodation provided that
the surcharge or service charge does not exceed
ten percent and no less than 90 percent of the
amount collected is added to the wages of the
workers;
(c) Solar water heaters, solar panels and related
equipment.
(d) A list of selected foods and personal items,
namely:
Legs whole Salt
Table margarine Yeast
Cooking margarine Sanitary napkins
Shortening Baby diapers
Cooking oil Toilet tissue
Baking powder Undergarments
Energy saving bulbs
(iii) To exempt the following: -
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(a) Yachting services provided by persons licensed
under the Yacht Licence Act.
(b) Sale of real property
(c) A list of selected food items:
Onions
Lentil peas
Garlic
Pigeon peas
(iv) To charge a reduced VAT rate to 10 percent for diving,
tours and other tourism related services.
(v) To allow the Comptroller of Customs and Excise to
register persons who are undertaking tourism related
developmental activities. This would allow the investor
to obtain refunds for input VAT, during the
construction phase.
These concessions on all these VAT related measures will
cost an estimated $6.0 million per annum.
Interest Levy
In an attempt to provide an additional boost to the
residential mortgage market, I propose to reduce the
interest levy to 0.5 percent for those financial institutions
whose sole business is that of granting residential
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mortgages. The institutions will continue to qualify for the
mortgage deductions pursuant to the Act.
This measure will cost approximately $0.6 million per
annum.
Further, a number of financial institutions are usually tardy
in the payment of the tax. I therefore propose to amend the
Act to impose a penalty of 1.5 percent of the outstanding
balance for each month or part thereof that the tax remains
outstanding by the financial institution.
Excise Tax
I propose to increase the excise tax chargeable on cigarettes
and alcoholic beverages. This is in keeping with our position in
promoting wellness. The link between those products and
certain life-style diseases and conditions is well established
and there is no doubt that excessive consumption of alcohol
and smoking has contributed to increases in our health care
costs.
Similarly, I propose to impose an excise tax of 5 percent on
aerated beverages. This measure is expected to yield an
additional $250 thousand per annum.
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Motor Vehicle License
I propose to increase the annual charges for motor vehicle
licenses and related matters by approximately 25%. As a
concession to the providers of public transportation the
charges for hired cars and passenger buses (including
minivans) will not be increased.
Expenditure on road repairs and construction consumes an
increasingly huge proportion of the budget. Thus, it is
reasonable that the users be asked to bear a larger share of
this cost. Motor vehicle licenses were last increased in
1999. In real terms the proposed increases are no higher
than they were in 1999 dollars. It should be borne in mind,
too, that in 1999 there were just over 6,000 registered
vehicles; today, the number is in excess of 21,000. So, far
more damage is done to the roads now than hitherto.
The measure is expected to yield $1.2 million per annum
Yacht Licence
Yacht licence fees were last increased in 2002 so I do not
proposed to institute any wholesale changes to the rate
structure. There are however some anomalies in the rate
structure which favour boats based outside of St. Vincent and
97
the Grenadines and which create difficulties in the
administration of the Act.
Furthermore, there are still too many visiting yachts which
refuse to carry out the necessary clearing procedures when
entering the waters of St. Vincent and the Grenadines. Apart
from the revenue loss, this practice represents a serious threat
to our national security.
I therefore propose to amend the Yacht Licence Act in order to:
(i) Require that all locally-based yacht charter companies
provide monthly returns of revenue and the number of
yachts in their fleet, within fifteen days of the end of
each month.
(ii) Impose a penalty of up to $20 thousand for noncompliance
with the Act, in terms of non-clearance of
customs and immigration.
(iii) Abolish the existing cruising tax of $5.00 per person
per day and replace it with a flat fee of $35.00 per
person irrespective of the duration of their stay, up to
one month from the date of issue.
(iv) Increase the occasional charter yacht licence from
$100.00 to $125.00 and
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(v) Increase the fee for chartered yachts from $4.00 per
foot per month to $5.00 per foot per month.
I have discussed these changes with operators in the sector
and they have all agreed that the new proposal represents a
fairer, reasonable, competitive more efficacious arrangement.
We will however consult further with stakeholders in the
sector in order to determine the most appropriate date for the
new fee structure to take effect.
The yachting sector will also receive a boost from the arrival of
the three patrol vessels which have been ordered and are
expected to arrive early in the new year. Further, we are
exempting yachting from VAT, as explained earlier.
Other Charges
Changes are also proposed for various other services
including airport charges, passport and immigration
services, custom warehouse licensing fee and liquor licence.
