Good Evening to all Saint Lucians here and abroad watching this telecast.
As the last few weeks have progressed and the realities of the repercussions of COVID have materialized, we have begun to get a sense that we are likely to be living with this virus for some time. Most of the world’s health and scientific authorities seem to share the opinion that a vaccine will not readily be available.
As a Government we have taken what we believed were the best measures to protect you all and to keep you safe when the virus first took hold here. And whilst we are clearly not yet out of the woods, there is no doubt that we have been successful in this regard with a 100% recovery rate, no deaths and with no apparent current cases on the island. For that we give thanks to God. We know that many of the measures we have had to take have made life uncomfortable and difficult for many – but it was better than allowing infection and possibly death to result.
When the virus first entered our country, our Government immediately adopted a three-phased approach to tackle the crisis with our top priority being protecting the health of Saint Lucians by ensuring that our healthcare system was prepared to deal with any possible outbreak. Personal Protective Equipment (PPE) and ventilators were ordered and we negotiated with Cuba to get 110 doctors and nurses on island to provide support.
Once we saw the beginning of a spread, we took stringent measures to limit person-to-person interactions including enforcing social distancing, closing our borders, declaring a state of emergency, applying a curfew and eventually shutting down completely. We also had to set up quarantine facilities at three hotels and fast-track the move to OKEU to facilitate Victoria Hospital becoming a respiratory centre. Since we got into Government we have been preparing to move into OKEU. However, there were fundamental issues that we had to resolve, among them, the cost of $70M per year to run OKEU as compared to $35M to operate Victoria.
In addition, although the basic physical structure was completed and handed over, several components were problematic such as the electricals, air conditioning system, drainage, air exhaust systems and others. Twenty-eight (28) million had been allocated from Government’s budget to address these major deficiencies which were not all completed but we had to move in anyway because Victoria was inadequate to serve as a hospital and a respiratory centre. The situation was far from ideal but we worked hard to determine a means of financing this hospital which we ultimately determined would be best arranged through a national healthcare insurance programme which was scheduled to start in June of this year. When this is established, every Saint Lucian citizen will have access to affordable and quality health care. Health centres and polyclinics island-wide have been revamped and upgraded and times of operation have been expanded.
The rebuilding of St. Jude’s has been a priority as persons in the south have been waiting long enough for a decent hospital and after long negotiations with the Taiwanese government, we are now well advanced and on track to complete this critical project.
The measures which the world has had to take and our pre-emptive actions locally have had the dual impact on decimating our economy especially our tourism sector, which in turn, has had wider spill-over effects in other sectors.
To survive the impact of COVID over the next few months requires stringent cash flow management and a great deal of fiscal prudence, including a reduction of all non-essential expenditure.
Once we get through this phase, we can begin the next – which is Stabilization. This will see the phased re-opening of our economy which has already started and later the gradual opening of our borders to global travel. This phase is expected to be between June and September 2020. Whilst we don’t expect to earn pre-COVID revenues, we will need to continue to meet salary and debt commitments and hopefully to allow for additional spending in high priority areas. An assessment of the situation will be conducted ahead of this phase to gauge the impact of the changes in the global economy on our local economy. It is only at this point that a short and medium-term strategy will be developed, and input from all major sectors of the economy will be sought on an economic stimulus. An economic recovery committee has already been put in place which comprises the Private Sector Council, the Unions and the Opposition and all parties have already been advised.
Phase 3 is Recovery. By September 2020, we will have had a clear assessment of the economic impact of COVID and only then, can we consider making permanent adjustments to our fiscal projections. We will hopefully then, be in a position to begin our economic recovery efforts. This will of course, depend on the pace at which international travel and commerce resume. The rebuilding efforts will require additional investment in the local economy and this will certainly be complemented by the reopening of our tourism sector. Key to this economic recovery is the continuation of our large-scale investment projects such as St. Jude’s Hospital and the Hewanorra International Airport both of which will not only generate jobs but are critical infrastructural projects for the country. HIA has long been inadequate but especially so during the last three years where we have had record tourism arrivals and a facility ill-equipped to accommodate the traffic.
