A WORLD BANK COUNTRY STUDY PUB5603 ST. LUCIA Economic Performance and Prospects 077 - .t 0036 H b 3- fO., A WORLD BANK COUNTRY STUDY ST. LUCIA Economic Performance and Prospects The World Bank Washington, D.C., U.S.A. Copyright (C) 1985 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, NW. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing October 1985 World Bank Country Studies are reports originally prepared for intemal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the govemments. Some of the reports are published informally with the least possible delay for the use of govern- ments and the academic, business and financial, and development communities. Thus, the typescript has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. The publication is supplied at a token charge to defray part of the cost of manufacture and distribution. The designations employed, the presentation of material, and any maps used in this document are solely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of the World Bank or is affiliates conceming the legal statis of any country, territory, city, area, or of its authorities, or concerning the delimitation of its boundaries or national affiliation. The most recent World Bank publications are described in the annual spring and fall lists; the continuing research program is described in the annual Abstracts of Current Studies. The latest edition of each is available free of charge from the Publications Sales Unit, Department T, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from the European Office of the Bank, 66 avenue d'1ena, 75116 Paris, France. Library of Congress Cataloging-in-Publication Data Main entry under title: St. Lucia : economic performance and prospects. (World Bank country study) "Based on the findings of a World Bank mission to St Lucia in February 1985"--Pref. 1. Saint Lucia--Economic conditions. 2. Finance, Public--Saint Lucia. 3. Public investments--Saint Lucia. 4. Infrastructure (Economics)--Saint Lucia. I. International Bank for Reconstruction and Development. II. Title: Saint Lucia. III. Series. HC156.5.Z7S267 1985 338.97298'43 85-20395 ISBN 0-8213-0624-3 PREFACE AND ABSTRACT This report is based on the findings of a World Bank mission to St. Lucia in February 1985. The mission consisted of Mr. N. Ramachandran (Chief of Mission); Mr. R. Ramsaran (Consultant); Ms. B. Buyck (IARM); Mr. A. Slusher (CDB); and Ms. D. Velasco (IBRD). Mr. S.J. Stephens (IMF) also contributed to the report. Mr. P. Singh (Commonwealth Secretariat); Mr. S.N. Goswami (UNDP); and Ms. H. Corbin (OECS Secretariat) assisted the mission in the review of St. Lucia's national accounts. The report was discussed with the Government in May 1985. Between 1977 and 1984, the St. Lucian economy grew by an average of 3.9% per annum in real terms. A major factor behind this growth has been the high level of public and private investment undertaken in recent years. The framework of development is one in which the Government has taken the role of providing basic infrastructure, while leaving direct productive investment to the private sector, both local and foreign. The Government's strategy for expanding the productive base of the economy and improving the welfare of the population centers on three sectors: agriculture, industry and tourism. The report discusses recent performance in these sectors and identifies areas where policy action is needed. Given the objective of increasing the level of employment in the economy, the report pays special attention to this problem. With respect to infrastructure, the Government has committed itself to the continued improvement and expansion of basic economic and social facilities. The section dealing with the public sector investment program contains an analysis of the problems and plans related to the Government's investment activities and their financial ramifications. To put this section in perspective, the report takes a detailed look at the state of the country's social and economic infrastructure. The main issues identified in the report include the need for: - Increased domestic savings and policies to encourage the flow of financial resources to productive sectors; - Restraint on wages and salaries in both the public and private sectors; - A concerted effort to address the unemployment issue; - A more intensive import substitution policy, particularly with respect to food, and the need to augment the local value added wherever feasible. Steps to promote exports ought to include attention to the exchange rate issue and to exploring more effectively extra-regional markets; - A great deal of caution in resorting to borrowing on hard terms, and equally, the need for donors to maintain the present degree of concessionality for most of their assistance. CURRENCY EQUIVALENTS Currency Unit: East Caribbean Dollar When it was created in 1965, the East Caribbean dollar was tied to sterling at the rate L1.00 = EC$4.8. In July 1976 the link with sterling was broken, and the East Caribbean dollar was aligned with the US dollar at the rate US$1.00 = EC$2.70. Since July 1976: EC$1.00 = US$0.370 or US$1.00 = EC$2.700 ABBREVIATIONS BDD British Development Division BGA Banana Growers' Association BOP Balance of Payments CARICAD Caribbean Center for Development Administration CARICOM Caribbean Community CDB Caribbean Development Bank CDC Commonwealth Development Corporation CFTC Commonwealth Fund for Technical Cooperation CIDA Canadian International Development Agency CMI Caribbean Meteorology Institute EC European Community ECCA Eastern Caribbean Currency Authority ECCB Eastern Caribbean Central Bank FRG Federal Republic of Germany GDP Gross Domestic Product GNP Gross National Product IDRC International Development Research Center (Canada) IARM Inter-Agency Resident Mission IICA Inter-American Institute for Agricultural Cooperation LUCELEC St. Lucia Electricity Services LWUU Land and Water Use Unit MAF Mission Administered Funds (CIDA) NDC National Development Corporation NFS Non-Factor Services ODA Overseas Development Authority (UK) OECS Organization of Eastern Caribbean States PDAP Project Development Assistance Program PSIP Public Sector Investment Program SLDB St. Lucia Development Bank TCP Technical Cooperation Program UDC Urban Development Corporation UNDP United Nations Development Program UNFPA United Nations Fund for Population Activities USAID United States Agency for International Development WASA Water and Sewerage Authority FISCAL YEAR April 1 - March 31 Page 1 of 2 COUNTRY DATA - ST. LUCIA AREA POPULATION DENSITY 616 km2 134,066 (mid-1984) 200 per km2 Rate of growth: 1.5% (from 1977 to 1982) 315 per km2 of arable land POPULATION CHARACTERISTICS 1984 HEALTH 1981 Crude Birth Rate (per 1,000) 30.0 Population per physician 3.704 Crude Death Rate (per 1,000) 5.4 Population per hospital bed 204 Infant Mortality (per 1,000 live births 1978) 26.9 INCOME DISTRIBUTION 1975 DISTRIBUTION OF LAND OWNERSHIP (Year) % of national income, highest quintile .. % owned by top 10% of owners lowest quintile .. % owned by smallest 10% of owners ACCESS TO PIPED WATER ACCESS TO ELECTRICITY X of population - urban .. % of population - urban - rural .. - rural NUTRITION EDUCATION (1982) Calorie intake as % of requirements .. Adult literacy rate % Per capita protein intake .. Primary school enrollment % 95.0 GNP PER CAPITA IN 1983: US$1,060 a/ - GROSS NATIONAL PRODUCT IN 1984 ANNUAL RATE OF GROWTH (%, constant prices) US$ Mln. % 1983 1984 GNP at Market Prices 148.1 100.0 1.6 7.9 Gross Domestic Investment 52.7 35.6 -17.8 11.7 Gross National Savings 31.3 21.1 68.8 80.0 Current Account Balance -21.5 -14.5 Exports of Goods, NFS 96.8 65.4 20.9 12.5 Imports of Goods, NFS 129.1 87.2 -6.3 10.9 OUTPUT 1984 Value Added US$ Mln. % Agriculture 17.7 13.7 Industry b/ 23.0 17.8 Services 88.3 68.5 Total 129.0 100.0 GOVERNMENT FINANCE Consolidated Public Sector Central Government (EC$ Million) % of GDP (EC$ million) % of GDP 1983/84 1984/85 1983/84 1984/85 1983/84 1984/85 1983/84 1984/85 Current Receipts 223.0 238.9 58.7 58.5 111.3 117.7 29.3 28.8 Current Expenditures 210.9 236.3 55.5 57.9 114.5 135.3 30.1 33.1 Current Surplus 12.1 2.6 3.2 0.6 -3.2 -17.6 -0.8 -4.3 Capital Expenditures 34.3 41.5 9.0 10.2 25.3 34.4 6.7 8.4 External Assistance (net) -0.8 ... 0.2 ... -0.8 ... -0.2 a/ World Bank Atlas methodology. 5/ Includes construction. ... not available not applicable Page 2 of 2 COUNTRY DATA - ST. LUCIA MONEY, CREDIT AND PRICES (EC$ Million) 1981 1982 1983 1984 Money and Quasi Money a/ 98.4 101.7 105.2 110.0 Bank Credit to Public Sector 12.9 14.0 23.5 -2.2 Bank Credit to Private Sector b/ 153.2 158.7 159.3 175.6 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 78.0 75.6 74.7 72.7 General Price Index (1964 - 100) 554.8 580.4 589.0 596.1 Annual x Changes in: General Price Index 15.0 4.6 1.5 1.2 Bank Credit to Public Sector 8.4 8.5 -75.0 -162.9 Bank Credit to Private Sector 6.0 3.6 0.4 10.2 BALANCE OF PAYMENTS (US$ Million) MERCHANDISE EXPORTS (AVERAGE 1981-1984) Prelim. 1981 1982 1983 1984 US$ Mln. % Exports of Goods, NFS 71.0 74.1 89.4 96.8 Bananas 19.1 47.3 Imports of Goods, NFS 136.7 127.5 117.2 129.1 Coconut Products 3.0 7.4 Resource Gap (deficit -) -65.7 -53.4 -27.8 -32.3 All Other Commodities 18.3 45.3 Factor Payments (net) -3.5 -4.01 -4.61 -3.2 Total 40.4 100.0 Net Transfers 14.9 13.0 12.0 14.0 Balance on Current Account (-25.2) (-30.4) (-14.2) ( ...) (Excluding Hess Investments) (-54.3) (-44.4) (-20.4) (-21.5) Public Capital 8.5 8.5 8.7 6.5 EXTERNAL DEBT, DECEMBER 31, 1982 (Grants) 5.4 3.4 6.9 6.3 Loan Disbursements (net) 2.8 5.3 2.0 ... US$ Mln. Private Capital d/ 45.4 36.0 11.8 15.1 Public Debt, Incl. Guaranteed 2.6 Change in Foreign Non-Guaranteed Private Debt Assets (-increase) 0.4 -0.1 -0.1 -0.1 Total Outstanding & Disbursed DEBT SERVICE, DECEMBER 31, 1982 c/ Public Debt, incl. guaranteed 2.4 Non-guaranteed Private Debt RATE OF EXCHANGE Total Outstanding & Disbursed Since July, 1976 US$1.00 - EC$2.70 1.00 - US$0.37 a/ Defined as demand savings and time deposits. b/ Includes other than public sector organizations. c/ Ratio of debt service to exports of goods and non-factor services. d/ Includes financial system, errors and omissions. ... not available .. not applicable ST. LUCIA TABLE OF CONTENTS Page SUMMARY AND CONCLUSIONS ix I. ECONOMIC GROWTH AND UNEMPLOYMENT ..................................... 1 Characteristics of the Economy ......................... ........... 1 Economic Growth ............................................ 1 Consumption, Savings and Investment ............. ................ 2 Prices .........0................ -.......*..*....*...* 4 Wages, Employment and Unemployment ......................... . 4 Employment Issues ... . .. .... .. . .......... .-... ... . ... .... . . 6 II. PUBLIC SECTOR FINANCES. ... .o. ... .. .-.. ... . 8 Revenues .....o.. .. - 0- 0 000- .. - 0- 000 9 Expenditures .... ... ..10 Credit . . . . . . .. . _ .. . . . . . - .. o. . . o o 11 III. BALANCE OF PAYMENTS, EXTERNAL DEBT AND CREDITWORTHINESS. 14 Financing the Current Account Deficit of the Balance of Payments 15 External Debt ....o.4... o*6o..... ......... 16 Creditworthiness .......... . . 17 IV. PERFORMANCE AND PROBLEMS IN THE MAJOR SECTORS... 19 Agriculture. . .... . ... . . . .. ... . ...... 20 Manufacturing ......,o ..... .o.... ....... .. ,..,... o- 26 Tourism .... ...o. -t.. ... .*.... oo.ooooo 31 Foreign Investment Policy ..... ................. ................ . 34 V. THE SOCIAL AND ECONOMIC INFRASTRUCTURE ........ .... o-oo-o ... 36 Electricity ............. , 36 Airports ......-................................ ........... 40 Water and Sewerage ...... ... .4..4.0.0 ...... ..... 41 Education ...o0 -00..0.. 0... ..0....000...0 43 VI. PUBLIC SECTOR INVESTMENT PROGRAM 46 Implementation of the PSIP -. . ....... . . .46 The Medium-term Program, FY84/85-87/88 .............00 47 Financing .. o.. .....oo...oo ...o... 52 Selected Issues in PSIP: Project Selection . ............ 53 Project Implementation and Monitoring 53 ........... ......... 53 Technical Cooperation Program ..0.0 ....to........... 54 Project-Related Technical Assistance . ......54 Other Technical Assistance ....... 55 GOVERNMENT'S INVESTMENT PROJECT AND TECHNICAL COOPERATION PROGRAM LISTS APP X56 STATISTICAL APPENDIX SUMMARY AND CONCLUSIONS i. St. Lucia is a small country in terms of both size and population. It has a land area of 616 km2 and a population of 134,000 (mid-1984 estimate). The labor force amounts to about one third of the total population. In recent years, the rate of population growth has been in the region of 2%. The country is mountainous withi a limited amount of arable land. Its natural resources are its people, its fertile valleys, its beaches and climate, and scenic beauty with numerous small harbors and bays, and certain natural attractions, such as the Sulphur Springs near Soufriere. These springs may also be a potential source of power. ii. Since 1981 the growth rate of real GDP, while fluctuating, has been positive. The rate of almost 5% attained in 1984 was the highest in the last six years and reflects the recovery of bothi the banana industry and the tourism sector. The slowdown in construction and the inability of other sectors to absorb this labor, especially in the context of an expanding labor force, has resulted in an increasing level of unemployment in recent years. The current rate is about 20-25% of the labor force, and this problem is one of the major challenges facing the country. iii. According to official statistics, the rate of inflation has been falling from the average of 20% experienced in 1980 as a result of Hurricane Allen and the shortages it created. The figure for 1983 was 1.5% and for 1984, 1.2%. There is some question, however, about the accuracy of the inflation rate, given the base year of the index, which is 1964. Despite the slowdown in prices and the prevailing high rate of unemployment, wage and salary increases have been high, although below the levels of the late 1970s. In recent years, private sector wage increases have averaged 10-15% a year, while public sector increases have been even higher. iv. The current expenditures of the Central Government have exceeded current revenues, a cause for concern. Whereas in FY1980/81, there was a current surplus amounting to 1.7% of GDP, since then there has been a deficit in every year. In FY1981/82, it amounted to less than 1% of GDP, but in FY1984/85 it was estimated to have increased to 4.3%. A major factor has been the Government's tendency to grant wage and salary increases it cannot afford. Because of this weak fiscal position, the case for increasing consumption taxes is strong. The Government needs to make a more concerted effort to collect revenues, even if doing so means resorting to the courts. v. At the end of 1984, net commercial bank c^redi t >rsSr t:. -he private sector amounted to 59.1% of GDP (by calendar year), as compared v 55.4% in 1980. The comparable figures for net credit to the Central Government were 5.2% in 1984 and 7.3% in 1980. Domestic credit to the private sector has been increasing at a faster rate than credit to the public sector. Of the 1984 total, personal loans and advances amounted to 51.3% of total loans and advances outstanding to the private sector at the end of 1984, as compared to 43.2% at the end of 1980 and 30.3% at the end of 1976. The share of this category of financing is too high, and the banks need to divert a greater proportion of their resources to the productive sec:tors