Details of proposed new charges are appended hereto.
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Prices for Petroleum Products
As explained in the section dealing with energy oil prices
have skyrocketed in recent months and are now at record
highs. With no corresponding increase in the local retail
price it means that the Government is now subsiding prices
of petroleum products at a high level. The current subsidy
is $1.09, $2.61 and $3.38 per gallon for gasoline, diesel and
kerosene respectively.
At these rates the annual cost to the Consolidated Fund is
over $15 million, which is clearly neither sustainable nor
advisable.
Accordingly, I propose to increase the retail prices of
gasoline, kerosene and diesel as follows: -
Current Proposed
Price Price
per gallon per gallon
Gasolene 11.50 12.60
Diesel 8.75 10.35
Kerosene 8.34 10.60
The government intends to implement again the subsidy for
public transport vehicles so as to lessen the burden of the
increases on the travelling public. It is to be noted that the
100
Eastern Caribbean Currency Union, through its Monetary
Council, has established the policy of an automatic pass-on
of the increases or reductions in the price of fuel on the
international market.
Contributions to NIS
I have already outlined the need for the NIS to increase its
contribution income in order to offset future benefit
payments and to avoid depletion of its reserves.
Accordingly, I wish to propose that with effect from January
01st, 2008 the contribution rate be increased as follows:-
Employee’s contribution from 2.5 percent - 3.5 percent
Employer’s contribution from 3.5 percent - 4.5 percent
These charges still make the contributions among the very
lowest in the region for the benefits provided.
This measure is decidedly pro-worker since it strengthens
the employees’ retirement and other benefits.
CONCLUSION
Mr. Speaker, Honourable Members, as I conclude, let me thus
summarise some of the recent positive developments in the
economy. These include: The rebound in real economic
101
growth in 2006; job creation; the admirable fiscal
consolidation in 2007; the write-off of the Ottley Hall debt in
the sum of $165 million; the successful introduction of VAT in
May 2007; the resilience of the economy to recent financial
market turbulence internationally; the strong and improved
implementation rate of the capital budget; the increase in job
creation; the reduction of poverty; the growing competitiveness
of St. Vincent and the Grenadines; the enhanced
attractiveness of St. Vincent and the Grenadines for
investments, local and foreign; the improvements in the
overall performance of State enterprises such as the National
Commercial Bank, the National Investments Promotions
Incorporated, the National Properties, the National Lotteries
Authority, the National Insurance Services, VINLEC, CWSA,
and the International Financial Services Authority; the
deepening of regional integration; the marked improvements
in the condition of the physical infrastructure, including the
construction of the Canouan Jet Airport and the Rabacca
Bridge; the consolidation and extension of the Education
Revolution; the laying of the bases of the Wellness Revolution;
and the Reclassification Exercise.
It is to be emphasised Mr. Speaker, that expenditure on
Education, Health and Wellness must no longer be mistakenly
seen as spending on non-productive items, as some still do.
Education, Health and Wellness, and some other ostensibly
102
socially-based spending are indeed directly or, at the first
remove, indirectly productive expenditure. The old
distinctions between productive and non-productive
expenditure no loner hold water. Thinking on development
economics and comparative political economy has long gone
past these essentially ancient paradigms and formalistic
classifications. The legitimate queries and concerns are now
of a different order: They relate, among other things, to issues
of efficiency in spending, cost effectiveness, relevance, and
socio-economic linkages, and overall development.
Mr. Speaker, my government has been very focused in its
quest to achieve greater resilience to financial shocks, and
fiscal and debt sustainability. We have fashioned in
conjunction with National Economic and Social Development
Council, a Social Contract, which has these issues at the
forefront. In the same vein, the Ministry of Finance has drawn
up a Draft Fiscal Covenant which contains a framework for a
debt management strategy. Robust economic growth, our
prudent borrowings, our streamlining and prioritising of the
capital budget, our expenditure controls and monitoring, the
tax reform measures, the successful search for debt relief, the
articulated policy to reform the system of social security and
retirement benefits, our stable currency and the pivotal role of
the Eastern Caribbean Central Bank, the move to establish a
single regulatory unit for non-bank financial institutions, the
103
use of the savings from the financing arrangements under
Petro Caribe agreement for concessionary finance, the
securing of an even higher level of remittances from abroad,
the push generally to enhance social safety nets, and much
more, are all part and parcel of achieving greater resilience to
financial shocks, and fiscal and debt sustainability.
