September 22, 2021
Hon. Philippe J. Pierre
Prime Minister’s Office
Greaham Louisy Building
Dear Prime Minister,
It is with a heavy heart that I write to you regarding the current COVID-19 crisis in Saint Lucia. As of yesterday, our country has registered more than 10,700 cases with 2,182 active cases and 168 deaths; with 18 deaths reported in one day. Based on current trends, by the time this letter reaches you, these numbers would undoubtedly and unfortunately have increased.
Prime Minister, over the past few weeks you have spoken several times about “science” and also about evidence-based decisions, two concepts that you seemed to have ignored when you were in opposition. Nonetheless, I’m somewhat happy that you’ve finally embraced evidence-based decision making since you took office. Unfortunately, it looks like you’re not following your own advice.
By now you are well aware of the debilitating economic fallout from COVID-19, in addition to the impact on health.
When our United Workers’ Party took office in 2016, the cost of running the country was around $ 103 million per month – $ 43 million for wages and salaries, $ 30 million for debt financing and $ 30 million for operating costs (rent, utilities, consultants, etc.). Meanwhile, the government’s monthly revenues were around $ 85 million per month. This meant that the government had a deficit of about $ 20 million per month.
This had been the case from the early 2000s until 2019. You will remember in 2013 the then Prime Minister, Dr Kenny Anthony, saying that something was wrong and the government could no longer borrow. silver.
Well, that is precisely what went wrong. In 2002-2003, the interest rate on the public debt was about $ 40 million per year, and by 2016-2017, it had climbed to $ 150 million. The impact of not addressing the cause of this deficit and of continuing to borrow money to finance this deficit was and continues to be unsustainable.
By 2019, the policies implemented in 2016 to remedy this fiscal imbalance had started to bear fruit. The unemployment rate had fallen from 25% to 16% and the debt-to-GDP ratio was 59%. We had experienced three years of economic growth and foreign direct investment was promising, with several projects about to start.
The reduction in the rate of value added tax (VAT), combined with the application of a tax on gasoline and the increase in the airport tax have allowed public revenues to rise steadily, reaching peaking in 2019 at $ 105 million per month. During this same period, the government used these new sources of revenue to increase allocations to education, health, safety and infrastructure. The government has targeted key spending by critically reviewing operations, especially those of statutory agencies.
In early 2020, we started to feel the negative impact of COVID – both from a health perspective and from an economic perspective. Later that year, the situation gradually worsened.
The policy we adopted at the time, which was different from that of many other countries in the Region, was to coexist with COVID. Even then, we understood that it was about lives and livelihoods and that we had to find the balance between them. This balance was guided by science and the resulting policies were evidence-based.
Despite our best efforts, we couldn’t prevent people from getting infected with the virus, but given the limited health infrastructure and the population’s vulnerability to the virus, all we could do was slow down the rate. infection to limit the number of people infected. within our health system. We needed to make sure that when people were infected, especially those with underlying ailments, we would be able to take care of them, avoiding what we have seen happening in Italy, England and New York. , where the number of simultaneous cases has overtaken the health system. If people are unable to get early detection and basic medication, their chances of survival are greatly reduced.
Initiatives such as using hotels as quarantine stations and isolation facilities have helped reduce the rate of infection. We also understood that social activities, house parties, public receptions, funerals, weddings, and all crowd events combined with alcohol significantly contributed to the rate of infection. Therefore, curfews and limitation / elimination of alcohol consumption were very effective. We also learned that businesses, public offices, and schools have been very successful in enforcing necessary social protocols like social distancing, wearing face masks, and disinfection. In other words, people were actually safer at work than staying at home. Tourism, manufacturing, construction, and our call centers all required unique protocols to stay open while keeping people safe and sustaining livelihoods. Given your reluctance to narrow down these areas, I think you’ve come to understand the science and evidence for this strategy.