In view of the anticipated income shortfalls and the thousands who have lost jobs overnight, we created two sub-committees: a Ministerial sub-committee comprising the Department of Finance, the Minister for Labour (Chairperson), the Minister for Commerce and the Minister for Equity, to conduct union consultations. That team has to date held five meetings with the public sector trade unions and engagements with key stakeholders during the months of March and April and presented an overview of the economic and financial impact of COVID on our island. The next meeting is scheduled for Tuesday. We also formed a sub-committee to manage the economic and social fallout comprising myself as the Minister of Finance, and the Ministers of Tourism, Education, Economic Development and Agriculture.
I want to thank our private sector partners and the trade unions for their participation and for their admitted appreciation of the gravity of the economic hurricane which has just hit us. We must work together to ensure the survival of our country. The need to negotiate with the civil service has not arisen because their work and contributions are not valued. In fact, at these times, they have shown us how invaluable they are, especially our frontliners. At the same time there must be a recognition that our financial situation – and that of the whole world – has changed overnight and an urgent but temporary adjustment is required.
And as we continue our negotiations with the civil service, we will at all times, deal openly and honestly but we will expect the same in return. When we review the revenues for April dating back to 2017, the drop is quite alarming. In April 2017 we collected 70 million. In 2018 we collected 87 million. In 2019 it was 101 million. And for this April to date we have only collected 40 million.
As civil servants all know, their salaries are paid from monthly Government revenues and as I mentioned the drastic drop – a 60% reduction for April alone – has put a severe strain on our cash flow and immediate options to replace this revenue are limited. We are projecting that this new level will continue at least until July and it is very difficult to determine how long until we get back to pre-Covid-19 levels.
All efforts are being made to be fair and no one has been asked to take a pay cut – I repeat, no one has been asked to take a pay cut – but some sacrifices are required to be made in order to get through this cash flow crisis.
Being aware that the frontline workers were exposed we looked at the possibility of making an exception. However, we realized that there were other public officers who were also at work: customs, the staff at the Government printery, our teachers, our ministry of finance staff and many more have been working long hours during this crisis.
While most people are not on the front lines, they are also at risk each day. If Government is left to make that determination it becomes a difficult choice to make. This is one of the reasons we have sought to seek the counsel of the unions in making the decisions as to the best approach.
The offer we have made to the civil servants is that part of their salary will be paid in cash and part will be paid in an interest-bearing bond. But this applies only to grades 7-21 staff, which are the higher earners. Everyone else at grades 1-6 and including pensioners will be paid in cash and allowances as usual. This represents more than half the civil servants.
Those at grades 7-21 have been offered part cash and part interest-bearing wage bonds for a three-month period. But everyone will be paid in full. A wage bond is similar to a fixed deposit redeemable after a year at a fixed interest rate of 3%, which is one percent above the current savings rate.
This offer, if accepted, will allow us to keep some cash on hand to pay debt and to cover other emergency expenses. The end of March represents the end of Government’s financial year and when we were expecting a windfall from income tax payments, not only have we been unable to receive these but we have had massive unexpected expenditure due to COVID-19. We can’t afford to default on our loan obligations because the repercussions for our country will be severe and on all us.
COVID-19 has dealt us a difficult hand and we are doing the best that we can to get through this. All we are asking for is a little time – 3 months.
To put things into perspective:
Before COVID-19, estimates by the Department of Finance for the next fiscal year had projected 4% economic growth. This would have capped off almost four years of consecutive growth since we assumed office in June 2016. In fact, next week we will be announcing that we have achieved not only another year of economic growth but our debt to GDP has now declined to 59%. This means that our economy has been growing faster than our debt for the first time in almost 20 years.
We are also very proud of the fact that our policies and initiatives have resulted in a dramatic reduction in unemployment from 25% when we took office to 16.8%. Youth employment continued to decline falling to the lowest ever recorded to 31.6% So we have been able to consistently grow the economy and improve overall output which has put us in a better position to deal with this economic crisis. Despite the current difficulties, our improved economy has undoubtedly made us more resilient.
