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2018 Annual Economic and Financial Review
SAINT LUCIA
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105
Eastern Caribbean Central Bank
While policy initiatives have contributed to
strengthening revenue intake, recurrent
spending continues to rise, necessitating
subsequent measures to contain that
expenditure and steer the country to fiscal
sustainability. The Citizenship by Investment
Programme is expected to contribute to that
overall objective. An increase in capital
expenditure is projected, contingent on the
implementation of major pipelined projects.
Of importance is the concern with regard to
mounting debt servicing cost and the progress
towards the target of 60.0 per cent debt to
GDP by 2030. While Saint Lucia’s medium
term debt strategy identifies its future
borrowing plan, the concentration of short-
term debt and rollover risks are significant
issues, which need to be addressed in its bid
to achieve fiscal and debt sustainability.
In the external sector, it is highly likely that
the merchandise trade deficit may narrow in
the near to medium term, as an improvement
in export earnings is anticipated, despite an
expected increase in import payments to
accommodate the projected expansion in
construction activity. Travel inflows are
expected to grow concomitant with the
expectations for increased activity in the
tourism industry, particularly for the stay-over
visitor sub-category. Additionally, it is likely
that foreign investment flows may improve in
the short run in line with positive prospects for
the Citizenship by Investment Programme.
Inflationary pressures may persist, largely
contingent on developments regarding global
commodity prices, especially fuel.
Global dynamics indicate that risks are
skewed to the downside and significant
.
These risks, which include the effect of
ongoing trade negotiations between China and
the USA, have the potential to inhibit
economic growth and confidence globally and
more so for small open economies like Saint
Lucia. Accordingly, Saint Lucia needs to
focus on accelerating economic activity and
strengthening resilience, while safeguarding
financial, fiscal and debt stability. Other key
sources of risk to the outlook include the
strong dependence of the tourism industry on
developments in the advanced economies, a
sudden stop in foreign investments necessary
for the pending tourism-related projects and
the adverse effects of global warming and
climate change. On the other hand,
opportunities exist with the Citizenship by
Investment Programme that the country can
leverage to its advantage.