Caribbean & Central America - March 2011 (ISSN 1741-4458)

*** BARBADOS CONTINUES FISCAL CONSOLIDATION.  On 11 March, the Barbados Senate passed four bills that give effect to the removal of tax-free allowances for travel and entertainment for employees and the increase in VAT from 15% to 17.5%.
The government's goal is to reverse the fiscal deficit to achieve a small surplus by 2015, and to bring the country's debt-GDP ratio below 100% with the goal of getting it down to 60%-70%.  In line with these targets, the government has announced a 7% decline in government expenditure for the 2011/12 fiscal year, along with a 5.7% increase in projected revenue.
Minister of Finance Chris Sinckler has said that he expects a small increase in GDP for 2010 of 0.3%, up from the 4.7% contraction recorded in 2009.

*** DEFEAT ON HANGING BILL FOR T&T GOVERNMENT.  The government of Trinidad & Tobago, led by Prime Minister Kamla Persad-Bissessar, suffered its first major legislative defeat on 28 February, losing a vote on bringing back hanging.  The prime minister reacted angrily, saying that the electorate would “hang the PNM".  The opposition People's National Movement (PNM) used its 11 votes to prevent the ruling People's Partnership (PP) from securing the 75% majority needed.

*** ST VINCENT & THE GRENADINES SECURES IMF SUPPORT.  On 8 February, the IMF agreed a US$3.26m Rapid Credit Facility (RCF) for St Vincent & the Grenadines to help with the recovery from Hurricane Tomas which struck in late October 2010.
 The damage from the hurricane is thought to have amounted to 5% of GDP.  The IMF said: “Because of the hurricane-related spending, the fiscal deficit is expected to widen in 2011."  However, it added: “The authorities remain committed to securing fiscal and debt sustainability over the medium-term.  To this end they have implemented fiscal reforms to facilitate the primary surpluses needed to put the debt-to-GDP ratio on a firmly declining path."

*** BELIZE BUDGET.  On 11 March, Belize's Prime Minister Dean Barrow presented his budget for 2011/12 on the basis of 3% growth on top of an estimated growth of 2.4% for the 2010/11 fiscal year.  The budget sets a primary surplus of 2.23% of GDP, with an overall deficit of 1.57%.

*** ST LUCIA PM BACK-TRACKS ON ELECTION DELAY THREAT.  Prime Minister Stephenson King and his ruling United Workers' Party (UWP) should face the polls before 11 December 2011, the fifth anniversary of the last general election.  However, as we reported last month, King had hinted that there could be a delay of up to three months as the country struggles to overcome the consequences of Hurricane Tomas. 
The opposition St Lucia Labour Party (SLP) was adamant that any delay beyond 11 December would be unacceptable, but King maintained: “I can't give any assurances, what I have indicated is that the experience of Hurricane Tomas has certainly extended the agenda of the government and has added more weight to our workload.  It has given the government the additional task of engaging in its reconstruction programme, and that can extend the call of the election."
 However, at the beginning of March King eventually gave way, and he has now confirmed that elections will be held this year.
 King was not wrong in emphasizing the impact of Hurricane Tomas.  Almost the entire island was affected by the hurricane that hit on 30 October 2010, causing damage estimated at 43% of GDP.  On 12 March, the World Bank approved a US$15m zero-interest credit to help with the rehabilitation of key infrastructure.