By David Prescod
FORGIVE me for returning to the subject, but recent comments in this newspaper and in the electronic media on the Citizenship by Investment Programme have led to this postscript (well, sort of a postscript). Having stuck my neck out, I feel compelled to reply.
Now that it is a fait accompli and we are all being led into its acceptance, the focus, as previously pointed out, is on the fine-tuning of the Act. While I continue to object on the grounds of patrimony and morality, this is not intended as sanctimonious preaching. We hope only to sound an alarm bell alerting to the consequences that we can expect as our values are eroded. One such possible consequence is an increase in violent crime, and what will it matter if the country is filthy rich but you’re a victim of crime, and you’re dead? I may be banging my head against a wall, but I’d rather do it myself than have it done to me.
Recently, the Leader of the Opposition stated that the Opposition had supported the Bill enacting this programme during its debate in the House of Assembly because of the “desperate” state of St. Lucia’s economy; the headline of one commentator’s comments on the CIP in this newspaper suggests the same. The Leader of the Opposition was however, wrong on two counts: wrong for not providing the leadership required in objecting to this proposal on the basis of patrimony, and wrong in her description of the state of St. Lucia’s economy.
While it may have been politically useful for her to describe our economy as “desperate”, the facts do not bear this out. Certainly, times are bad. People have lost their jobs, unemployment and crime are sky-high, there is little money in circulation, and some have lost hope and given up on life itself. We are told that the economy is showing green shoots, but few have spotted them, and there is little indication that these shoots are getting the necessary nutrients that will enable them to grow. But St. Lucia’s economy is not in a state that can be described as “desperate”, particularly when compared with other regional economies.
As we look around us though, we have to be careful in our comparisons, as we are discussing family, and have to be careful not to give offence if for no other reason than the fact that we have to continue to live together. We hope.
According to IMF data, (World Economic Outlook Database, October 2015), in 2014 St. Lucia’s debt to GDP ratio was 79%. For that year the Debt to GDP ratio for St. Kitts & Nevis was 80%, that of Antigua & Barbuda 98%, while that of Grenada was 100%; Jamaica’s ratio was 136%, while that of Barbados was 100%.
St. Kitts & Nevis had to resort to IMF assistance in 2011, at which time their Debt to GDP ratio was 151% having peaked at 159% the year before. Grenada had to do likewise in 2006, again in 2010 and is currently benefitting from the last IMF programme instituted in 2014, its Debt to GDP ratio having peaked at 107% in 2013. Jamaica, of course, has been on an IMF lifeline for the last forty or so years.
This is what happens when your economy is in a “desperate” condition – you fall on the lender of last resort, the IMF, and you take your medicine.
While at 79% our Debt to GDP ratio is cause for concern, (the ECCB reports an agreed target of 60% for the year 2020), we did not hear concern voiced by the Leader of the Opposition as Government proposed to significantly increase our debt by borrowing EC$150 Million for the expansion of the Choc to Gros Islet highway with no realistic return on this investment possible.
Nor did we hear concern expressed as the Government undertook non-traditional financing of road reconstruction in Laborie and Vieux Fort, (contractor financed), even as construction of the Vieux Fort hospital remains stalled and the new Castries hospital remains un-opened. Again, non-revenue generating borrowing that should not be undertaken when your economy is in a “desperate” condition. Nor do we hear concern expressed over the stalled opening of the long complete abattoir in Vieux Fort.
We can go on, but there is another side to this coin. While most have complained bitterly of the austerity measures imposed by the IMF, following the Greek crisis the IMF itself now recognizes that austerity on its own will not solve the debt problem and that growth in the economy is also required. Where is the Opposition Leader’s voice of concern on the state of the government’s efforts to grow our economy?
Of the countries mentioned above, St. Kitts & Nevis, Antigua & Barbuda, Grenada and now St. Lucia have instant Citizenship by Investment programmes. Jamaica, however, is considering a Residency programme, and while the issue has been mentioned in Barbados, it has not been pursued. It does not seem to us that it is simply those economies which one might describe as being in a “desperate” state that are leading the charge to this program of the sale of instant nationality. It seems, rather, that it is those seeking a quick and easy way out of trying circumstances who are doing so.
The IMF working paper, IMF WP/15/93 authored by Xu, Ashram and Gold warns about this, advising that countries adopting this CIP approach may not also adopt the fiscal policies necessary for a healthy economy. Apparently, extracts of an interview with the authors in which they describe the impact of the CIP programmes are currently being used to bolster support for this programme. In the interview, however, the authors comment only on the financial inflows from these programmes. The working paper in fact sounds a cautionary note and its title indicates this: “Too much of a good thing? Prudent Management of Inflows under Economic Citizenship Programs”. The authors also make no comment on social policy. Here’s a link:
http://www.imf.org/external/pubs/ft/wp/2015/wp1593.pdf
But with respect to the concerns expressed in IMF WP/15/93 on the adoption of appropriate fiscal policies by governments receiving high CIP inflows, where are the Leader of the opposition’s concerns with respect to government’s policies? The way our democracy is supposed to work, a vibrant opposition puts a brake on potential excesses or failures of the Government, and that ensures good governance. No opposition, no brakes.
Part II in next Tuesday’s issue of this paper will point to some issues affecting the health of our economy. These also should be of concern to the Leader of the Opposition.