of the economy. vi. Preliminary estimates suggest that in real terms total domestic consumption has been increasing. While gross domestic investment as a percentage of GDP declined over the last two years, it still averaged over '0% as compared to an average of 60% between 1978 and 1981. This trend iargely reflects the decline of the private sector ratio from an average of about 51% in the latter period to about 25% in the last two years. The completion of the Hess terminal was the major factor affecting the level of private sector investment. Public sector investments have been averaging about 9% of GDP in recent years. vii Because of the significant inflows of private remittances by 2 Lucians living or working abroad, gross national savings have been :tgher than gross domestic savings. The public sector's contribution to sivings has been relatively small (0.6% of GDP in 1984) compared to that of I.e private sector (20%). External financing in the form of official loans aid grants as well as private direct investment have played important roles In domestic capital formation in recent years. viii. If the momentum of recent years is to continue, the public sector will need to increase its level of savings. A determined effort to curb the growth of current expenditures, collect outstanding revenue and restrict tax evasion could boost current public savings to 2% of GDP by FY1987/88. As to the private sector, there appears to be scope for Jncreasing savings there as well. Because of the absence of banking facilities in certain areas of the country, a considerable amount of floarding is apparently taking place, and the banks ought to be encouraged to explore the possibility of opening small offices to tap this source. The Government itself, together with the ECCB, should examine the scope for lntroducing firLancial instruments that might both discourage consumption aad encourage savings. ix. The balance of payments data for St. Lucia indicate that, in recent years, while the current services balance has been positive, the trade balance has usually been negative. A major item in the service account is receipts from tourism, which increased by 33% between 1980 and 1984. The impact of this item, however, was reduced to some extent by the increase of over 100% during the same period in payments by St. Lucians for travel abroad. Moreover, the trade deficit has outweighed the services balance, so that there has been a persistent current account deficit, notwithstanding the significant private transfers into St. Lucia. The two main sources of financing in the capital account have been official inflows in the form of grants and loans and private direct investment. The former averaged about 20% of the current account deficit in the last five years, as compared with about 60% for the latter. Private inflows have dropped significantly in recent years with the completion of the Hess terminal. x. Given the country's heavy dependence on foreign sources for capital goods and other essential inputs, the country needs to conserve as much foreign exchange as possible. Fortunately, there is scope for both import substitution and import replacement. The potential for increasing the production of foodstuffs is considerable, the high import content of the hotels and tourism sector could be cut by using more local inputs. A related issue that needs to be addressed is the import orientation of local consumers. On the other front, St. Lucian exporters of manufactured goods should be encouraged to attain standards in terms of prices and quality that will enable them to penetrate extra-regional markets. Here the Government has a special role to play in terms of providing incentives, undertaking market analysis and helping to provide credit. xi. The external debt outstanding grew from US$8.0 million (19.8% of exports of goods and non-factor services) at the end of 1977 to US$31.2 million (32.2% of exports). The growth in public debt has been accompanied by a corresponding increase in debt service payments. Indeed, some debt payments have been in arrears, a condition which indicates that.the tight fiscal situation is causing debt servicing problems. A program for settling these arrears is clearly a precondition for establishing full creditworthiness. The medium- to long-term prospects of the economy are encouraging. Assuming redress of the fiscal situation, continuation of appropriate sector policies, and no external shocks to the economy, the economy could continue to grow at 4% to 5% in real terms. xii. One adverse exogenous factor with which St. Lucia will have to contend is the continued weakness in its terms of trade, resulting from its high dependence on bananas. This trend reinforces the need to pursue economic diversification vigorously. The Mission's fiscal and balance of payments forecasts suggest that, assuming some hardening in the terms of external financing, St. Lucia will be only marginally creditworthy for the levels of borrowing envisaged; in the projection period to 1995, the debt service/exports ratio rises from the present level of about 4% to 9%, and the debt service/revenue ratio from 7% to 26%. Such a level of debt servicing would constitute a major drain on the Government's finances. This situation underlines the need for St. Lucia to exercise a great deal of caution in resorting to borrowing on hard terms, and equally for donors to maintain the present degree of concessionality in their assistance. xiii. A main element in the Government's strategy for development remains the diversification of the economy. Despite progress, the economy is still excessively dependent on agriculture, particularly bananas. In 1984, agriculture's contribution to real GDP amounted to 14%, as compared to 9% for manufacturing, 6% for construction, 8% for hotels and restaurants, 11% for transport and communications and 22% for Government services. Given the limited amount of arable land, the Government's policy is to increase the production of bananas through increased yields per acre. A parallel policy, however, is increased diversification by encouraging greater production of other tree crops, fruits and vegetables. Here, shortages of agricultural credit, marketing and the pattern of land tenure continue to be critical constraints. A major issue facing the banana farmers and the Government is the decline in the pound sterling in relation to the U.S. dollar to which the EC dollar is pegged. The exchange rate issue is further aggravated by the fact that a significant proportion of the country's imports originate in the U.S. However, a change in St. Lucia's exchange rate can only be accomplished by unanimous agreement among the member states of the ECCB. The exchange rate issue needs urgent attention. xiv. Even with the reorganization and modernization of agriculture, it is recognized that the potential for creating jobs in this sector is quite limited. The Government's strategy, therefore, is to encourage industry and tourism in order to attain some balance in the economy. The new industries that have been attracted are largely of an assembly type, and their value at the moment is mainly the employment they provide. Moreover, they are dependent on the CARICOM market, whose recent trade restrictions have had a severe impact on their performance. Industrial policy needs to place greater emphasis on both market diversification and greater local value added. xv. The tourism sector has experienced impressive growth in recent years, and the Government plans to expand the industry even further as part of the diversification effort. However, the policies relating to tourism development wilL need to be carefully articulated if the industry's full potential is to be realized. For example, there are indications that St. Lucia may be pricing itself out of the market. In a competitive situation the issue of cost is serious and will have to be watched closely. There are questions as to whether the packaged tours, so closely associated with St. Lucia's tourism, are significant as net earners of foreign exchange. It is estimated that for each tourist dollar spent in St. Lucia, more than half leaves the country. Greater local participation and use of local foodstuffs may reduce this leakage. In any event, a special study should be undertaken to resolve this question. xvi. The Government has devoted a great deal of its resources to developing the infrastructure. In terms of the resources spent on social infrastructure, they have had a positive impact on the quality of life. The average St. Lucian today is potentially more productive and is in many respects better off than in the 1960s, when the country was ranked low in terms of nutrition, educational opportunities, health care and literacy. Nevertheless, many problems persist. The public sector investment program is geared toward these to some extent, even while emphasizing the directly productive sectors. xvii. The level of public sector investment in 1983/84, although below target, was satisfactory, particularly in view of the difficult public sector finances in the medium term (1984/85-1987/88). The public sector investment program (PSIP) is projected to reach approximately EC$50 million a year, a not significantly higher level than that in recent years. The institutional capability to implement this program is adequate, and in general the composition of public sector investments is consistent with the Government's development strategy. A large part of the program aims at completing the projects in progress. As to financing, 84% of the program is to be funded from external sources. In addition, the reliance on loan financing, including at non-concessionary terms, is increasing. Whereas grants were estimated to have represented 80% of total inflows in 1983/84, it is estimated that that proportion will decrease to 59% by 1987/88. As to the availability of financing, disbursements already committed from external sources are estimated at EC$120.5 million, leaving EC$46.6 million to be mobilized. xviii. Fewer projects need to be financed than in last year's investment program. This trend reflects the Government's success in securing financing for its PSIP, as well as its efforts to concentrate on fewer projects. The 16% of the PSIP that will need to be financed from domestic sources will require an adequate level of public savings if the program is to be implemented fully. The PSIP also reflects strong improvements in the selection and preparation of projects. Areas that still need special attention, however, are completion of the national plan, as it will provide a framework for project selection, the integration of the PSIP and the annual budget, and the strengthening of the planning capabilities of the implementing ministries and institutions. St. Lucia has received a substantial amount of technical assistance in some of these areas in recent years; potential sources of technical assistance for a few project-related programs still need to be identified. xix. A special task the Mission undertook was to review the St. Lucian national income estimates for recent years in order to determine their reliability. In general, the existing estimates conformed with international standards. However, the Mission did recommend that the Statistical Department selectively improve the data base. 1. ECONOMIC GROWTH AND UNEMPLOYMENT Characteristics of the Economy 1.1 St. Lucia, with 238 square miles (616 km2), is of volcanic origin, with a rugged and mountainous topography, particularly in the central area. The land tends to flatten out a bit at the northern and southern tips of the island. Broad, flat valleys run between the off-shoots of the main central ridge to the sea. Three of them - Roseau, Cul-de-Sac and Mabouya - are fertile and contain the banana plantations. Those valleys in the western and southern areas are, by contrast, narrow and deep. 1.2 With respect to the country's natural resources, they revolve around the people, and the climate, beaches and natural harbors, as well as the fertile valleys and scenic beauty, including the natural attractions such as Sulphur Springs near Soufriere. These springs are also believed to be a potential source of geothermal energy. St. Lucia does not have any mineral resources, although its quantities of pumice (sulphur ash) could be used to make blocks. However, limited accessibility apparently makes this prospect economically unfeasible. 1.3 St. Lucia is also small in terms of population - the estimated count at mid-1984 was 134,066. The rate of growth has been around 2% in recent years, despite an average net outmigration of about 675 a year between 1977 and 1984. According to 1983 estimates, about 50% of the population was below 14 years, while another 5% was above 65, giving a dependency ratio of 55%. Another 16% was in the 15- to 24-year age group, 29% were between 25 and 64 years. The population density was 563 people per square mile, or 218 per km2. The labor force in 1983 was estimated to be about one third of the population. 1.4 St. Lucia's economy is very open and heavily dependent on foreign trade. On average, exports of goods and non-factor services over the last five years have amounted to 66% of GDP, while imports of goods and non-factor services have averaged around 97%. Although the economy is still heavily oriented toward agriculture, in recent years a fair amount of progress has been made toward diversification. This trend is, however, more apparent in the sectoral contributions to GDP than in their employment figures. In 1983, agriculture's share of GDP was 12.7%, compared with 10.8% for manufacturing, 11.7% for construction and 64.8% for other services. The comparable figures for sectoral employment in 1983 were, by contrast, 39.5% of the employed labor force for agriculture, as compared to 7.9% for manufacturing, 4.6% for construction, 12.2% for tourism and 35.8% for other services. Economic Growth 1.5 In recent years, the economy's growth has declined from an average real rate of over 7% in the 1970s to more modest proportions. Whereas GDP rose at 13.3% in 1978, the rate was only 3.1% in 1979 and -0.2% in 1980. This latter figure reflects, however, the devastating effects of - 2 - Hurricane Allen that year, coming on the heels of Hurricane David in 1979. In 1981, there was a return to positive growth of 0.2%, despite a decline in agriculture of 13.4% and in hotels and restaurants of 16.2%. In 1982, the overall rate rose to 4.5% as a result of a partial recovery in agriculture, which was sufficient to offset a falling off in construction and wholesale and retail trade. In 1983, the growth rate again fell, but was still positive, despite a significant drop in construction and mining and quarrying. GDP is estimated to have increased by about 5% in 1984, even though the value added in manufacturing declined by 2.1%. Construction grew by 8.5% following the declines in 1982 and 1983. Government services remained the largest single contributor in 1984, at about 21% (Annex Table 2.1). 1.6 Despite the economy's fluctuating performance in recent years, per capita GDP at constant 1977 prices is estimated to have grown from US$548 in 1980 to US$567 in 1984. The 1984 per capita GDP in current prices stood at US$1,128 (per capita GNP was US$1,104). 