1 / 36

Economic Performance and Prospects

Economic Performance and Prospects. GOVERNMENT OF SAINT LUCIA Ministry of Finance, Economic Affairs, Planning & Social Security. Recent Economic Performance. Growth Performance. Average growth of 2.5% over the last decade. GDP contracted by 0.6 percent in 2012 due to low external demand….

morgan
Download Presentation

Economic Performance and Prospects

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Economic Performance and Prospects GOVERNMENT OF SAINT LUCIA Ministry of Finance, Economic Affairs, Planning & Social Security

  2. Recent Economic Performance

  3. Growth Performance • Average growth of 2.5% over the last decade. • GDP contracted by 0.6 percent in 2012 due to low external demand…

  4. Real Sector ReviewBaseline: Real Growth Rates (%)

  5. Trend In FDI

  6. Commercial Bank Credit

  7. Fiscal Performance • The fiscal position has deteriorated… • Widening fiscal deficit, corrective measures required…

  8. Fiscal Summary

  9. Current Revenue • Fall in current revenue due to reduce intake of taxes on income and international trade

  10. Current Revenue • Fall in taxes on income driven by fall in corporate taxes…

  11. Current Revenue • Fall in international trade led by fall in excise tax (petroleum)…

  12. VAT Performance

  13. Current Expenditure • Increases in current expenditure driven by higher interest payments, goods and services and transfers…

  14. Composition of Budget 2012/13 By Category of Recurrent Expenditure

  15. DEBT • Debts levels are trending upwards…

  16. Inflation • Inflation uptick due to VAT but temporary… Source: IMF Staff Report

  17. Unemployment • Unemployment climbing due to slow economic activity and structural problems in the labour market.

  18. Challenges in curbing unemployment… • Young demographic imply large inflows into the labour market • Most of the unemployed are unemployable… • According to the latest Labour Market Needs Assessment (LMNA) for Saint Lucia 60% of job seekers have educations levels below secondary school.

  19. Where we are Vs Where we should be… Economic Performance and Targets (In Percent)

  20. Turning Point • To bridge the gap government policy should aim to achieve the following: • Boosting GDP Growth • Removing structural impediments to growth • Improve targeting of capital spending • Maintaining Fiscal Sustainability • Reduce overall deficit through fiscal consolidation • Redirect debt on a more sustainable path

  21. Growth is Key… Growth Jobs Improve Debt Ratios Economic Development Lower unemployment Higher Living Standards Reduce poverty

  22. Growth leads to higher incomes… Impact of Growth on GDP (nominal) per Capita

  23. GDP per capita In $US • We have some catching up to do…

  24. Challenges to Growth • Rapid wage growth coupled with low productivity growth has eroded competitiveness. Source: IMF staff estimates

  25. How do we boost Growth ?

  26. Creating an Environment to Facilitate Growth

  27. Export Expansion

  28. Fiscal Sustainability

  29. Curbing Current Expenditure… • Review of generalized subsidies (food, fuel)

  30. Curbing Current Expenditure • Review of generalized subsidies (food, fuel) • Scope for reducing generalized bulk food subsidies • LPG subsidy not to exceed $15 per 20lb cylinder • Containing the wage bill • Setting WASCO on a sound financial footing to reduce expenditure on transfers • Increase water tariffs to cover operating costs • Reform of the Public Pension System

  31. Capital Expenditure • In the wake of global recession, the focus of government spending has been to; • Generate economic activity through fiscal stimulus • Reduce high unemployment rate • However the current environment requires consolidation and streamlining of the capital budget. • Currently 37% of capital budget is spent on maintenance • Capital investment to focus not only on physical capital but on building human capital.

  32. This will be Challenging… • The experience of other countries demonstrate that structural adjustment and reforms are not easy to implement. • Not many examples of countries seamlessly undertaking required adjustments prior to a crisis. • The reality is that there will always be resistance to change.

  33. Challenges… • Fiscal adjustment will be difficult due to the current composition of government expenditure. • Large percentage of recurrent expenditure is distributed to education, health and security (teachers, nurses and policemen). • VAT and wage negotiations will impact current expenditure • 78 percent of capital budget is ongoing projects. • Scope for reductions is limited. • Public sector reforms will involve revisiting the current legislative framework • Re-examining the expectations of the state

  34. Going Forward…

  35. Role of the Private sector • Aggressively seek new investment opportunities including partnership with foreign investors • Embrace competition and drive efficiency through adaptation of available technology • Introduce and reach for standards in support of world class product and service delivery • Play a strong, constructive and focused role in shaping government policy

More Related