In fact, we were on the verge of a major take-off when COVID hit and the numbers are there to substantiate this. It is as a result of our pre-COVID growth and reduced debt to GDP ratio that we are now able to more easily negotiate with regional and international institutions to get the financial assistance that we need. We have been in discussions with ECCB, IMF, World Bank, Caribbean Development Bank (CDB) and other bilateral partners to repurpose existing loans in some instances and to extend new financing facilities. But these loans take time to negotiate which is why we are asking for the understanding of our unions.
The global uncertainty as to when the world will recover, means that every country including Saint Lucia will contract for a period of time. The ECCB suggests that Saint Lucia’s contraction could reach 18%. This contraction if it occurs, will result in a possible doubling of our fiscal deficit for the upcoming financial year.
In order for us to survive, managing incoming cash flow over the next two to three months is essential.
The Department of Finance will need to undertake the following:
- Work with the National Insurance Corporation (NIC) to provide a cash injection to fund the income support allowance to non-contributors of NIC for three (3) months, as presented in the Social Stabilization Plan. The NIC will bear the portion relating to providing income support to contributors of NIC.
- Assist statutory bodies by way of cash injections, primarily for salaries and wages.
- Meet the costs associated with the treatment and containment of COVID-19.
- Meet the increased cost of operating the OKEU Hospital, funding the operations of Victoria Hospital as a respiratory hospital, maintaining other respiratory centres as well as the quarantine and isolation centres.
- Meet the costs of funding and operating the National Feeding Programme intended to feed up to 10,000 people daily for a period of six weeks.
Additionally, our Government remains committed to meeting all debt servicing obligations in addition to its obligations as per the 3-year collective agreement we negotiated with public sector trade unions, covering the period 2019-2022.
As I recently announced in the Social Stabilization Plan, we have been working with the ECCB and the commercial banks to provide a moratorium on interest and principal payments. We started this process since February with a view to protecting our citizens from the anticipated fallout which is why the banks were able so early in the game, to offer debt payment deferrals.
This moratorium is for a six (6) month period in the first instance, with a possibility of further extension. And I wish to sincerely thank them all for their willingness to work with our Government and our people as we navigate through this crisis. Efforts are afoot to secure similar arrangements with other local financial and non-financial institutions, such as the credit unions, micro-loan and insurance companies.
The Government has taken an aggressive multi-faceted approach to this situation – we are tackling it from all sides, but only time will tell if this is enough because of the level of uncertainty which looms.
The Managing Director of the IMF recently stated that the already dire economic forecasts may still be too optimistic. The IMF projects that 170 countries will see income per capita shrinking during 2020 and that poor countries will be hit multiple times – first by the pandemic, then by the spill-over from economic contraction elsewhere, by the flight to safety and because remittances from the diaspora are expected to dry up.
There is no lack of evidence as to how bad the situation is around the world. Disney, the world’s largest entertainment company just announced a few days ago that it is letting go half of its staff of 200,000 persons. And there are signs that its parks won’t reopen until next year. Some US universities are telling students they won’t be open in the fall but rather in January 2021. Jobless claims in the US have reached 26 million since coronavirus hit, wiping out all gains since 2008 recession.
So the continued uncertainty of what is to unfold globally as well as locally puts even greater pressure on our economy and reduces our ability to rely on typically predictable trends and economic projections.
However, inaction is not an option. We must take decisions to put ourselves in a position to recover from this even though the situation regarding COVID-19 is evolving almost daily. And we are doing so.
For a small country with limited resources, we have to be extremely proud of how well we have handled and managed COVID-19. I must express my most sincere thanks to the Minister of Health Sen. Mary Isaac and her team of frontline workers in particular Mrs. Sharon Belmar-George, our Chief Medical Officer and her team whose contact tracing efforts were incredible and which served to protect our nation. The level of organization and coordination of the quarantine facilities have been superb and I must thank Minister Dominic Fedee together with Ms. Charon Gardner and Mrs. Nancy Charles who spearheaded the logistics.