1.7 The St. Lucian economy, and particularly the agriculture sector, has recovered significantly from the hurricanes of 1979 and 1980. Despite the adverse weather conditions banana farmers have periodically faced, and the negative impact the fluctuating pound sterling has had on earnings, their performance has been a redeeming feature. On the other hand, the coconut industry continues to be affected by disease, while marketing problems appear to be a serious constraint for other domestic agriculture. There has been a protracted slowdown in the construction sector following the building boom in hotels and ancillary facilities in the 1960s and 1970s, the completion of the Hess transshipment terminal in 1983, and the conclusion of a number of the Governments infrastructure projects. In recent years, the manufacturing sector has been seriously affected by the restrictions imposed on CARICOM trade by Barbados, Jamaica, and Trinidad and Tobago in particular. One company is known to have closed down as a result and others that are heavily dependent on the CARICOM market have also been seriously affected. Although in 1984 the hotel occupancy rate did not attain the levels of 1978 and 1979, 1984 was still a good year for tourism. Tourism performance is important because it affects not only the hotel and restaurant sector, but also such areas as transport, wholesale and retail trade, and utilities. Consumption, Savings and Investment 1.8 Data on gross domestic expenditure and its components are subject to serious inadequacies and should be used with caution. Preliminary estimates suggest that over the last five years, consumption as a proportion of GDP has fluctuated between 86% and 97%, the average for the period being around 90% (Table 1). In real terms, consumption increased at an average rate of 9.6% over the 1980-84 period. Given the population growth rate of 2%, real per capita consumption grew at an average rate of7.6%. -3- Table 1s CONSUI'TION, SAVINGS AND INVESTMENT (S of GW at market prices) External Flnance as a S of Consunption a/ Gross Domestic Investment Gross Gross Central Private Public Central Private Nass Dometic Gross Natlonal Savings Domestic Totel Gov't. Sector Total Sector Gov't. Sector Co. Savings Total Public Private GOP Investmnt 1977 84.5 (21.7) (62.8) 47.5 9.8 (9.8) 37.7 (21.0) IS.S 21.3 (4.8) (16.5) 24.4 51.3 1978 74.2 (19.0) (55.2) 66.7 7.5 (7.5) 59.2 (24.2) 25.8 30.6 (5.5) (25.1) 33.2 50.0 1979 82.5 (16.5) (66.0) 57.2 9.7 (7.5) 47.5 (24.5) 17.5 21.4 (4.1) (17.3) 31.6 55.3 1960 86.0 (20.9) (65.1) 59.4 10.9 (7.2) 48.5 (26.3) 13.9 20.1 (4.3) (15.8) 33.8 56.9 1981 93.7 (20.9) (72.8) 58.3 9.8 (5.5) 48.5 (27.8) 6.3 15.4 (1.6) (13.8) 35.1 60.2 1982 96.9 (25.3) (71.6) 42.7 7.2 (6.1) 35.6 (17.0) 3.1 9.8 (-0.8) (10.6) 24.4 57.0 1983 86.3 (25.7) (60.6) 33.5 8.8 (7.4) 24.6 (6.0) 13.7 19.0 (2.2) (16.8) 10.3 30.7 1984 86c4 (25.1) C61.3) 34.9 9.6 (6.9) 25.3 1-) 13.5 20.7 (0.6) (20.1) 10.1 29.0 a/ Estimtes are preliminary. Source: Appondix Tables. 1.9 Between 1977 and 1981, gross domestic investment averaged about 58% of GDP. Since then, it has declined, in parallel with the tapering off of activities related to the construction of the Hess Oil terminal, but was still 35% in 1984. The ratio of public sector investment to GDP has averaged around 9% over the last five years. 1.10 With respect to domestic savings, the estimates do not indicate any consistent trend. Because of the significant transfers back home by St. Lucians living or working abroad, national savings have exceeded domestic savings. The contribution of the consolidated public sector to total national savings has been very small - in 1984 it amounted to less than 1% of GDP, as compared to about 20% for the private sector. As far as external savings or finances are concerned, they have played an important role in domestic capital formation in recent years. Official capital inflows plus private investment averaged about 33% of GDP between 1978 and 1981. In 1982, though, the figure dropped to 24% and has averaged only about 10% in the last two years, a major reason for this trend being the decline in private investment, parallel with the completion of the Hess Oil terminal. The preliminary figures for 1984 indicate that, even without the Hess Company investment, the private sector component of foreign capital inflows was still in excess of official inflows. -4- Prices 1.11 Because of the heavy dependence of the economy on foreign supplies, domestic prices are readily affected by foreign inflation. Domestic shortages, however, can also be a significant influence, as was true in 1980, when inflation was 19.6%, and in 1981, when it was 15.9%. The rates were 4.6% in 1982, 1.5% in 1983 and 1.2% in 1984. These low recent figures may reflect the more favorable prices of imports from sources other than the US in the light of the strength of the U.S. dollar. However, the index may not give an accurate reflection of recent price developments. The retail price index from which they were calculated is tied to 1964. On that basis, this index shows that the average cost of food and housing declined in 1984. Clearly, the base year of the index needs to be revised. 1.12 St. Lucia uses a price control system to discourage profiteering and to keep the cost of living within certain limits. It has a price control department that not only monitors prices, but administers the country's negative list. This list contains a range of agricultural and manufactured goods produced locally, and licenses to import these goods are granted only if the department is satisfied that demand cannot be satisfied from local production. This protective device needs to be reviewed periodically in the context of the need to encourage efficiency and exports. 1.13 The Government has resorted to two pricing mechanisms to control the prices of certain essential items. The first is the importation in bulk of such goods as flour, rice and sugar, which the Government then sells to distributors at prices that include a margin to cover handling charges. The second one is explicit price control through percentage mark-ups (on landed costs) in the case of imported goods and absolute ceilings in the case of domestically produced goods. One difficulty with the mark-up system is that it can encourage imports from expensive sources, since the base of the calculation includes the c.i.f. value. Wages, Employment and Unemployment 1.14 The buoyancy of the economy in the late 1970s and the high rates of inflation in the very early 1980s encouraged high nominal wage and salary settlements. Increases in the range of 15-25% a year were not uncommon in the private sector; in certain instances government settlements tended to be even higher. With respect to daily-paid workers, for example, the agreement negotiated for the 1981/82-1982/83 period averaged 30% for the two years, while that for FY82/83-85/86 is 32%. The agreement with the established civiL servants for the period October 1980 to March 1983 averaged 19% a year. For the 3-year period FY83/84-85/86 the aggregate increase was fixed at 20%. Both awards contain a provision for retroactive payments that will increase the wage bill in FY83/84 by 21% over the previous year. Agreements tend to run three years, although two-year contracts are negotiated occasionally. 1.15 The slowing of the growth rate of the economy in recent years, the prevailing high levels of unemployment and the low inflation rates have led to some moderation in wage and salary demands. The Prime Minister has suggested a guideline of 10% a year. However, review of a sample of recent private sector wage and salary increases gives a range of 10% to 15% a year, with a few special cases falling outside this range. The Government's recent agreement with established civil servants, however, averages about 6% to 7% over the three-year period 1983/84-1985/86. This level implies some retroactive payments. 1.16 Recent wage and salary increases have generally been signifi- cantly higher than the rate of inflation. Thus in real terms, wages and salaries have been increasing. St. Lucia needs to watch this relationship carefully if it is not to price itself out of international markets. In the public sector, wage and salary concessions have to bear some realistic relationship to resources, or the public investment program will suffer. The Government may be forced to lay off workers as happened in 1981. Another issue that has to be kept under review, if people are not to be discouraged from acquiring skills and training, is the narrowing gap in earnings between unskilled and semi-skilled and skilled workers. 1.17 According to present estimates on employment, the economy needs to create about 2,000 to 3,000 jobs annually; the addition to the labor force is around 2,000 each year. In recent years, this target has not generally been attained, as a result of which the unemployment rate has tended to increase. In 1983, it was estimated to be about 25%, as compared to 14% in 1975. The recent figure includes many skilled and semi-skilled workers. Unofficial estimates put the figure for 1984 somewhere between 20% and 25%, equivalent to about 11,000 or 12,000 people. 1.18 Despite the vicissitudes to which agriculture is subject, it continues to absorb about 40% of those employed, or around 13,000. In recent years, the number of workers in manufacturing has averaged around 2-3,000 people, or 7% to 8% of total employment. At the height of the tourism season, about 3-4,000 (11% to 12% of the employed labor force) find jobs in the tourism sector, and tourism may indirectly generate a similar number of opportunities in transport, distribution, etc. The numbers employed in the construction industry vary widely from period to period, depending on the level of business. The Government sector is also a large employer - excluding daily-paid workers, its permanent civil service staff currently numbers about 4,300. 1.19 The labor situation has been helped over the years by the emigration of people to neighboring islands such as Martinique and St. Croix. These outlets are, however, gradually being curtailed. There is also an arrangement with the U.S. that allows about 500 people a year to cut cane for a wage of about US$50 to US$60 a day. Their average stay is five months. Another 80 go to Canada to pick apples and reap vegetables; they earn about Can$4.85 an hour and spend from six weeks to six months. These arrangements, however, hardly touch the problem of unemployment. - 6 - 1.20 The high proportion of the labor force currently unemployed is undoubtedly one of the most serious issues facing the Government. Thus, one of the major objectives of any development strategy must be to create enough jobs to employ a significant proportion, if not all, of the labor force. Indeed, one of the prominent goals of most governments has been full employment. It is an elusive goal, however, since in most circumstances the growth of the labor force has exceeded the Government's ability to create jobs. Given this situation, there is an increasing recognition that population growth cannot be left to chance. It must be dealt with explicitly. The current difficulty with emigration makes it all the more imperative to focus attention on the natural growth rate. Employment Issues 1.21 St. Lucia has all the elements of an employment policy, even if they are not well-articulated. The Government sees clearly that its financial position does not allow the permanent establishment to be expanded at the moment. The shortage of arable land and natural resources limits the extent to which employment can be increased in the agricultural sector. It is also not easy to persuade young people to pursue agriculture, not only because of the apparent lack of glamor, but because of its uncertain nature. The Government hopes to introduce agricultural science in the elementary schools and to modernize agriculture in order to improve the farmer's standard of living, and thus not only halt the flight of people from the land, but to attract some of the younger ones back. 1.22 Nevertheless, a great deal of the responsibility for creating new jobs will still rest with tourism and manufacturing. The Government has been encouraging both, but has not paid enough attention to the institution of policies to encourage linkages among the sectors. There is also a need for policies that could lead to greater local involvement in tourism and manufacturing. The critical role of education and training has also been recognized, and certain steps are being taken to equip young people with required skills. At present the Morne Technical School does not provide the proper range or level of skills, and there is a great need for middle-management training, machine operators, people to maintain and repair the equipment being used in hotels, restaurants and industry, electronics technicians, etc. In short, the education system must be responsive to the needs of the economy, or there will be a surfeit of unemployable graduates, as is the case at present: those currently unemployed contain a large number of high school graduates and people with certain kinds of skills that are not in demand. Financial institutions must also be encouraged to make more resources available to the productive sectors of the economy and to recognize their special responsibility in helping to mold young entrepreneurs and industrialists. Lending procedures and requirements have to take local conditions into account. Government-owned institutions may have to lead the way here in adopting innovative practices and techniques that go beyond simple lending. 1.23 Trade unions have often taken a narrow view of their responsibility, limiting it to their membership and not the society at large. On the other hand, some companies think their responsibility is to their shareholders and not the community. Both positions have had a negative impact on the investment climate. In the same way that firms, both local and foreign, need to support national development objectives, trade unions should also adopt practices and policies that will have a favorable effect on productivity and performance. 1.24 In an effort to address the problem of industrial relations and the investment climate, as well as the problems of unemployment, the Government has suggested the creation of a Tripartite Commission involving the Government, private employers and unions. However, certain sectors have not responded positively. There is, nevertheless, a clear need for restraint in wage and salary settlements. Further increases could aggravate unemployment, since they could force employers to lay people off. The trade unions need to re-examine their role in development and to devote some attention to increasing productivity. They also have a responsibility to the unemployed and underemployed to create an atmosphere conducive to new job opportunities. 1.25 The Government has assigned the private sector a key role in development. It is hoped that the latter will respond more positively to the incentives being offered and support the Government's development program. In his last (1984/85) budget speech, the Prime Minister estimated that it would cost EC$30,000 to create one job in the manufacturing or tourism sector. Given that 2,000 jobs a year are needed to accommodate new entrants into the labor force, the required private sector investment is about EC$60 million a year. In the light of recent trends and with the proper climate, this level is not outside the realm of possibility for St. Lucia. - 8 - II. PUBLIC SECTOR FINANCES 2.1 The public sector of St. Lucia comprises the Central Government, the Castries City Council, the National Insurance Scheme and seven non-financial public enterprises: the Air and Seaport Authority, Water and Sewerage Authority (formerly the Central Water Authority), National Development Corporation, St. Lucia Electricity Services, Banana Growers Association, Marketing Board, and Government Funding Scheme. 