Mr. Speaker, the International Monetary Fund (IMF) has done
an interesting analysis, comparatively, of the macro-economic
performance of eleven CARICOM Countries, including the six
independent member-states of the Eastern Caribbean
Currency union (ECCU), covering the changes for the periods
1990 - 1997 to 1998 – 2006. A ranking was then devised
based on indices of overall fiscal balance, debt, inflation, and
real growth in Gross Domestic Product (GDP), each index
being configured absolutely and relatively. Countries were
ranked from 1 to 14 in each category, with the best performer
receiving the highest scores. The scores were then summed
for each country, with equal weight to each category of macroeconomic
performance. Finally, the summed-up scores were
normalized so that the scores for all countries range from 1 to
100.
In this ranking, Trinidad and Tobago and the Bahamas were
accorded first and second spots with scores of 100 and 93.4
respectively. St. Vincent and the Grenadines was third with a
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score 70.3, then thereafter were the others in the following
order:
Antigua –Barbuda; Belize; St. Lucia; Dominica; Grenada;
Guyana; Jamaica; and St. Kitts – Nevis with score of 23.1.
Mr. Speaker, it is evident from the overall data, absolutely and
comparatively, that St. Vincent and the Grenadines has been
performing quite well and better than most of our neighbours.
This assertion does not mask or hide my government’s
acceptance, of the many challenges which our country still
faces or its socio-economic limitations.
Indeed, these challenges and limitations, have been identified
heretofore in this presentation. This 2008 Budget has
produced policies and resources to meet and overcome them.
This Budget builds on existing progress. I can thus assert
that the economic state of our nation is sound and is
improving markedly despite the challenges and limitations.
The government has been doing its part wonderfully well in
this our march to progress, but clearly it could not have done
it all by itself. Every sector of our nation, at home and abroad,
has contributed to improving our common weal. So, too, have
our friends from overseas who have stood in solidarity with us
as a nation. And in the crafting of this budget I want to thank
all the participants in our many consultations including: the
105
working people, the farmers, the fisherfolk, the trade
unionists, the business persons, the entrepreneurs, the
bankers and financiers, the insurers and professionals, the
hoteliers and tourism providers, and other persons from all
walks of life. Their input has been most beneficial to my
government and to this budgetary exercise and I thank them.
Mr. Speaker, the almost 7 per cent economic growth last year,
2006, and the estimated 6.6 per cent real growth this year,
2007, have afforded my government the opportunity to share
the fruits thereof with the poor, (including the elderly poor),
the working people, all the producers of wealth, the business
community, and the nation as a whole.
On the 28th anniversary of our nation’s independence on
October 27, 2007, I announced a series of measures which
brought good cheer to all Vincentians. The 5 per cent backpay
from January 1, 2007, for all established central
government employees and daily-paid workers was paid at the
end of November at a cost of some $9 million to the Treasury.
In the December 2007 pay packet, most established public
employees (all the nurses, all the police officers, over 80 per
cent of the teachers, and a sizeable number of civil servants)
will receive salary enhancements in excess of 6 per cent, on an
average, in the “reclassification exercise”, back-dated to
January 1, 2007. This “reclassification” pay enhancement will
106
cost the Treasury a further $9 million, approximately. In the
pay-packet, too, for December 2007, all government employees
will receive a tax-free bonus of $250 if they worked in excess of
150 days for the year; those who work up to 150 days with a
minimum of 100 days will receive one-half of the bonus, that
is, $125.00. This bonus will cost the Treasury in excess of
$1.5 million. I fully expect that the State enterprises and the
private sector would follow-suit with Christmas bonuses for
their employees.
Further, with effect from January 1, 2008, all public servants,
teachers, nurses, policemen/women will receive another salary
increase of 5 per cent. So, too, would the daily-paid employees
of the Government. These pay increases for 2008, plus the
salary for the additional public employees to be hired, will lift
the salaries and wages bill by $24.8 million from $193.1
million to $217.9 million.
As usual, the pensioners on central government pensions will
receive the same percentage increases as for the salaried
public employees.
Additionally, for December 2007, the following will receive
more benefits:
107
1. 7,700 of our nationals, comprising elderly persons who
are economically disadvantaged, some persons who
are physically challenged, and deserving children or
students who receive a monthly stipend in public
assistance or those who receive the non-contributory
aged pension, and disabled pensioners on the NIS, will
get a special $75 Christmas bonus when they receive
their regular December payment. This bonus will cost
some $600,000.
2. A Christmas bonus, too, will be paid to banana
farmers based on $1 per carton of bananas sold per
farmer during the first six month of the year 2007.
This bonus amounts to $619,954.
