PRIME Minister Allen Chastanet says that socio- economic development infrastructure is a key component in Saint Lucia’s efforts to rebound from the COVID-19 pandemic.
Describing the impeding transition of the global economy as the “Fourth Industrial Revolution”, the prime minster said, the country’s overall economic development would depend largely on investing in public infrastructure and in particular economic infrastructure to create an enabling environment.
He noted that this shift comes at a very crucial time in the nation’s developmental thrust and will be a critical factor to lay the foundation for the country’s development ambitions.
“In this infrastructure revolution … no community will be left behind. This revolution will be one with a difference, one marked by inclusion, resilience and transformation; one that will demonstrably shift our needle of economic growth and of socio-economic development,” said PM Chastanet.
In contextualizing the global economy, Chastanet noted “that while the world prepares to enter the fourth Industrial Revolution characterized by increased ICT integration and digitization of the global economy, developing countries like ours must simultaneously embark on our own infrastructural revolution while repositioning our economies to optimize the benefits that the Fourth Industrial Revolution presents.”
Presenting the Appropriation Bill on the $1.6 billion budget this week, he said, infrastructural deficits hinder economic growth and reduces the dynamism of any economy, “consequently slowing the pace at which citizens’ lives are transformed and the rate at which we lift our poor out of poverty.”
Chastanet lamented that, “this chronic situation is compounded by the sad reality of the gross state of disrepair of much of our national public core infrastructural assets.”
He said the country’s road networks, airports, ports and other amenities were in a ‘dire situation’ and that was partly due “to decades of inadequate public maintenance … and protracted neglect.”
The prime minister said government was cognizant of the citizens’ plea in both urban and rural communities for better infrastructure, “not just at the national level but at the community level as well.”
Noting that every budget must recognize and relate to current conditions in the country, he said, while last year’s budget addressed the fight against COVID-19, “this year our focus is on how we live and thrive in a world with and changed by COVID-19.”
PM Chastanet asserted: “We are forging ahead and have been preparing ourselves to take advantage of the opportunities that we know will arise as the world re-opens and returns to some level of normalcy.”
He noted that the main focus of the 2021-22 Appropriation Bill is reflected in the theme: “Adapting, Overcoming and Persevering – Building a Resilient Nation.”
Citing statistical data from the IMF in its latest World Economic Outlook released on April, 6, the prime minister said the global financial agency had revised its earlier GDP growth projections, to an upward trend.
“An expansion of the global economy of 6.0 percent is now expected for 2021 with growth ranging from 3.3 percent to 6.4 percent for advanced economies including the US, UK, Canada and the Euro-area,” he added. “The US is expected to exceed its pre-pandemic GDP levels in 2021 while others will return to pre-COVID levels later in 2022 and 2023.”
Chastanet warned the world is not yet out of the danger zone and that “the outlook for the world’s economy remains shrouded in uncertainty given that some countries, including those in Latin America and parts of Europe are now experiencing resurgences with third or fourth waves of infection of the virus.”
He said predictions dictate that the regional economy is also poised to benefit from this recovery. The IMF World Economic Outlook for the Caribbean region projects GDP growth of 3.3 percent for 2021 and 11.1 percent for 2022.
According to the Caribbean Tourism Organization (CTO), recovery for the region will be driven mainly by a turnaround in the tourism sector in terms of anticipated improved arrival levels, when compared to the 65.6 percent decline in arrivals for 2020.
Nonetheless, though this projected recovery of the tourism sector is expected to bring some relief in the short term (in the first instance), the long term effects of the pandemic are likely to linger for some time.
On the local front, Saint Lucia is poised to experience a partial economic recovery in 2021 as well, driven by an expected increase in economic activity in the second half of 2021.
Public sector construction is expected to drive growth in 2021 as a result of the timely implementation of various major pre-planned projects aimed at upgrading the core infrastructure, among other initiatives.
PM Chastanet explained, “Most of these are in the form of shovel-ready projects which are ongoing while others are on the cusp of commencement.”
In addition, he said, the tourism sector is expected to partly recover and boost overall economic activity with positive impacts on investor and consumer confidence. Increased activity is also expected from the increased ease of doing business as consumers and businesses continue to adapt to the new normal.
“The closure of the tourism sector and the attendant consequences reflected in high levels of unemployment, reduced economic activity and lower tax revenues have left this government with little fiscal head room and very few policy options to respond to the economic fallout triggered by the pandemic. Mr. Speaker, it is worth highlighting that this government has taken the deliberate approach of not tokenizing investment in infrastructure as was done by previous administrations. But rather we understand that if Saint Lucia is to live up to its 50 potential, and to escape the lethargic economic performance that has characterized the past two decades, and accelerate the rate of growth of our economy – innovative investments in public infrastructure are required,” Chastanet said.
Saint Lucia, he said, is not alone in employing this strategy of leveraging infrastructure investment as one of the essential pathways for economic recovery and economic take off in a post-pandemic era.
“In fact, Mr. Speaker, the IMF has urged governments to spare no effort in utilizing the arsenal of infrastructure investment to alleviate the economic impact of the pandemic, by providing short-term employment and income to households. But importantly, Mr. Speaker, the IMF cautioned that such investment must expand the productive capacity of countries and must critically have the ability to repay themselves in the future, without compromising their future fiscal positions,” Chastanet said.