2.2 In the four years ending FY82/83, Central Government finances were characterized by rising overall deficits, the accumulation of payment arrears in all but one year, and heavy borrowing from domestic and external sources. The financial operations of the consolidated public sector showed a steady widening of the overall deficit from less than 4% of GDP in FY79/80 to 6-1/2% of GDP in FYS2/83 (the fiscal year begins April 1). Despite the surpluses of the National Insurance System in this period, the overall deficit:s of the public enterprises and the Central Government were substantial enough to cause the decline. However, in FY83/84, the consolidated account was in approximate balance, a reflection of an improvement in Central Government finances as well as the operations of public enterprises. This latter development was based mainly on a turnaround in the current account of the Banana Growers Association, equal to nearly 2% of GDP, following a rise in 1983 in both the volume of exports and unit prices, and a marked improvement in the administration of the Association. However, in FY84/85 the finances of the public sector again deteriorated. Public sector savings, which had averaged a little less than 2% of GDP annually during the previous five fiscal years, fell to 0.6% of GDP, while an estimated overall deficit equivalent to 2% of GDP was recorded (Table 2). Table 2: OPERATIONS OF THE CONSOLIDATED PUBLIC SECTOR (% of calendar year GDP) Fiscal Year Beginning April 1 1980 1981 1982 1983 1984 Total revenue and grants a/ 33.6 34.2 33.9 39.2 41.2 of which: revenues a/ (30.7) (29.4) (33.0) (34.2) (35.0) Total expenditures and net lending 37,8 38.5 39.8 39.2 43.0 of which: current expenditures (26.5) (27.8) (32.7) (31.9) (34.3) Current account balance 4.3 1.5 -0.8 2.2 0.6 Overall deficit (-) -4.2 -4.3 -6.5 -1.8 a/ Includes the operating surplus of public sector enterprises. Sources: Ministry of Finance, World Bank, and IMF estimates. -9- Revenues 2.3 In the aggregate, revenues, which derive from a few major sources, performed well (Table 3). Income taxes, the consumption tax, import duties, and the stamp duty provided 77% of total revenues in FY1984/85. The yield from total tax revenues for FY84/85 amounted to 26.3% of GDP, as compared to 25.1% in FY80/81. The comparable share of taxes on income in the latter period was 8.5%, as compared to 8.8% in FY84/85. The fact that tax revenues have grown at a faster rate than GDP gives some evidence of buoyancy in the tax system: the buoyancy coefficient for total tax revenue in the period was 1.19, and a slightly lower 1.11 for income taxes alone. The performance of the tax system is a reflection not just of the structure of the income tax system in the context of economic growth, but also of the high propensity of St. Lucians to import and consume. Consumption taxes which have increased marginally have been about 4% of GDP in recent years, while taxes on international trade (excluding export duties) have amounted to 10%. Table 3: CENTRAL GOVERNMENT REVENUES (% of calendar year GDP) Fiscal Year Total Total Taxes on Ending Current Tax Non-Tax Goods & International 3/31 Revenue Revenues Revenuesa/ Income Services Transactionsb/ 1977/78 28.0 26.6 1.4 7.4 7.7 10.9 1979 26.2 23.9 2.3 6.9 6.8 9.9 1980 26.6 24.8 1.7 7.2 6.1 11.0 1981 27.8 25.1 2.7 8.5 5.8 10.4 1982 25.9 23.3 2.6 8.0 5.6 '9.3 1983 29.2 25.6 3.6 9.7 5.8 9.8 1984 29.3 25.9 3.4 8.7 6.3 110.6 1985 28.8 26.3 2.5 8.8 6.3 10.8 a/ Includes profits in ECCA, the post office and the supply department, which has a monopoly on imports of sugar, rice, flour and cement. b/ Includes "other taxes. Source: Annex Tables. 2.4 In view of the high levels of consumption and imports, the case is strong for an increase in the level of consumption taxes on luxury and semi-luxury goods. Further, rather than increasing the level of other taxes at this time, the Government's efforts should be directed toward improving the assessment and collection system. Evasion of the income tax is widespread, particularly among the self-employed and businesses. If the Government is to carry out its investment plans and at the same time maintain the current range of public services, it will have to make a more determined effort to collect outstanding revenues. - 10 - Expenditures 2.5 Although revenue has risen in relation to GDP in recent years, the increase was not sufficient to offset the enlarged capital outlays, which were covered by foreign grants, and the pronounced rise in current spending associated with the relatively large wage awards, which also entailed retroactive payments. As a result, the overall deficit more than doubled in the four years ending FY82/83, reaching the equivalent of nearly 7% of GDP, while the current account, which had been in near balance, recorded a deficit of about 2-1/2% of GDP. The fiscal situation, however, improved markedly in FY83/84, mainly because of a fall in current spending in the absence of retroactive wage payments for this year and a jump in project-related foreign grants. 2.6 Central Government operations in FY84/85 are expected to deteriorate in comparison with a year earlier. While revenue has been estimated to grow more slowly than GDP, total expenditures are expected to rise from 36% of GDP in FY83/84 to 41% of GDP in FY84/85, so that the current account deficit should reach over 4% of GDP and the overall deficit nearly 6-1/2% of GDP. This sharp deterioration stems almost entirely from the wage increases awarded civil servants and daily paid workers, respectively, and to a lesser extent, the rise in interest payment liabilities. In the context of the Government's present financial position, more restraint is required here. As to interest payments on the public debt, they have been increasing steadily, moving from EC$3.14 million (3.9% of current expenditures and 1.0% of GDP) in FY80/81 to an estimated EC$10.8 million (8.0% of current expenditures and 2.6% of GDP) in FY84/85. Subsidies in FY84/85 are estimated to have amounted to 1.2% of GDP as compared to 1.1% in 1980/81. Given the recognized necessity of utilities to be paying for themselves, the subsidies in this area should not grow. Current expenditures on goods and services as a percentage of GDP have fallen slightly in recent years: between FY80/81 and FY84/85, they averaged about 6.6%. 2.7 The Government has had serious difficulty securing the resources to cover its financial requirements, notwithstanding substantial recourse to the domestic banking system. As a consequence, fiscal arrears have continued to accumulate, and by January 31, 1985, they amounted to EC$21 million. The arrears to local suppliers alone amounted to EC$7 million on that date. A large portion of those arrears could be eliminated by the issue of treasury bills or other interest-bearing instruments to the Social Security Scheme for unpaid contributions on behalf of Government employees and other overdue obligations. The arrears in external payments are mainly to foreign suppliers and regional and international organizations. It also seems likely that the payment arrears, including outstanding retroactive wage and salary payments of about EC$7 million, have grown further since the beginning of' 1985. 2.8 Clearly, the Government needs to adopt corrective measures that will substantially improve its finances so as to facilitate, among other things, the reduction and eventual elimination of the arrears. In fact, the statutory Government bodies and agencies are trying to improve their financial operations. Their work could benefit from action in the following areas: - 11 - . Government debt to the utilities. The Government and some of its agencies owe money to both the Water Authority and the Electric- ity Services. This debt not only affects those enterprises' operations, but also the Government's ability to raise funds. A serious effort should be made to resolve this situation, which has persisted for years. . The Water Authority has applied to the Public Utilities Commis- sion for an increase in rates. This application needs to be granted. That increase, combined with improvements in the collection and assessment system, should put the Authority in a position to cover the cost of its operations. The Commission needs to consider applications by the utilities more promptly; tariffs should be reviewed at least once every two years. . The assets of the National Insurance Scheme (NIS) at the end of June 1984 were about EC$62 million, of which EC$34 million were in fixed deposits, EC$16 million were loans to quasi-Government bodies and EC$5 million were treasury bills. The NIS has had trouble recovering the loans to certain Government agencies and is now cautious in lending its funds, which it prefers to hold instead largely in the form of fixed deposits at commercial banks. Given a proper legal/administrative framework, more of these funds could be channelled into socially productive uses in pursuit of national objectives. Doing so will also strengthen the NIS itself. Organizing the farmers into cooperatives would go a long way toward reducing some of the administrative costs of the Banana Growers Association. While the Association is aware of this, it may need some help. Credit 2.9 The commercial banking sector in St. Lucia comprises six commer- cial banks with a total of twelve offices, most of which are in Castries. Of the six, four are branches of transnational concerns, one is owned by local residents, while the National Commercial Bank is wholly owned by the Government. The insurance business is carried on by 29 companies, all of which (with one exception) are foreign-owned. Other institutions in the financial sector include the Government-owned St. Lucia Development Bank, which engages in long-term development-oriented lending (including Loans for housing and education), the St. Lucia Mortgage Finance Company (which lends only for housing) and a number of local credit unions. Statlstics on the banking sector are set out in Annex Tables 6.1 to 6.5. 2.10 At the end of 1984, net commercial bank credit to the Central Government stood at EC$21.2 million (12.4% of net domestic assets), as compared to EC$22.4 million at the end of 1979 (17.0% of net domestic assets). Outstanding commercial bank loans and advances to the private sector were EC$241.3 million (59.1% of GDP), as compared to EC$137.8 million (50.6% of GDP) at the end of 1979. In terms of sectoral distribution, 51.3% was in the category "personal and other advances," a level that marked a vast increase over 1976, when the figure was 30.3%. - 12 - These loans account for an increasing share of all loans outstanding, a situation that: may call for special measures, though perhaps implementation will depend oii approaches of other ECCB member states. As to the shares of other groups of borrowers, agriculture accounted for 4.0%; manufacturing, 9.9%; tourism, 14.4%; transport, 12.0%; construction, 4.6%; distributive trade, 2.8%; and public utilities, 1.0%. Of the total commercial bank loans outstanding to agriculture, one bank alone was responsible for 60%. 2.11 The commercial banks operate competitively, and therefore the rates they pay on deposits and charge on loans do not differ by much. The Government-owned NCB operates on a slightly smaller margin than do the other commercial banks: while they pay 4% on savings deposits, NCB pays 5%; while most of the other banks pay between 7-1/2% to 8% on six-month deposits, the NCB's rate is 8-1/4%. The latter's lending rate also tends to be slightly lower than those of the other banks. In general, the effective rate for loans from any bank is often much higher than the advertised rate. 2.12 With respect to the construction sector, its share of bank credit has declined steadily in recent years and was only 4.6% at the end of 1984. However, inadequate housing is a major social problem in St. Lucia, which has a demand for about 1,000 new houses a year. Lack of resources for house ownership is a problem. Some insurance companies do provide loans to their clients, and at least two commercial banks make some housing loans, but mainly at the higher end of the market. The largest lender for housing is the St. Lucia Mortgage Finance Company, which is jointly owned by the Commonwealth Development Corporation (CDC) (51%) and the Government (49%). Mortgage Finance lends not only its own resources, but also some funds provided by the National Insurance Scheme, which stipulates the rate at which its funds are to be lent. Mortgage Finance concentrated more on middle and higher income lending and tends to observe a limit of EC$100,000. Between 1968 and 1984, it lent EC$37 million for housing. Its total assets at: the end of 1984 stood at EC$22.8 million, as compared to EC$9.26 million at the end of 1974. 2.13 Also involved in housing loans is the St. Lucia Development Bank (SLDB), which is owned by the Government and was formed in 1981. It took over the credit facilities of the National Development Corporation, the functions of th,e Housing Development Bank and the Agricultural and Industrial Bank.. At the end of March 1984, its total assets amounted to EC$20 million, of which outstanding loans and advances represented 80%. The Development Bank concentrates on three areas besides housing: agriculture (including fishing), industry, and manpower and training. Table 4 shows the cumulative approvals by the Development Bank in each category during the period February 1981 to January 1985. Housing takes the largest share of the Development Bank's funds. Of the EC$9.4 million disbursed between February 1981 and December 1984, it accounted for EC$5.3 million (56.3%), as compared to EC$1.7 million (18.8%) for industry, EC$1.0 million (10.6%) for agriculture, and EC$1.3 million (13.8%) for education. With respect to housing the Bank concentrates at the lower end of the market. Its loan ceiling for housing is now EC$40,000, but there is a proposal to increase this level to EC$60,000. The Bank is also trying to get some NIS funds for housing. With some EC$34 million in fixed deposits at the end of June 1984, the NIS is in a position to channel part of its resources through the Development Bank. - 13 - Table 4: SLDB - Cumulative Loan Approvals, February 1981-January 1985 Number EC$mn % Agriculture (including fishing) 267 2.3 13.9 Housing 427 7.3 44.0 Industry 25 5.5 33.1 Education 214 1.5 9.0 TOTAL 933 16.6 100.0 Source: St. Lucia Development Bank - 14 - III. BALANCE OF PAYMENTS, EXTERNAL DEBT AND CREDITWORTHINESS 3.1 Because St. Lucia is a member of the ECCB, its overall balance of payments position is defined to exclude net borrowing from the Bank and the IMF, as well as net changes in its official foreign assets. Payments anc transfers for international transactions are subject to controls that are administered flexibly; the surrender of foreign currency from exports and invisible transactions is mandatory. Capital is free to move within the ECCB region, although the scope and degree of enforcement of exchange controls differ among ECCB's member states. St. Lucia's economy is very open, with exports of goods and non-factor services over the last five years accounting for an estimated 66% of GDP and imports for aDimost U(R% (Table 5). Table 5: EXPORTS AND IMPORTS OF GOODS (as % of GDP) Resource Gap- Exports Imports (Excluding Imports of Goods of Goods Resource Related to Year and NFS and NFS Gap Investment of l-ies3' 1980 69.8 115.2 45.3 24.1 1981 56.2 108.3 51.9 28.9 1982 54.9 94.7 39.7 26.2 1983 63.5 83.2 19.7 15.1 1984 (est.) 64.0 85.3 21.3 21. 