3. In excess of 7,000 persons, as I speak, are, or have
been, employed on a Special Christmas Cleaning and
Repair Works Programme, costing so far in excess of
$2 million.
4. The importers of family barrels for Christmas again
this year have these barrels enter duty-free between
the period November 19th to December 31st 2007. Over
17,000 barrels are expected to be cleared duty-free.
108
Mr. Speaker, next year, three other categories of persons
are also due increased benefits:
1. The persons who are on public assistance will, from
January 1, 2008, receive an increase of $30
monthly for each recipient, across the board. Thus
those who currently are paid $125 will receive $155.
They, because they are over 65 years of age, will
continue to be exempted from the $12 monthly
basic water charge at the CWSA. Those who receive
$115 now will each be paid $145 monthly from
January 1, 2008.
2. The non-contributory old-age pensioner at the NIS
will also each receive an increase of $30 monthly.
Please note that the regular NIS pensioners will
await the next actuarial review scheduled for early
2008 for any increases which may be proposed.
3. The YES volunteers will receive an increase from
January 1, 2008, of $50. Their stipend will thus
rise to $450 monthly.
4. Workers who are paid minimum wages will receive
increases next year consequent upon the
109
conclusions of the Wages Councils which were
appointed earlier this year.
Mr. Speaker, Honourable Members, my government is
looking out, too, for pregnant women and mothers who
receive nutritional support currently through the
Ministry of Health. They will be accorded further
assistance. In the 2008 Estimates there is a provision for
a 25 per cent increase. Similarly, the school feeding
programme has its budgetary allocation for 2008
increased by 25 per cent.
All these pay increases and enhancements, bonuses, and
benefits are supplemented immensely by the reliefs
announced earlier in this speech in respect of income
tax, company tax, and the VAT. Every single household
in St. Vincent and the Grenadines is being personally
touched, positively by the public policies of this
government, including the proposals in this 2008
Budget. As a whole, the nation’s economy is being put
more surely, more firmly, more decidedly, and with
greater equity on a progressive, developmental path, in
the people’s interest.
Mr. Speaker, I reiterate that all this is not to affirm that
things are perfect. My government never promised
110
perfection. Those who will be satisfied only with
perfection must await their presence on the other side of
eternity. But here on this “Earthly City” known as St.
Vincent and the Grenadines, my government promised
the people “good governance”, the best governance
possible. That is what we are delivering with this 2008
Budget; that is what we have delivered in 2007.
So, in 2008, we must now implement this splendid
Budget in the best possible way, to produce the optimal
results for the magnificent, hard-working, law-abiding
and good-natured people of St. Vincent and the
Grenadines. Ours is a small country, but we are a great
people! St. Vincent and the Grenadines may lack
substantial material resources; we do not have a large
territorial area, though our seascape is huge,
comparatively. We do not own the riches of oil and
minerals. But Almighty God has blessed us with a
wondrous land and sea; and most of all He has made us
beautifully as a people, with enormous gifts. Our
strength is in us. That is why we must be educated and
trained to the fullest extent possible; we must keep well;
and we must show daily a good neighbourliness which is
the outward sign of our inward grace.
111
Mr. Speaker, it thus begins with each of us. The inner
peace which we each seek begins with each of us — you
and me, individually. It is this which surely must
restrain us from hurting someone physically with crimes
of violence or some other criminal activity. Our country
is too small to persist with all the senseless wrangles and
mindless posturings which to a large degree are rooted in
greed and vanity, which are debilitating and incapable of
being satisfied.
Mr. Speaker, Honourable Members, as a people we ought
surely to come to the realisation by now that we own our
nation. It is ours. We are not tenants in this land; we
are not mere occupants; we are the real owners. This is
not a plantation on which we must use trickery, cunning,
or a debasement of ourselves in order to get on in life.
No! We are the owners of our landscape and seascape in
this a thriving and competitive democracy, in this most
glorious component of our Caribbean civilisation, in
which daily we reaffirm that this nation is founded on the
belief in the supremacy of God and the freedom and
dignity of man. Thus, we must work together and build
this land which we proclaim that we love. Much has
been given to us as a people; much is expected from us in
return. Let us lift our productivity and our conduct.
112
Today, I present a Budget based on numbers in the
Estimates but it is much, much, more than that. We
deliver a statement about ourselves, about who we are as
a people, about our past, our present, and about a future
which only of all time is ours to desecrate.
