The Government of Saint Lucia tabled the Fiscal Responsibility Framework in the House of Assembly on Tuesday 24th November 2020 to ensure fiscal discipline and monitoring to achieve long-term fiscal policy objectives. The establishment of these fiscal rules will be geared towards attaining a 60 percent debt to GDP target ratio by 2030.

The framework will comply with internationally accepted financial management principles and incorporate the appropriate institutional arrangements, including a Fiscal Responsibility Oversight Committee.

“Despite the setbacks of COVID-19, the Government of Saint Lucia is committed to enhancing its long-term fiscal resilience, stability and sustainability, whilst at the same time fostering broad-based, inclusive economic growth and development,” said Prime Minister and Minister of Finance Honourable Allen Chastanet at Tuesday’s Parliament session. He continued, “The Government is committed to maintaining strong macroeconomic fundamentals by continuing to implement sound fiscal policies and reducing the debt-to-GDP ratio to a prudential level.  The Government, being a member of the Eastern Caribbean Currency Union, has committed to attaining the 2030 debt target set by the Eastern Caribbean Central Bank.”

The Fiscal Responsibility Framework commits Government to establishing a Working Group led by the Ministry of Finance to be approved by the Cabinet of Ministers by 31st March 2021. The Work Group will have the responsibility to design, approve and enact the rule-based Fiscal Responsibility Framework and ensure that the fiscal rules established limits the annual growth of Central Government’s primary expenditures.

According to Prime Minister Chastanet, Saint Lucia saw a decline in unemployment during the period 2017 to 2019 and experienced real growth of 1.7 % in 2019, with growth expectations of 3.0 to 4.0 % for 2020.  In 2020 however, tax revenues fell by more than 50% and placed significant strain on the purses of Central Government in response to the ongoing pandemic. “This effort seeks to correct the shortcomings of the current public debt framework, bring the jurisdiction in line with best practices and prepare for a more robust, comprehensive and uniformed approach to public debt.”

In his Budget Address for the Financial year 2020/2021 the Prime Minister shed light on the Government’s fiscal strategy stating that it would be focused on two principles, continuing to grow the economy and rationalizing the Nation’s expenditure to ensure optimal use of tax revenue and debt resources.

A major feature of the fiscal strategy is a significant capital expenditure programme most of which is directed towards the upgrade and modernization of the country’s infrastructure. This is intended to lay the foundation needed to support higher volumes of economic activity, contribute to future economic growth, increase employment among other desirable social and economic outcomes.

The debate continues Thursday 26th November 2020 with Senate at 10am.