3.2 In the period 1980-82, the current account of the balance of payments was characterized by large deficits, averaging some 38% of GDP. For the most part, those deficits reflected sizable imports of capital equipment associated with the construction of the Hess Oil transshipment terminal and, to a much lesser extent, post-hurricane reconstructioon- The current account deficit dropped to roughly 15% of GDP in 1983, reflecting the combined effect of an increase in banana exports and travel receipts, and a further drop in imports following the completion of the 'l4 terminal. The current account deficit declined further in 1984 to ar estimated 14% of GDP, as continued strength in banana exports anld an increase in net private transfers almost offset a modest rise in imports. 3.3 The growth in domestic exports has been largely influenced by the performance of the agricultural sector, particularly banana exports, wbjich accounted for 56% of total exports in 1984. Light manufacturing and clothing appear to have declined relatively over the past two yeats. as exports of newly established enclave enterprises were offset by the cessation of operations by others. St. Lucia is highly dependent oc tourism as a source of foreign exchange: gross tourist receipts, e.-t1mated at US$44 million in 1984, were only slightly less than the value -J (otal domestic exports. The effects of the deepening recession in ln-scr-i.b^ - 15 - countries led to a 13% decline in stay-over visitors and a 68% drop in cruise ship visitors in 1981. In 1982-84, however, tourist arrivals recovered at an average rate of about 9% a year, reflecting the economic recovery in the industrialized countries and the intensification of tourist promotion abroad. As a consequence, the hotel occupancy rate went from 52% in 1981 to 67% in 1984. Estimates of St. Lucians' travel expenditures abroad, though tentative, indicate an unusually strong increase in the past five years. As a result, St. Lucia's net travel receipts grew only moderately during the period and are estimated to have leveled off in 1984. 3.4 St. Lucia is also dependent on outside sources for a wide range of consumer goods, food, intermediate inputs and capital goods. Its high propensity to import has put increasing pressure on the balance of payments. After several years of rapid growth, the value of imports decelerated sharply in 1981 and declined in real terms for the first time in a decade by 8-1/2% in 1981 and 9-1/2% in 1983. The rapid growth of imports, mostly manufactured goods and machinery, and transport equipment, had been related to foreign investment in a few export enclave enterprises, the construction of the Hess Oil transshipment terminal, and public sector investment in large infrastructure projects. The contraction of imports in 1982 and 1983, which was concentrated in the same categories, followed the completion of the projects. However, in 1984, the value of imports rose by an estimated 7%. The preliminary data for 1984 indicate that food accounted for 20% of the total; crude materials and fuels, 14%; chemicals, 11.6%; manufactured goods, 33%; and machinery and equipment, 17%. There is certainly some scope for St. Lucia's reducing its food bill, given its agricultural potential, and it is possible that the development of geothermal energy could have an impact on the fuel bill. In light of the increasing strength of the U.S. dollar, a shift to non-U.S. dollar sources for imports would have been expected. There is no indication, however, that this shift has taken place to any significant extent: in 1984, the U.S. accounted for about 37% of St. Lucia's imports, as compared to 36.7% in 1982, while the UK's share was 13.1% in 1984 and 12.3% in 1982. 3.5 Despite the good performance of tourism and bananas in 1984, merchandise imports increased at a faster rate than foreign exchange receipts. As a result, the resource gap rose and so did the current account balance, which moved from a deficit of US$20.4 million in 1983 to an estimated US$21.55 million in 1984. Financing the Current Account Deficit of the Balance of Payments 3.6 Although the size of the current account deficit has varied from year to year, it has persisted. The two main items in the capital account --official inflows in the form of grants and loans and private direct investment--have offset this deficit somewhat. In the period between 1980 and 1984, net annual official inflows amounted to 20% of the current account deficit on average. Project related grants have been over 60% of net official inflows on average. In 1984, the official transfers were almost wholly in the form of project-related grants. As far as private direct investment is concerned, it has been the single most important item in the capital account in recent years, averaging over 60% of the current - 16 - balance in the last five years. In recent years, private direct investment has been dominated by the capital inflows related to the construction of the Hess facility. Of the total private direct investment inflows into St. Lucia of US$118 million between 1980 and 1984, Hess accounted for over 80%. The completion of the terminal in 1983 has meant not only that the imports associated with the construction of the facility have ceased, ending their impact on the current account, but also that the capital inflows that dominated private sector investment have declined. The small overall deficits in 1983 and 1984 were financed largely by borrowing from the ECCB. External Debt 3.7 At the end of December 1984, St. Lucia's outstanding public sector external borrowing stood at US$31.2 million, or about 21.0% of GDP. This figure represents only a marginal increase over the previous year and reflects a marked slowdown in the rate of drawings on foreign loans compared with previous years. While a number of new loans were contracted during 1984, the need to satisfy the conditions for disbursement and other administrative requirements resulted in only one drawing on them (Annex Tables 4.1 to 4.3). 3.8 St. Lucia has traditionally relied very heavily on external sources for financing its public sector investments. The reason is the combination of relatively low public sector current account surpluses and the high costs of modern infrastructure. Current conditions--the recession in the world economy generally, and in St. Lucia's overseas markets in particular, following the oil price rises of 1979, and the effects of exchange rate changes on domestic currency earnings from merchandise exports and tourism--have depressed the level of public sector savings and increased the reliance on external sources for capital financing. The hurricanes in 1979 and 1980 also led to a rise in public sector spending requirements, as did the wage and salary increases in 1981, 1982 and 1984. As a result, St. Lucia will continue to be dependent on external sources for financing its major capital projects in the public sector. 3.9 The pressure on public sector finances since 1980/81 has led the St. Lucian authorities to borrow substantially from both domestic and foreign sources for budgetaty support. Domestic borrowing has been mainly in the form of commercial bank loans, while foreign borrowing has been from the Caribbean Development Bank and the Venezuela Investment Fund, and in the form of bonded debt: treasury bills in the case of funds obtained from regional governments and institutions, and debentures. The terms of recent external borrowing for budgetary support have generally been substantially harder than those for previous project-related borrowing. 3.10 In addiition to borrowing for fiscal support, the tight public finances have led to substantial arrears in both domestic and foreign payments on the part of the Central Government. They include interest due on a portion of the treasury bill issue referred to earlier. Interest payments to a number of creditor institutions have been capitalized, and the greater part of the issue continues to be rolled over at maturity. Although the funds from China were drawn down in 1983, no interest payments or arrangements for payments have been made so far. The St. Lucian public - 17 - sector has on occasion been in arrears on payments to the IMF, and to the CDB on both principal and interest. 3.11 The present fiscal situation has implications not only for the continued execution of projects which are entirely financed from domestic sources, but also for the availability of external financing. Most foreign funding sources require recipients to make counterpart contributions to projects, a requirement that the public sector in St. Lucia is likely to have more difficulty meeting. As such, external inflows would be restricted. While some public sector agencies have obtained or are seeking permission to increase user charges in order to improve their ability to contribute to the expansion of capital, the financial position of the Central Government will continue to determine the volume of resources requiring counterpart contributions that are likely to be made available. (Another factor besides counterpart contributions that determines the inflow of external funds is creditworthiness, dealt with in the following section.) 3.12 Since 1982, there has been substantial reorganization and restructuring of financial and economic management within the public sector. This effort to improve and streamline the efficiency and delivery capacity of ministries, departments and statutory bodies is continuing. St. Lucia's record on project implementation has generally been good, with the centralization of project monitoring in 1982 appearing to have contributed positively to implementation. One area that needs attention, however, is the absence of a centralized public sector external debt monitoring system capable of providing quick information on exposure levels, servicing costs and servicing performance. Creditworthiness 3.13 St. Lucia's outstanding public sector debt (21.0% of GDP) is not particularly high, as is true of its debt service ratio (4%). However, the emergence of payments arrears does reveal that the tight fiscal situation has created difficulties in servicing the debt. This problem raises questions about St. Lucia's ability to service additional borrowing. Clearly, a program for settling the arrears is a precondition for re-establishing full creditworthiness. 3.14 To analyze St. Lucia's medium- to long-term creditworthiness and to explore the longer term prospects of the economy, a set of macroeconomic and balance of payments projections have been formulated (Annex Tables 2.5 to 2.8). These are aimed at demonstrating what could be a feasible pattern of growth and the likely course of the economy, assuming redress of the fiscal situation, continuation of appropriate policies and no external shocks to the economy. A growth rate in the economy of 4% to 5% could be sustained over this period, but subject to the important assumption that both public and private consumption can be restrained to the extent that consumption's share of GDP declines from the average of 90% over the last five years to around 85% by 1985, the end of the projection period. An adverse exogenous factor that St. Lucia may have to contend with is an expected deterioration in its terms of trade; potentially some 20% by 1995. This projection reinforces the need for vigorous pursuit of economic - 18 - diversification. The balance of payments forecast provides for phased settlement of the arrears in payments, based on the conservative assumption that net current transfers and grants will hardly increase, even in nominal terms, over the projection period. Some hardening of the terms of financing and the terms of external financing is also assumed. A summary of the balance of payments projections is given in Table 6 below. Table 6: BALANCE OF PAYMENTS PROJECTIONS (In current US$ million) 1986 1990 1995 Exports of goods and NFS 120.8 211.87 369.04 Imports of goods and NFS 151.2 244.74 407.86 Resources Balance -30.39 -32.87 -38.82 Net current transfers 12.0 12.0 13.0 Net factor payments -6.25 -13.24 -20.46 Current Account balance -25.65 -34.11 -46.21 Direct Foreign Investment 5.5 9.32 15.01 Grants 7.0 8.0 9.0 Net M< Public Sector Capital 13.41 16.75 22.22 Arrears -1.3 Change in Reserve (-= increase) -0.1 -0.1 -0.1 Memo: Debt service as % of exports of GNFS 4.09 6.93 8.49 Debt service as % of current revenue 9.67 20.04 26.06 3.15 Annex Table 2.8 shows a sensitivity test for financing between 1987-90 of about US$5 million on even less concessional terms. Under either scenario, St. Lucia appears to be only marginally creditworthy for the levels of borrowing envisaged; the debt service ratio rises to about 9% in the projection period. The ability to service external debt depends also on the availability of fiscal resources, and maintaining creditworthiness rests crucially on budgetary reform, particularly restraint by the Government in its current expenditures. The fiscal projections show that debt service as a percentage of total revenues does increase from the present level of about 7% to 26% by 1995. Such a level of debt servicing would constitute a major drain on the Government's finances. This projection underlines the need for St. Lucia to exercise a great deal of caution in resorting to borrowing on hard terms, and equally for donors to maintain the present degree of concessionality for mst of their assistance. - 19 - IV. PERFORMANCE AND PROBLEMS IN THE MAJOR SECTORS 4.1 St. Lucia's sectoral development strategy aims at strengthening the tripod of agriculture, tourism and manufacturing, and at diversifying the economy. Traditionally, the country has depended heavily on agriculture-oriented activities. Banana and coconut production predominates, and some cocoa and coffee are still grown, while a wide range of fruits and vegetables are part of the intercropping system currently in use. Sugarcane, once an important crop in certain parts of the island, has now largely disappeared. 4.2 Given the importance of bananas as an export crop, the Government wants to increase production, particularly through increased yields per acre. Another aim is to provide farmers with their own plots by dividing up some of the larger plantations previously owned by expatriates. At the same time, because the Government recognizes the implications of too heavy a dependence on one crop, another objective is to increase the production of other tree crops, fruits and vegetables, both for local use and for exports. A major broad objective of the country's agricultural policy is also to re-organize the sector in such a way that farmers can earn a reasonable standard of living. By doing this, it is hoped that not only will the flight from farms be halted, but also that more youth will be attracted back to agriculture, which tends to lack the glamor of other activities. 