Economic Data Confirms Prime Minister Pierre's Policies Prevailed in 2023/24, New Budget Promises to Build Resilience

28/03/2024

Economic Data Confirms Prime Minister Pierre's Policies Prevailed in 2023/24, New Budget Promises to Build Resilience

By OPM

The Estimates of Revenue and Expenditure for the financial year 2024-2025, presented by Prime Minister and Minister for Finance Hon Philip J. Pierre on March 26, 2024, confirm that Saint Lucia convincingly surmounted global economic instability, sharp rises in interest rates, record high inflation, stubborn supply chain bottlenecks and the challenges posed by conflicts in Gaza and Ukraine.

Prime Minister Pierre leads a skilled and competent cadre of men and women serving in the Cabinet of Ministers, ably supported by trained and experienced technocrats in the public service. Their collective effort has extended Saint Lucia's economic gains over the previous financial year and stabilised the government's fiscal position.

"...this government, as the economic data will show, has done well in managing the economy. Our financial ratios illustrate fiscal prudence and responsibility." Said Prime Minister Pierre.

At a Glance: FY 2023/24

Revenue

In the 2023/24 financial year, $1.68 billion in revenue was raised to finance government operations and capital projects.

Expenditure

The 2023/24 Budget ceiling stood at $1.856 billion. Preliminary data up to February 2024 points to the government spending approximately $1.68 billion or an estimated 9.3% below the approved estimates of $1.856 billion.

Surpluses

Primary surplus: $104 million ($42 million more than 2022/23 and $62 million more than the approved estimates)
Current account surplus: $156 million ($47 million over 2023)
Recurrent Account Surplus: $46 million ($39 million over 2023)

The Primary Balance is 1.5% of GDP compared to 1% last year.

Reduced Borrowing

These surpluses demonstrate the prudent fiscal management of the country's finances.

The government is in a better position to meet its recurrent expenditure and cover, in part, the country's debt obligations in interest payments and principal payments.

The government averted borrowing to meet some of its recurrent expenditures and is developing the capacity to reduce its level of debt over time.

Closing the Deficit Gap

The government will experience an overall deficit in 2023-2024 of $111 million or $65 million less than last year, confirming the deficit gap is narrowing.

Trimming the Fat

Expenditure on Goods and Services

Approved Estimates: $309.9 million

Overall spend: $214 million ($95.9 million less)

The reduction is mainly due to reduced payments for consultancy services related to capital projects and other Government initiatives.

Development/Capital Expenditure

Approved Estimates: $302 million

Overall spend: $259.6 million (14% decrease)

Public Sector Projects initiated in 2023-2024 include:

Renewable Energy Sector Development Project
OECS Tourism Competitiveness Project
Community Tourism Project
Disaster Vulnerability and Reduction Project
St. Jude Hospital Reconstruction Project
Construction of Northern Police Headquarters
Custody Suites

2023/24 Revenue Performance

"...although we will fall short of our Projected Total Revenue target for 2023-24, revenue collection continues to indicate an upward trend because of increasing economic activity, resulting in improved performance in several revenue areas, notably, personal income tax, taxes on goods and services, and excise tax on petroleum products." Prime Minister Pierre said.

Financing

Loans: $139 million

This amount reflects a strategic utilisation of borrowing to meet critical funding requirements for development projects and infrastructure enhancements.

Treasury bills and Bonds: $82.6 million

This amount demonstrates an approach to using debt instruments to manage liquidity and meet short-to-medium-term financing needs. It includes issuing treasury bills and bonds to raise capital while efficiently maintaining financial stability and market confidence.

The Prime Minister reaffirmed, "2023-2024 was a fiscally well-managed year, setting the platform for an even better year in 2024-2025."

THE 2024/25 BUDGET PROPOSAL: The Year of Infrastructure

The Prime Minister has made clear the aim and objective of his Administration in the new financial year, which is to "...transform the economy of Saint Lucia through infrastructural development: physical, social, and digital."

GDP projections for Saint Lucia are encouraging. The Dept of Finance forecasts a 5.8% nominal increase in GDP for 2024/25. The increase in GDP represents $7.3 billion from $6.9 billion over 2023/24.

Investing in Saint Lucia

The Prime Minister has committed/assigned $484.9 million to the Government's Investment Portfolio. Capital expenditures constitute $298.9 million, or 61.6% of the total Investment Portfolio of the Government.

Prime Minister Pierre's Government Prioritises Your Needs

"...the foundational theme underlying this government's strategic initiatives has become an article of faith - Putting People First." The Prime Minister remarked.

Activated/continuing projects for 2024/25:

Road expansion and repair programmes
School plant rehabilitation
Government plant refurbishment
Construction works at the St Jude Hospital.
The commencement of works on the Soufriere Hospital.
The establishment of the Castries Urban Polyclinic.
The completion of works on the La Resource Wellness Center.
Rehabilitation of sporting facilities, including Daren Sammy Cricket Ground, for readiness to host the ICC Cricket World Cup and the refurbishment of the Vieux Fort Stadium, Mindoo Phillip Park and Marchand Grounds, Bellevue Playing Field, Gros- Islet Playing Fields
National Aquatic Center
Housing development in Roseau, Cas-en-Bas and Choc
Expansion of energy projects - to seek alternatives that will diversify our energy needs and reduce our carbon footprint.
Laborie Market
Rehabilitation of Rudy John Beach Park
Grand Riviere Community Centre
Northern Police Headquarters
Northern Police Auditorium
Completion of Custody Suites
Cul De Sac Community Center
Community Centre for Castries North and Castries East
Completion of Control Tower at HIA
Commencement of terminal Building at HIA
Private Public Sector construction by GPH at Port Castries and Soufriere 23. Canaries Market
Micoud Jetty
Community Tourism Projects
Repairs to Fishing Complexes
Vieux Fort Entertainment Centre
Halls of Justice
Digital Infrastructural Enhancement
Investments in upgrading government services to online platforms

Improving Revenue Collection

Recurrent Revenue inflows are projected to increase by $61.9 million relative to the approved estimates for 2023/24, reaching a total of $1.48 billion for the fiscal year 2024/25.

Compared to the revised estimates or outturn for the preceding year, Recurring Revenue would have increased by $99.6 million or 7.2%.

The increase is expected partly due to expansion in construction activities in both the public and private sectors and the multiplier effect of continued growth in tourism.

Responsible Debt Management

The Government Debt Strategy is to secure external borrowing on concessionary terms, with $243.8 million to be sourced from Development Partners and the remainder, $64.1 million, sourced from bonds, treasury bills, and notes.

Proper Cash Management

The government paid contractors in full for the financial year 2023/24. A total of $60 million due to contractors will be used this year, 2024/2025, for new road infrastructural projects. This has been possible through proper cash management by this administration, which paid debts earlier.

Quick Summary: 2024/25 Estimates of Revenue & Expenditure

Recurrent Expenditure - $1.502 billion

Capital Expenditure - $298.9 million
Interest Payments - $232.5 million
Principal Payments - $92.9 million

Total Revenue - $1.576 billion

Tax Revenue - $1.330 billion
Non-Tax Revenue - $146.80 million
Capital Revenue - $2.8 million
Grants - $108.0 million

"...enhancing the quality of life of the people and creating opportunities for wealth creation will remain the main objective of government policy." Said Prime Minister Pierre