We also understood the precarious economic situation in which we found ourselves. Due to the shutdown of the economy for three weeks in April and the slow reopening until September, government revenues went from $ 110 million per month to $ 60 million and our costs went from $ 100 million. from dollars per month to $ 120 million per month.
The increase in costs was mainly due to the cost of the isolation facilities, the operationalization of the OKEU, the conversion of Victoria Hospital to a specialized respiratory facility, national security and, most importantly, the buyout of ‘government bonds. As you know, bond repayment is an unbudgeted item as it is customary in the past for bonds to tend to be rolled over. If there is a deficit, it is normally covered by our recurring income.
One of the catastrophic fallout from COVID-19 has been the financial impact on many businesses and personal income, which has led many businesses, institutions and individuals to buy back their bonds. In 2020, the government had $ 700 million owed and about 25% has been repaid. The government had to pay almost $ 170 million in cash. This left the government with a deficit of around $ 500 million in the 2020/21 budget. This shortfall was partially filled thanks to the support of the CDB, the WB, the IMF and the ECCB. Recognizing the fallout from COVID, all of these institutions have moved with unprecedented speed to approve funds to help with budget support.
I was very proud of the Finance and Economic Development team for the incredible work they did in the most difficult times. Charged with the effort to get out of the EU blacklist, juggling the sudden and drastic drop in income and rising costs, the introduction of a new finance law, the arduous task of applying for funds to several agencies, while designing a social framework and a stabilization and economic recovery plan, this team was able to accomplish all these tasks.
The government of Saint Lucia has continued to meet all of its financial obligations, in particular all salaries and wages, all debt commitments, including bond repayments, government operating costs and increased costs due. to COVID protocols.
Financial institutions have provided around EC $ 300 million in highly concessional loans to GOSL. IMF and WB funds could not be used for debt payment, so they had to be allocated to other operating costs, including costs associated with COVID. The remaining shortfall comes from the increase in the overdraft facility with ECCB and local / regional banks, and the increase in our debts. Accounts payable are normally $ 30 million on average, and as you know, they are now over $ 100 million. This means that individuals and businesses who provided goods and services to the government were not paid or it took an excessive time to be paid. While we didn’t have a choice, this can only continue for a while before these entities want to be prepaid for any service.
Although we were able to provide income and food assistance, it was clearly not enough, a fact that you will appreciate more now. The current crisis is at a point where we will have to reintroduce some of these programs. The question is where will the resources come from? This reality will be compounded if the whole economy has to shut down again. Sir, this problem will not resolve itself and will not go away anytime soon.
Mr Prime Minister, the intention of this letter is not to lecture you or remind you of what you espoused in opposition, but more importantly, to inform you that your government must act urgently. and decisive before health and economic systems completely collapse. Sir, you cannot wait for the situation to become so overwhelming that we have no choice.
Our COVID-19 statistics continue to increase at an alarming rate. Of greater concern is the high death rate, in part because people cannot access timely help. Unfortunately, when you took office, many of the frontline were already exhausted and the current situation is only making matters worse.
Sir, you must now realize that you will have to adopt some of the same policies that have been proven to work in the past. We urgently need to slow and temper the rate of COVID-19 infection. To achieve this, we must reduce public socialization. Doing so will require longer curfew hours and a ban on the sale and consumption of alcohol. It may also require the use of zoning 758/759 for a period of time to help police enforce these protocols.
You have repeatedly commented on the poor and limited housing conditions and that is why it would be useful to use some hotels to facilitate the isolation of positive cases, but I appreciate the extraordinary cost. If your government does not act now, as I mentioned, the country will very soon reach a point where it will shut down, jeopardizing many other livelihoods to save lives.
Finally, the vaccination campaign must be intensified. We note that the number of Saint Lucians vaccinated is well below the target and are offering an extensive community awareness program where we bring the vaccine to the population and engage in a rigorous education campaign.
The opposition stands in solidarity with the people of Saint Lucia and we are ready to offer our assistance. For the sake of our people and our country, you must change course. I’m afraid if you ignore this advice it will be catastrophic.
Leader of the opposition