4.3 Tourism has emerged in recent years not only as a major earner of foreign exchange, but also as the source of a significant number of jobs. The Government sees considerable scope for expanding the industry, and this is a key objective. However, a number of problems confront the industry that must be dealt with if St. Lucia is to remain competitive and the country to benefit from tourism's growth. There is a need for greater local participation and less leakage of foreign exchange. To some extent, the latter is tied to the question of intersectoral linkages, the development of which is seen as integral to strengthening the fabric of the economy. In this context, the development and preservation of historical sites are viewed not only in the context of tourism, but as part of an effort to preserve the country's historical legacy. Further, if tourism is to flourish, the local population must support it. The program and policies aimed at preventing any alienation will have to be more firmly articulated and their implementation accelerated. 4.4 Active encouragement of manufacturing is part of the Government's diversification strategy. Given the limited amount of arable land and the growth of the population, manufacturing and tourism will have critical roles to play not only in earning foreign exchange, but also in the provision of jobs. Thus the Government, besides offering a range of incentives, seeks to encourage private sector development, in part by devoting considerable resources to the establishment of industrial estates and factory shells. However, given the small size of the local market, manufacturing for export will have to be an integral part of industrial strategy. At the moment, it provides a very small share of total exports, and a significant proportion of those limited exports come from the enclave assembly-type enterprises in which local value added is small. The main - 20 - attraction of these units at present is employment: even while recognizing the "footloose" nature of the enclave enterprises, the authorities feel that a sufficiently large number could provide a significant number of jobs. There would also be, in addition to some foreign exchange earnings, spin-off benefits in the form of on-the-job training, the acquisition of work discipline and skills, and the creation of an atmosphere that could have an agglomerative effect. Since industry tends to attract industry, the possibilities of linkages and increased local value added become more realistic. Agriculture 4.5 As a result of Hurricane David in 1979 and Hurricane Allen in 1980, real value added in agriculture declined from EC$27.4 million (14.9% of GDP) in 1979 to EC$21.6 million (11.8% of GDP) in 1980 and to EC$18.7 million (10.2% of GDP) in 1981. By 1984, however, the figure had climbed back to EC$29.0 million, or 14.1% of GDP. 4.6 The Government continues to place a high priority on agriculture as a major sector of the economy. Agricultural development is seen not only as necessary for earning foreign exchange and generating employment, but also for providing food for the population and the tourist sector. It is also a source of raw materials for manufacturing. 4.7 Many of the problems that have been plaguing agriculture continue to do so. They relate to marketing, the lack of farm-to-market roads, agricultural credit, diseases and pests, and land tenure. To these may be added the problem of the declining pound sterling and its impact on earnings, not only for bananas, but also for a range of fruits and vegetables exported to the UK, such as pumpkins, plantains, mangoes, breadfruit, avocado, sweet potatoes and ginger. 4.8 A number of Government entities have a hand in agriculture. The Marketing Board, a statutory body, helps market the produce of farmers outside the three specialized organizations, the Banana Growers' Association, Coconut Growers' Association and Agriculturists' Association (cocoa, nutmeg, and spices). However, the Board is largely unequipped to perform a marketing function. It has only one van, which is used for occasional buying and delivery to hotels. If farmers are to produce, they have to be able to get their goods to buyers. Another problem is that the regional Agricultural Marketing Protocol within CARICOM, which was intended to give farmers, particularly in the less developed territories, first preference in the regional market, has collapsed, largely because of the inability to solve the logistics to make it work. 4.9 The problems associated with land tenure have long been recognized, but solutions are slow in coming. A survey is currently underway to ascertain the extent of the problem. The French inheritance law, which the country follows, has resulted in a system of joint or multiple ownership that has not only led to the fragmentation of property, but often presents difficulties when bank credit is being sought. Land is often used as collateral, and the absence of clear titles puts lenders in a difficult position. Multiple or joint ownership often leads to an unwillingness to plant or cultivate, since all owners are entitled to the benefits. - 21 - 4.10 From a position of insignificance in the early 1950s, the banana industry in St. Lucia has become not only the dominant activity in the agricultural sector, but one of the most important elements in the country's overall economic structure. Bananas are a critical dynamic in the economy, and the country's buoyancy is closely associated with their performance. Their prominence has come about as a result of both increases in yield per acre and acreage under cultivation. 4.11 About 14,000 acres, or about 9% of St. Lucia's land area, are believed to be arable, of which over 10,000 acres (71%) are under banana cultivation. In terms of exports, bananas account for over 50% of domestic exports. The banana industry injects close to EC$1 million into the economy every week. Further, more than half the population of 134,000 are directly dependent on it. 4.12 Precise data on the number of farmers by size of plot under cultivation are not available, as the last agricultural census was in 1973. However, almost all the large plantations formerly owned by Geest Industries have now been broken up into small farms and sold to local farmers. Thus, at the producing end, the industry is now almost totally in the hands of local farmers, who bear all the risks associated with production. Geest's role is marketing and distribution. The average size of farms has been estimated at between 5 and 10 acres, and over 75% of the banana farmers have plots of 10 acres or less. The St. Lucia's Banana Growers' Association (SLBGA) has a registered membership of 10,000, of which 7,000 are active. However, about 1,500 farmers are responsible for about 80% or 90% of total production and a similar volume of exports. As such, the bulk of the farmers account for only about 10% to 20% of production. 4.13 In St. Lucia (as in the other Windward Islands), inter-cropping is a common practice, i.e., bananas are grown along with a variety of fruit trees, food crops and vegetables. The reasons are several. Among the most important are the desire for extra food and cash and the fact that this practice helps suppress weeds and reduces the cost of the plantation establishment. Another characteristic of banana cultivation in the Windward Islands is that the fruit is grown on a wide variety of slopes, soil and climatic conditions, no doubt contributing to the high cost of production. 4.14 Banana production is readily affected by a wide range of natural conditions. As a result, production and hence exports can vary widely from year to year. Although fluctuating from period to period, exports increased steadily between 1954 and 1959, moving from 3,539 tons in the former year to 84,762 tons in the latter. However, between 1970 and 1979, the level of exports fluctuated between 31,000 tons and 50,000 tons, reflecting bad weather conditions, pests and diseases. A figure of 28,996 tons was recorded for 1980, the lowest level since 1960; it resulted from the devastating effect of Hurricanes David in 1979 and Allen in 1980. Since then, production and exports have shown an upward trend, with exports reaching 64,000 tons in 1984. The projected figure for 1985 is 68,000 to 75,000 tons. Of the 117,438 tons exported by the Windward Islands in 1983, St. Lucia contributed 53,479 tons, or 45%. - 22 - 4.15 Over 70% of St. Lucia's banana production is exported to the UK, as traditionally it has offered a protected market for bananas from the Windward Islands, Jamaica and Belize. The UK's domestic consumption has stabilized at around 300,000 tons a year, of which the Caribbean (Windwards, Jamaica and Belize) supplies about 50%. The residual market (i.e., the difference between domestic requirements and Caribbean supplies) is satisfied by imports from Latin America and certain African countries. 4.16 The sole purchaser of bananas is Geest Industries, whose ships call about once a week at designated ports in the islands. The growers' interests are looked after by an Association on each island, which in St. Lucia is the SLBGA. Prices, which are negotiated weekly and are quoted in pound sterling, tend to be influenced more by demand in the UK market than by the cost of production. The first price to be determined is the gross green wholesale price, which replaced the green market price as a basis for paying local producers in January 1, 1984. Geest gets this price from the wholesalers in the UK market. Geest deducts certain charges (for freight, handling, etc.) from the gross green wholesale price in order to arrive at the net green wholesale price, and that is what the SLBGA receives. These deductions account for a significant proportion of the gross price and have often been controversial. For instance, for the week ending February 8, 1985, the difference between the gross and net prices was in the region of 172, or 37% of the gross offer. As to the price paid to the growers, it is still less than the green market price, the difference being attributable to deductions the SLBGA makes for a range of services it provides the growers. In 1983, the gross green market price averaged about EC$0.77 a pound, while the average net price paid to the SLBGA was EC$0.42 a pound, and to the growers, EC$0.18 a pound. 4.17 The price Geest pays fluctuates widely from week to week. As can be seen in Table 7, the net green wholesale price in the first week of 1984 was 218.32. In the 33rd week, it had risen to 292.66, in the 40th week of the year, it had dropped to 263.06, and then in the last week of the year it rose to 275.19. It is also important to note that the green wholesale price could increase in real terms, but the farmer's income might decrease. A critical factor here is the exchange rate. Until 1976 the EC$ was pegged to sterling at a rate of EC$4.80. In 1976, however, the then Eastern Caribbean Authority (now the Eastern Caribbean Central Bank) switched to the U.S. dollar. The weakening position of the pound against the U.S. dollar in recent times has tended to erode farmers' income in terms of local currency. In the 1980-81 period, because of the strong position of the pound against the US dollar, the EC$ rate averaged about EC$6.00 to the pound. At the end of 1984, the rate had fallen to just over EC$3.00. Although the average sterling price paid to the Windward Islands Banana Growers' Association (WINBAN) increased from 240 a ton in 1983 to 264 a ton in 1984 (or by 10%), the EC dollar equivalent declined from $975 in 1983 to $945 in 1984, or by 3.1%, as a result of exchange rate changes. WINBAN has estimated that of the roughly EC$18 million reduction in net banana revenue experienced by the Windwards in 1984, fluctuations in the exchange rate accounted for about EC$12 million, or 68%. - 23 - Table 7: NET GREEN WHOLE PRICE RECEIVED FROM GEEST IN SELECTED WEEKS IN 1984 AND THE PREVAILING EXCHANGE RATE AT THE TIME Net Green Wholesale Price Per Ton EC$ Exchange Rate Week (E sterling) with the Pound 1 218.32 3.740 8 244.59 3.980 16 267.05 3.771 24 286.66 3.678 33 292.66 3.429 40 263.06 3.250 45 271.90 3.402 52 275.19 3.120 Source: SLBGA. 4.18 To compensate for the drastic drop in income, the farmers have produced more fruit. However, there are clearly limits to this solution, and some means have to be found to protect producers from the effects of a highly fluctuating rate if the incentive to produce is not to be destroyed. Four major proposals have been put forward so far. The first involves the creation of an artificial "banana pound"; it would involve a fixed exchange rate for the pound sterling, to be used to pay for banana exports. The second is the creation of a banana stabilization fund, which could be used to compensate farmers for losses of earnings arising from changes in the exchange rate. The third is to peg the EC dollar to an appropriate basket of currencies, in which changes with respect to one currency could be offset by movements in the others. The fourth idea is to switch back to officially pegging the EC$ to the pound. The first two suggestions seem to have greater appeal in official circles than the third one, which is seen as too complex. The last two proposals would require that the Eastern Caribbean Governments act as a group - the exchange rate could only be changed by consensus. As to the creation of a "banana pound" and/or banana stabilization fund, they would depend on the willingness of the British Government, Geest, and the other governments and agencies to contribute to the fund. The option of switching back to the pound has to be seen against the evolving pattern of trade in the various islands that are members of the ECCB. In the case of St. Lucia, while the UK took about 58% of its exports in 1984, only 13% of its imports originated there. Instead, the U.S. has been supplying an increasing proportion of total imports - from about 2U% in 1976 to between 30% and 40% in recent years. Included in these imports are - 24 - a number of inputs for the banana industry. In this context, a falling pound could lead to a significant increase in import costs that would be felt in the already high-cost banana industry. Interestingly, under the present system, in which the EC dollar is pegged to the U.S. dollar at EC$2.70, the appreciation of the US dollar vis-a-vis the pound should have led to an increase in imports from the UK. The data, however, indicate that imports from the UK as a proportion of total imports declined from about 25% in 1976 to 16% in 1980 and about 13% in 1984. 4.19 Beyond these more common types of problems and issues, the banana sector faces a number of special ones. St. Lucia, as with other Windward Islands, is a relatively high cost producer of bananas. One reason is a low yield per acre. While a return of 10 to 12 tons per acre is obtained at a few well-managed large plantations, the average is generally about 5 to 6 tons, as compared to about 10 to 15 tons in the neighboring French islands of Martinique and Guadeloupe, and in Latin America, where the mode of cultivation is more scientific and better organized. While data on the cost of production are not readily available, it appears that in recent times costs (even when family labor is excluded) have been rising at a faster rate than average revenue. Thus there is a widening cost/revenue gap that often has to be met by borrowing from the commercial banks. Here several factors are at play. With respect to revenue, there is no institutional linkage with the cost of production. With respect to costs, there are several contributory influences. The fact that bananas have a guaranteed market in the UK and are a cash crop that brings in a regular income has encouraged many farmers to cultivate lands not ideally suited for banana growing. Yields are unlilcely to increase significantly on these lands even with increased usage of fertilizers. (Additional costs are the destruction of hillside forests and the resulting soil erosion.) Another factor is labor costs. Banana cultivation is not particularly labor-intensive, but wages still account for about 50% to 75% of total costs (the lower figures apply to the large estates). While family labor is widespread, particularly on the small farms, hired labor is still an important input. With increasing money costs and falling real productivity, real wage costs have been increasing. Finally, the prices of inputs relating to herbicides, pesticides and fertilizers, which account for the rest of total costs, have also been increasing. 