Recognising the likelihood that COVID will be with us for the foreseeable future, we have been continuing to examine all options for sourcing Personal Protective Equipment for our frontliners, particularly our healthcare workers who have to change this PPE several times a day. Whilst the state has large quantities in supply and we have received donations from Taiwan as well as other private sector partners, this unexpected expenditure means that funds have to be diverted from other causes where they were allocated in order to meet the need. Having received offers of assistance from persons around the world and particularly in the diaspora, we decided to host a telethon that has to date raised over 2.5M in pledges and donations. This is testimony to the patriotism and caring that exists in this country. I thank all those who contributed funds and those who sent their prayers and good wishes. They all made a difference.
But as we prepare to take next steps to open up our economy and eventually our borders, we must do so knowing that the crisis still looms if we become complacent. The task which lies ahead is not easy and it is not an easy time to be the leader of a nation. I speak to my Caricom colleagues daily – everyone is facing the same challenges posed by the greatest health and economic crisis of our lifetime. But Saint Lucia, I wish to reassure you that we will get through this.
When I ran for leadership of this incredible country, I did not do so because I thought it would be easy. I knew the challenges would be significant. I saw the high levels of unemployment especially amongst our youth, the suffocating debt levels, the stagnant economy and a country with no clear direction. In addition, when compared to our regional counterparts, our per capita GDP was substantially lower than our potential and I felt strongly that Saint Lucia could perform much better.
When I made the decision to run for office and to seek to gain your confidence, I knew that I had a plan to turn this country around. I didn’t run for office just to hold a position – I ran because I believed I could make a positive contribution to the development of this country. The immediate reduction in VAT to 12.5% and the FIVE TO STAY ALIVE plan were part of a strategic approach to grow the economy and we have done this consistently – the numbers are all there in black and white for everyone to see.
And so now, even with this unprecedented crisis, I am not deterred. And your Government is not deterred. Because for every problem that arises in life, there is always a solution. This does not mean the solutions to this situation will be easy – but there are indeed solutions.
Changes and disruptions to our lives and routine may become normal, wearing masks and social distancing may be with us for some time, we may have to adjust to lesser income and less conveniences of life and there may be other things until a vaccine is discovered and the global economy returns to its pre-COVID level.
The novel nature of this virus and this situation means no one, not even the experts, can predict the precise outcome. But we will rally together as we always have during difficult times and we will get through this. The whole world is going through a bad storm and we are all in the same boat – but God is our captain and we need to maintain our faith in Him and in each other to navigate through this.
The fact that we currently appear to be COVID-free, should not give us a false sense of security. In fact, due to the fluidity of the situation, we have not yet given the all clear, which is why we have extended the state of emergency and maintained the curfew and zoning as we must have the ability to take decisions quickly if the situation suddenly changes.
We must take nothing for granted – we must all hunker down and do all that we can to ensure that we make it through this together.
As of April 27th, tomorrow, we have made the decision to maintain the partial shutdown while allowing for some increased activity in some areas. So far church gatherings have been limited to ten persons. This is being amended to accommodate more people and will be governed by the square footage of the church building and the maintaining the six foot distance. Details can be obtained from the relevant ministry.
We will also allow the Construction sector to open up under strict protocols already outlined by the Ministry for Infrastructure.
This week we will allow the operations of private doctors and clinics. Considering that many local designers, tailors and seamstresses are making masks to assist with the protocols we will allow the opening of fabric and haberdashery stores.
The curfew from 7pm to 5am, the zones and stay at home orders remain in effect.
I want to thank the entire country for abiding by the protocols and for the discipline you have shown. I know it has not been easy. Nothing about this crisis has been easy for any of us.
I am heartened by your response to the virus and trust that this will continue until such time as we no longer need protective measures.
Although the past several weeks have been challenging, my mother always reminds me that “behind every dark cloud there is a silver lining”.
This period of lockdown and quarantine has been for many, a period of rest and reflection, a reassessment of priorities and for others a new focus has emerged.
Many of you have spent much needed time with your families and with God. As your Prime Minister I have always believed in the resilience of the Saint Lucian spirit and I know that we will emerge from this crisis as a stronger and better people and as a stronger and better nation.
There is no problem we cannot overcome if we tackle it together. If there was ever a time for us to be ALL IN, it is now. STAY SAFE, STAY STRONG, STAY UNITED.
May God continue to bless you all and may God Bless our beautiful island.