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

 *** OPPOSITION WINS IN ST LUCIA.  In the 28 November general election, the St Lucia Labour Party (SLP), under Dr Kenny Anthony, comfortably ousted the ruling United Workers Party (UWP) of outgoing prime minister Stephenson King.  King had predicted the UWP would win comfortably, taking 14 of the 17 seats in parliament.  However, at the time of going to press it is not certain how many seats the SLP will hold in the new parliament due to recounts although it is thought likely that it has won 11 seats.

The election result returns Dr Anthony to a post he held from1997-2006.  His success has been attributed to public dissatisfaction with increases in crime and unemployment and the difficulties the island has experienced in recovering from the effects of Hurricane Tomas which hit the island on 30 October 2010.  Unemployment is over 20%. 

The change of government in St Lucia has potentially important international ramifications.  In 2007, St Lucia restored diplomatic ties with Taiwan after a 10-year hiatus.  At the time of the swap, Dr Anthony, then leader of the opposition, said: "It is clear that the strategy of the UWP government is to embarrass and insult the government of the People's Republic of China, to provoke them into unilaterally terminating diplomatic ties with Saint Lucia...A country that conducts its external affairs with such duplicity can never earn the respect and trust of the regional and international community."

However, immediately following the confirmation of the SLP’s return to power, Taiwan’s Ministry of Foreign Affairs said that it had received assurances from Anthony that he would not withdraw St Lucia’s diplomatic recognition of the Taiwan.  The statement added: “Taiwan has offered various forms of assistance to St Lucia that have benefited the people of that country and we believe that the newly elected government of St Lucia will proceed with cooperative projects.”

*** BARBADOS RATING LOWERED.  On 22 November, the Standard & Poor’s ratings agency downgraded its outlook for Barbados from stable to negative.  Its local and foreign-currency ratings are BBB-/A-3.  The positives for Barbados, according to Standard & Poor’s, are a “predictable and mature political system” and a consensus on major economic and social issues.  However, the agency added, “the government’s large fiscal deficits and a rising debt burden, which are not sustainable in the long-term...constrain the ratings”.

S&P believes that net general government debt will remain at 52% of GDP in 2011-13 and that the cost of servicing debt will account for 13% of general government revenues.

Speaking on 25 November, Minister of Finance and Economic Affairs, Chris Sinckler, recognized the need to “consolidate our fiscal accounts”, but he still forecast a medium-term deficit of 5.6%.  He said: “We cannot overcompensate by raising more taxes, thereby cutting demand to an extent where it cannot contribute to the growth in the economy.”  He warned against following “pro-cyclical” policies as draconian as those imposed upon Greece.  He said: “If we do that in a small, open economy like Barbados, trust me, it is going to be for the worse.”

*** IMF SEES DOWNSIDE RISKS FOR BAHAMAS.  On 2 November, the IMF concluded its Article IV consultation with The Bahamas calling for “steadfast implementation of reforms to place public debt on a sustainable path, build fiscal buffers, and enhance medium-term growth prospects”.  According to the IMF, the government’s fiscal deficit rose to 4.7% of GDP in 2010/11 (June-July).  The ratio of government debt to GDP has also continued rising, reaching 48% by mid-2011.  Downside risks have increased because of the slower than expected US recovery.