Mr. Speaker, it is our duty, individually and collectively,
to ensure that the majesty and beauty of our land and
people shine always in optimism and achievement. Our
deceased bard, Ellsworth “Shake” Keane, has so inspired
us poetically, in his “The Age of Chains”:
“Beautiful was my country in time’s rains,
Beautiful is my country in the warm hopeful season.
An age of chains did not sully her mountains,
Nor pain’s broad knuckle smudge out the sun .
O Beautiful.
“I can catch her voice in the thick hills,
Her impulse
Gathers green in the wood her breath skying.
In the quick tempo of the river I hear her high sighing.
A song that is good
O Beautiful
“Up and far beyond care of the wind’s corroding,
Ruin of star and light’s utter end,
113
Toil and her heart’s hopes extend
Beautiful.
Sun’s her monument;
And her brightness is of a bright sky’s hoarding.”
Thank you!
Appendix 1
Summary of Proposed Changes – 2008
Current Rate ($) Proposed Rate ($)
Liquor Licences (per quarter)
Class 1 Wholesale 200.00 250.00
Class 2 Retail – Town 120.00 150.00
Class 3 Retail – Country 85.00 110.00
Class 4 Retail – Grenadines 85.00 110.00
Class 5 Hotel 250.00 315.00
Class 6 Refreshment House 250.00 315.00
Class 7 Occasional (per day) 100.00 125.00
Class 8 Bottle 200.00 250.00
Class 9 Proprietary class 250.00 315.00
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Customs Warehouse Licence
Closed warehouse 500.00 750.00
Opened warehouse 750.00 1000.00
Visiting fee (per hour) 10.00 12.50
Minimum per visit 20.00 25.00
Excise Tax
Beer and stout (per litre) 0.50 0.55
Wine, vermouth, other fermented
Beverages 3.00 3.30
Brandy, whiskies, rum (under proof)
Vodka, gin (per litre) 3.00 3.30
Other spirituous beverages 3.00 3.30
Cigars and cigarettes
of tobacco or tobacco substitute 10% 12%
Aerated beverages – 10%
Incandescent bulbs 40% 100%
Airport Charges and Air Transport Licensing Fees
i. Rental of Advertising Space
large signs 700 1,200
small signs 400 750
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ii. Extension Fees
First hour or part thereof 80 100
Additional hour or part thereof 120 150
Up to midnight
Additional hour or part thereof 120 200
After midnight up to 6 a.m.
iii. Air transport licences and Permit
Application Fee
Class I 200 250
Class II 150 200
Class III 200 250
Class IV 150 200
iv. Annual Charge
Class I 1,000 1,250
Class II 600 250
Class III 1,000 1,250
Class IV 800 1,00
v. Variation
Class I 250 325
Class II 120 160
Class III 250 325
Class IV 150 200
116
Annual Fees and Duties – Motor Vehicle
Part A
Private Motor Cars
Not exceeding 2000lbs tare 250 315
Exceeding 2000lbs but not
exceeding 3000 lbs tare 325 410
Exceeding 3,000lbs tare 400 500
Private Motor Tricycles
Not exceeding 2,000lb tare 125 160
Exceeding 2,000lbs 150 190
Private Motor Cycles
Without side Car 150 190
With side Car 200 250
Goods Vehicles
Of less than 2 tons tare 550 700
Of 2 tons tare but less than 3 tons 700 875
Of 3 tons tare but less than 5 tons 800 1,000
Of 5 tons tare and over 800 1,200
117
Trailers
Not exceeding 1 ton tare 150 190
Of 1 ton but less than 1 ½ 200 250
Of 1 ½ but less than 3 ton 225 250
Of 3 tons tare or over 225 300
Tractors
Of less than 2,600 lbs tare 150 190
Of 2,600 lbs tare or over 175 225
Hearses 500 625
Hiring Cars
Licensed to carry less than
4 passengers 275 225
Licensed to carry less than 325 325
6 passengers
Motor buses less than 2 tons
License to carry passengers only 375 375
Motor buses of 2 tons but less
Than 3 tons licensed to carry
Passengers 400 400
Motor buses of 3 tons
Tare Licensed to carry passengers 425 425
Rental motor cycles 175 175
118
Part B
Tutor’s Permit 100 125
Learners Permit 50 65
Registration of Change of 75 100
Ownership
Duplicate Licenses or Permits 50 65
Examination of a Driver 50 65
Dealers Licence 2,000 2,500
Inspection of Motor Vehicle 50 65
Temporary Driving Permit 50 65
International Driving Permit 75 100
Conductor or omini buses and 10 10
Mini buses
Fee for personalize number
Plates on registration 1,500 1,500
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