4.20 As to the future, barring further natural disasters or adverse weather conditions, production could reach 85-90,000 tons. Given the constraint of arable land, most of this increase will have to come from increased yields per acre rather than from an expansion of the acreage under cultivation. In fact, the authorities will need to exercise great care, when encouraging production, to see that hillside forestry is not destroyed. Bananas do not have root systems that hold the soil, and erosion could put the country's ecosystem in danger. 4.21 Under an agreement with the SLBGA that is to expire shortly, the BDD has been paying the salaries of some 20 extension officers who have been travelling about the countryside providing advice. This service has had a - 25 - positive effect on productivity and should continue. Farmers tend to resist new ideas, and the extension officers can help the SLBGA and WINBAN encourage them to adopt a more scientific approach. A major project under consideration is getting farmers to apply fertilizers more effectively, thus earning higher yields. 4.22 The SLBGA provides a range of services to its members. They could, however, be administered more effectively and cheaply if farmers were organized into cooperatives. The present system of dealing with individuals and loose groups strains the manpower resources of the Association. Assistance with the setting up of cooperatives may be needed. 4.23 Over the years, the WINBAN has been doing valuable research on banana production. Some of it relates to the effective use of fertilizers, the application of multi-purpose chemicals, the timing of inputs, weed control, the use of cultural practices designed to reduce labor, other input costs, and methods to retain good fruit quality. Research is important to greater efficiency and higher fruit quality, both of which would yield a greater profit margin that in turn could be encouraging to farmers. 4.24 As another incentive, WINBAN is also looking into a crop insurance scheme, given how vulnerable bananas are to a number of problems. Even though the Windward Islands have a protected market in the UK, they still must deliver fruit of high quality, and the exposure of British customers to Latin American fruit has reinforced this need for quality. It has already resulted in some changes. Up until the mid-1960s, the island exported fruit on the bunch. This system resulted in a great deal of damage and complaints about quality. Now banana hands are shipped in cartons. As the cartons have improved and field-packing has become more common, the level of rejected fruit has fallen significantly. 4.25 There is no reason why St. Lucia cannot be self-sufficient in fish. There was an absence of facilities for storing fish for long periods, but a facility was just completed in Castries with the assistance of CIDA. Now the surplus from the peak January-June season can be stored to help overcome the shortage in the low season, a time when fishermen are unable to go far out to sea, as most are not equipped for deep-sea fishing. Another issue being studied is the still excessive use of dug-outs, even though an increasing number of fishermen are using gas-powered engines. The use of dug-outs has taken a toll on the forestry reserves. The Prime Minister has suggested to the Development Bank that it cease lending for the purchase of canoes and thus encourage fishermen to obtain more modern vessels. To date, however, tradition has been slow to change. 4.26 To encourage fishing in other parts of the country, holding facilities may be necessary to supplement the storage depot at Castries. Moreover, a similar depot may be required at Vieux Fort. In certain areas, the construction of ramps for putting boats in the water is also needed. Programs designed to familiarize fishermen with modern techniques should be undertaken in various stages. Improved roads to get the fish to the people will also assist in the development of the industry. - 26 - 4.27 While a canning industry might produce employment, this project might best be tackled at a regional level. 4.28 As stated in previous reports, the coconut industry continues to be afflicted by the disease known as "Coconut Mite," which mainly affects the size of the nut. Whereas a few years ago it took 5,000 nuts to make a ton of copra, now it takes about 7,000 nuts. An FAO expert has been expected for some time to look into the problem, and assistance has also been sought from the UK Government. All copra produced is bought by the coconut oil factory to make oil, about 85% of which is exported. Besides the oil, the coconut industry is associated with a wide range of possible byproducts, such as livestock feed, coconut cream, fibre, shells for souvenirs and vinegar. 4.29 Since coconut is grown in other CARICOM countries, it has long been recognized that the best approach to the industry is regional. However, a proper regional policy has been slow in coming, and countries like St. Lucia have had to seek extra-regional markets for their products, as they cannot compete with the cheap imported oil in a number of the CARICOM countries. 4.30 As a result of Hurricane Allen in 1980, cocoa production declined from 238,000 pounds in 1979 to 158,000 pounds in 1980 and 106,000 pounds in 1981. Since then there has been a steady increase in production, with the figure for 1984 esstimated at around 143,000 pounds. 4.31 The Government is committed to a policy of increased cocoa production as part of its tree-crop diversification program. West Indian cocoa is premium grade and is in little danger of competition from cocoa grown elsewhere. A critical element in this effort will be the attitude of farmers and their response to the extension services provided by the Government. In early 1983, the Agriculturist Association was able to secure what it regards as a satisfactory market for cocoa in the U.S., and this should be a stimulant for greater production. In this connection, in 1983 the Association also waived the commission (5% of the farmers' export price) it normally collects for marketing. It recognizes that, despite the assured market it has secured, unless St. Lucia can attain a certain volume of exports, it will be difficult to get transport facilities, since ships tend to require a certain volume to make the voyage economically feasible. 4.32 In the area of fruit and vegetable production, farmers have often demonstrated that, with proper incentives, they are capable of increasing output beyond current levels. As indicated, the absence of a properly organized marketing system continues to be a major constraint. This sector also needs to be more explicitly linked to the development of tourism. Manufacturing 4.33 In the 1960s, manufacturing activities in St. Lucia contributed less than 5% of GDP. By 1977, the value added of this sector in real terms was EC$13.8 million (8.8% of GDP at factor cost). It rose further to EC$18.8 million (9.6% of GDP at factor cost) in 1983. However, in 1984, real value added fell to EC$18.4 million, or 8.9% of GDP. This decline - 27 - reflects the effects on local manufacturing of the trade restrictions adopted by other CARICOM countries, particularly Trinidad and Tobago. In terms of employment, in 1983 the sector employed about 2,600 people, or about 8% of the employed labor force. 4.34 In the 1960s there were only a few simple industries, such as edible oil, soap-making, garments, saw milling, cigarettes and aerated drinks. Now, as the result of a conscious policy to encourage industrial production, the sector encompasses a wide range of small-scale industries producing both for the local market and for export. The garment sector has expanded and diversified greatly. A number of agro-based activities using local raw materials have sprung up. Beer-making and furniture manufacturing are other new industries. A survey of 10 manufacturing establishments employing more than 2 paid persons carried out in 1983 indicated that of the sample of 84 units, 19 (22.6%) were involved in the manufacture of food products, 8 (9.5%) in beverages, 13 (15.5%) in textiles, 12 (14.3%) in wood and wood products, 10 (11.9%) in paper and paper products, 7 (8.3%) in industrial chemicals, 5 (5.9%) in other metallic mineral products, and 10 (11.9%) in fabricated metal products. Out of the total, 60 (71.4%) were locally owned, 17 (20.2%) foreign-owned, 5 (5.9%) joint local and foreign private, and 2 (2.4%) were classified as "other." Foreign firms were dominant in textiles and fabricated metal products. Out of the 13 in the former category, 9 were foreign-owned, while in the latter all 5 were foreign. 4.35 Among the factors contributing toward making St. Lucia one of the most industrialized of the smaller Eastern Caribbean states is the relatively high quality of its infrastructure. In recent years, a great deal of attention has been devoted to improving the basic facilities. Another factor has been the fiscal incentives offered in the form of tax holidays and exemptions from the import duties on raw materials and capital equipment. These are more or less the same as ones offered by other members of the Organization of Eastern Caribbean States. Similarly, the provision of industrial sites (there are now four) and factory shells has been an integral part of the Government's promotional efforts. These have been the responsibility of the National Development Corporation (NDC), set up in 1971 "to stimulate, facilitate and undertake the economic development of the island." The NDC helps prospective investors by identifying industrial opportunities and providing project profiles. It is also responsible for constructing the factory shells and creating and maintaining the industrial estates. 4.36 To encourage exports, companies selling to countries other than those in the East Caribbean Common Market are permitted to claim a tax rebate, depending on the percentage of profits attributable to exports. St. Lucia is often advertised as a low labor cost country in order to attract foreign investors. however, wages have been rising and, as shown in the table below, are higher than in a number of other Caribbean and Central American countries. If St. Lucia is not careful about its labor productivity and general work attitude, it may well lose whatever labor advantages it has enjoyed. - 28 - Table 8: COMPARATIVE MONTHLY INDUSTRIAL WAGES, a/ 1984 (US$ per month) Caribbean Islands Central America East Asia St. Lucia 185 Costa Rica 150 Hong Kong 275 Haiti 95 El Salvador 150 Korea 200 Bahamas 400 Guatemala 100 Singapore 275 Barbados 250 honduras 100 Dominica 150 Mexico 150 Dominican Panama 200 Republic 150 Grenada 150 Jamaica 150 Puerto Rico 600 US Virgin Islands 600 a/ Including fringe benefits (mostly taxes and social security dues assessed on wages and paid by employers). Source: UNIDO and mission estimates. 4.37 The small size of the St. Lucian market is a major constraint on industrial development. In addition, the country is not well-endowed with industrial raw materials. Even the agro-based industries are few in number, although there Ls room for expansion here. As indicated earlier, many of the new enterpr:Lses have been attracted by the relatively low wage costs and good infrastructure. While these industries export some products to the U.S., the CARICOM market is critical to their survival, although its share as a market has fallen. In 1984, the CARICOM countries are estimated to have taken 24% of St. Lucia's exports, as compared to 47% in 1976. Barbados' share declined from 7.8% to 4.4% over the period, while the proportion going to Trinidad and Tobago fell from 9.4% to 5.7%. This development clearly demonstrates the problem of too heavy a dependence on a few markets and underlines the need for diversification. 4.38 Even though there are clear limits on the kind of industrialization St. Lucia can undertake, there is still considerable scope for expanding light manufacturing oriented toward local, regional and extra- regional markets. Spin-off industries related to certain local products (e.g., coconuts and bananas) and the processing of local fruits and - 29 - vegetables are realistic possibilities. By providing training, the work force can become an asset on which to base skilled and semi-skilled industries. 4.39 Given the small size of the domestic market, exporting has to be an explicit element in any industrialization strategy. Toward this end, certain measures must be adopted. Enterprises have been able to exploit the CARICOM market because less exacting standards are required there. If extra-regional markets are an objective, a local bureau that promotes the attainment and maintenance of standards required in foreign markets may be necessary. Marketing intelligence will also have to be acquired through monitoring foreign markets and sources of supply. 4.40 On the positive side, as a member of CARICOM and as a signatory of the Lome Convention, St. Lucia has access to the Caribbean and European markets, provided its products comply with the rule of origin requirements. St. Lucia, however, has to compete with other countries. Its ability to penetrate these markets will depend on its competitiveness and marketing techniques. In addition, the Caribbean Basin Initiative provided by the U.S. offers duty-free access to the U.S. market for 12 years. Nearly all products exported from designated countries are eligible except textiles and apparel, canned tuna, petroleum and petroleum products, certain leather products and footwear, and certain watches. The exclusion of textiles and apparel has been a disappointment to the small Caribbean countries that believe they have a comparative advantage in the production of these items. A few firms in St. Lucia have been able to take advantage of U.S. Tariff Schedule items 806.3 and 807.0. The 806.3 items include articles of metal manufactured in the U.S., exported for further processing and then imported back into the U.S. for still further processing. Import duty is levied only on the amount of value added attributable to processing outside the U.S. Tariff item 807.0 applies essentially to goods exported from the U.S. for assembly. Among the operations that qualify as "assembly" are the assembly of cut parts of wearing apparel by sewing, hemming or stitching, and the assembly of U.S. electrical components by soldering and other operations. Here the U.S. duty is equal to "the full value of the imported article less the cost or value of such products of the United States." 4.41 A major activity up to 1983 was the construction of the Hess facility, a self-contained, fully automated storage and transshipment terminal. It provides jobs and the payment of a throughput tax of two U.S. cents on every barrel of oil. In FY1984/85 the revenue from this tax was estimated to be about EC$2 million. Hess himself has also assisted in the reconstruction of 13 hurricane damaged schools and replacement of another 13 schools, and has constructed one new comprehensive secondary school. Total expenditure by Hess is estimated in the vicinity of EC$22.5 million. 4.42 While the terminal was being built, it had a significant impact on the construction industry and on employment, and its completion has affected those sectors. Initially, it was hoped the facility would be expanded to include a refinery around which other industrial activities would flourish. Given the changes in the international oil industry, this expansion is highly unlikely. - 30 - 4.43 Because of the increasing congestion in Castries, the Government has decided to create a growth pole in the southern region around Vieux Fort. Not only is the infrastructure available, but there is a large expanse of unutilized flat land. The largest (189 acres) of the four industrial estates the Government has created since the establishment of the National Development Corporation in 1972 is at Vieux Fort, within two miles of Hewanorra Airport. 4.44 Part of this estate (60 acres) is being developed as a Customs Free Zone to supplement the Hewanorra Airport Free Zone. The essential feature of the free zone concept is that it allows firms whose operations are largely export-oriented to function without red tape and bureaucracy. The Government hopes that this strategy will attract companies that are looking for a base from which to export to other countries, particularly the U.S. The Government sees this development as one way of creating permanent employment to absorb part of the new labor force each year. From its point of view, the strategy is critical, as the scope for employment in the agricultural sector is quite limited. While the relevant legislation is not yet in place, a few factories are now apparently being allowed to operate on the free zone basis at the Vieux Fort estate. Present deficiencies at the estate revolve largely around infrastructure for security, such as lighting, fencing, and fire-fighting equipment, and an administration and customs building. 4.45 To conclude, with respect to the manufacturing sector, St. Lucia, a small country, is trying to industrialize within a competitive region and in the context of a legacy of social and economic problems. Given the enormity of the task, the Government's efforts have been laudable in several respects. It is focusing its attention on maintaining and improving the infrastructure, while encouraging the involvement of the private sector in productive activities and making the entire community aware of its responsibility in the development process, which must be a joint undertaking. The Government recognizes that productivity is not enhanced by labor, capital and management working in isolation, but rather by their ability to work together. Since productivity holds the key to the country's industrial success, industrial relations are a critical issue. Training also has to be integral to the whole process. Similarly, the tourism, manufacturing and agriculture sectors must reinforce one another. 4.46 The unemployment problem has led to a great deal of attention being paid to the generation of jobs as part of the development effort. Manufacturing undoubtedly has a key role to play here. In order to attain a higher level of local value added, policies are needed to encourage more linkages through greater use of local raw materials and the encouragement of labor-intensive production techniques. As previous reports have pointed out, there is scope for developing the handicraft industry, which appears to be extremely disorganized. 4.47 The availability of industrial credits and the framework within which they are provided continues to be unsatisfactory. The seriousness of this problem and what measures could be instituted to encourage the flow of resources to areas where they are needed most, and to increase their supply, needs to be studied. - 31 - 4.48 One reason for setting up the Development Corporation was to obviate the need for prospective investors dealing with several departments or ministries. The Corporation does not appear to be fulfilling this role, and its operations, staff and structure need to be looked at. Tourism 4.49 The total number of visitors to St. Lucia in 1984 was 13.4% greater than in the previous year, substantially more than the 6.4% between 1982 and 1983 (Annex Table 7.5). Thus there has been positive growth for three successive years, following the decline of 36.1% in 1981. The situation in 1984 reflects an increase in both cruise and stop-over visitors. These tourists spent an estimated US$43.4 million in 1984, compared with US$39.7 million in 1983. Tourism earnings in 1983 accounted for about 45% of the exports of goods and nonfactor services. In 1984, the average length of stay was 8.7 days, the same as in the previous two years. However, expenditures per stay-over visitor were US$58.1, slightly below those of the previous year, US$60.9, although still higher than the average for 1979-83 of US$54.3. With respect to employment, tourism provides direct employment for about 3,000 persons, and perhaps a larger number indirectly. 4.50 With respect to the origin of visitors, the U.S. and Canada account for about 40-45% of the stay-overs. Other major sources in 1984 included the UK (20%), the Federal Republic of Germany (West Germany) (6%) and the Caribbean countries (17%). Visitors from West Germany have declined since 1980, as is the case with Canada since 1979. Tourists from Caribbean countries have fluctuated around 11-15,000 over the last eight years. 4.51 The tourism industry in St. Lucia is relatively new. The country has always been well-endowed with natural attractions, but the growth in tourism in recent years is the result of a conscious Government policy to make it one of the central planks of the economy. Several measures have contributed to the good performance for this sector, among them improvements in the physical infrastructure, including the availability of an international airport to accommodate large planes, the setting up of a tourist board to engage in promotion, and the provision of incentives to build and operate hotels. While in 1964 there were only two hotels in St. Lucia, with a total of only 20 rooms, by 1975 there were 1,205 rooms and by 1984, 1,705. 4.52 Despite the impressive growth of the industry in recent years, a number of areas need attention if the industry is to be sustained and developed. Even though tourism looks like an "easy" industry on the surface, it is a complex activity that has to be carefully managed if the costs to the country are to be minimized and the benefits maximized. The goals must be clear, backed by consistent policy. The following are some areas that should be addressed: * Promotion. More intensive promotion is necessary, not only to increase the number of visitors from traditional sources, but to develop new markets in order to reduce the country's dependence on - 32 - a few countries. South America, continental Europe and other Caribbe.n countries offer potential. The hosting of conferences is anotlher area worth looking at. It is not always possible for a small country to divert its scarce resources from other uses to promote an activity like tourism, whose spread benefits may not be easily recognizable. Moreover, at least from a cost point of view, promotion should ideally take place within a wider Caribbean framework. Recent experience, however, has shown that joint promotion is a difficult objective, as the countries of the region see themselves as competirLg. Facilities. The addition of duty-free shopping and a few more quality restaurants would not only enhance St. Lucia's attractiveness, but would provide further employment. In addition, public amenities need to be placed at historical and natural sites. One function of these units could be the sale of handicrafts and souvenirs, whose marketing is not properly organized at the moment. In general, development of handicraft and souvenir manufacturing should be intimately linked to the growth of the tourism industry. Two other possibilities - water sports and round-the-island cruises - have yet to be fully explored. The Government is also developing Pointe Seraphin as a duty-free shopping center. Funding is also being sought to develop Pigeon Island as a national park. Foreign Exchange Leakage. It is estimated that on average 54% of St. Lucia's tourism business is in packaged form, with a higher proportion in the winter, 67%, and lower in the summer, 42%. The essential feature of packaged tours is that the financial transaction takes place abroad. While funds undoubtedly have to be brought into St. Lucia to meet local costs, the country may be losing foreign exchange through this arrangement. A study needs to be made of all the ramifications of packaged tours. Another aspect of leakage is more easily handled by proper policy measures. It is estimated that of each tourist dollar spent in St. Lucia, more than half leaves the country. While St. Lucia will continue to be dependent on foreign inputs for tourism, such as food and building materials, for some time, it can increase the share of some local resources, such as the food consumed by the tourist industry. The following figures from a recent study show the share of foreign foodstuffs consumed by hotels in St. Lucia in 1983: meats, 86%; seafood, 19%; dairy (excluding eggs), 99%; staples, 30%; vegetables, 35%; fruits, 7%; and "other," 97% (Annex Table 7.6). These figures clearly indicate the scope for greater consumption of local items. - 33 - For their part, the hotels argue that local suppliers cannot be depended on and that the quality of their products is often below acceptable standards. Farmers, on the other hand, see the hotels as biased against local foodstuffs, since they do little to promote them. Clearly the Government has a role to play in bringing both parties together to establish mechanisms to resolve these issues relating to marketing, production and promotion of local food items. . Seasonality and Occupancy Rate. St. Lucian tourism, as elsewhere in the Caribbean, is seasonal. The high months are generally between December to April, when the hotels experience higher occupancy levels. To generate business in the "off" season, St. Lucia needs to explore lowering its rates, combined with skillful promotion of water sports and natural attractions. It should target countries (e.g., in the Caribbean and Latin America) where vacation periods are in the summer months. The average occupancy level in 1984 was 66.8%, well below the projected level of 80%, although a few hotels had levels above the average. Most hotels are, however, heavily booked for 1985. Further construction of hotels will depend on the level and success of promotional activities and the scope of the industry envisaged by the Government. At the moment, then, attention needs to focus on the refurbishing and renovation of existing hotels, most of which are now 10-15 years old and somewhat run down. . Training. Some training is provided by the Hotel Trade School. However, more is needed at the middle-management levels. Given the nature of the tourism business, greater on-the-job training should be provided, particularly at the lower levels, including for those jobs that involve interface with visitors, where there is now a noticeable absence of professionalism and tact. Training of the technicians who service the equipment used in hotels and restaurants is also needed. . Costs. Increasing concern is being expressed in many circles about the rising cost of a Caribbean vacation, particularly in light of the growing number of competing resorts. Some cost factors are completely outside of the control of the various countries, for example, the high price of fuel (and its effect on transport costs), fluctuating exchange rates and the cost of imported goods, However, there are also local factors, such as wage levels, labor productivity, utility services and maintenance that can be addressed. If Caribbean countries are not to price themselves out of the market, greater attention should be paid to those areas they can influence. 4.53 A recent study comparing Barbados, Antigua, St. Lucia and Jamaica indicates that while St. Lucia may be below Barbados in terms of costs, it is above Antigua and Jamaica. A comparison of the package per person from New York for a seven-night stay in a middle-grade hotel in the four countries produced the following retail prices: Barbados, US$511; St. Lucia, US$484; Antigua, US$468; and Jamaica, US$438 (Table 9). - 34 - Table 9: REPRESENTATIVE PACKAGE PRICES FROM NEW YORK, PER PERSON, FOR 7 NIGHTS IN LOWER, MIDDLE RANGE HOTELS a/ (US$) Barbados Antigua St. Lucia Jamaica Retail Price 511 468 484 438 of which: Airfare 299 279 299 239 Ground Transfer 15 15 15 15 Hotel Accommodation 197 174 170 184 Cost to Tour Operator: Air Seat Cost 244 228 244 195 Ground Transfer 15 15 15 15 Hotel 164 144 142 153 Net Cost of Package to Tour Operator 423 387 401 363 Tour Operator's Profit 88 81 83 75 a/ European Plan, assuming two people sharing a double room. Prices are averages for departures in January and March 1984. Source: Pannell, Kerr, Forster Associates, Comparative Tourism Pricing Study, for the Government of Barbados, May 1984. Foreign Investment Policy 4.54 The Government of St. Lucia recognizes that its nationals must benefit from its development efforts. It also recognizes that the country suffers from a shortage of the factors of production (capital, technology, managerial expertise and various types of skills) that can generate a rate of growth sufficient to meet its citizens' high expectations. Thus to attract foreign investors, it makes the fiscal incentives available to its nationals also available to the citizens of other countries. 4.55 Besides the fiscal incentives, the Government has instituted a number of other measures and policies aimed at attracting foreign investment. One relates to the repatriation of profits. Industries owned by nonresidents are generally permitted to repatriate all their earnings and all imported capital, as well as the gains from the sale of plants and equipment or business liquidation. Where the amounts exceed US$370,000, investors might be required, depending on the balance of payments situation, to repatriate their funds in installments according to a schedule agreed - 35 - upon by the Government and all foreign investors. Another measure is a treaty with the U.S. that prevents double-taxation of income earned in St. Lucia. Recently, the Government signed a treaty covering investment promotion and protection with the UK. (Belize is the only other CARICOM country with such a treaty.) The agreement binds the St. Lucian and British Governments to accord "fair and equitable" treatment to investments in their countries by nationals and companies of the other. Provisions in the agreement address most-favored-nation treatment, compensation after expropriation, free transfer of capital and earnings, and settlement of disputes by international arbitration. It also provides for compensation for losses through war or armed conflict, revolution, a state of national emergency, revolt, insurrection or riot. The agreement prohibits the nationalization or expropriation of investment "except for a public purpose related to the internal needs" of the country. Where that step is taken, the Government assures "prompt, adequate and effective compensation," based on the market value of the property expropriated, with interest at normal commercial rates until the date of payment. Also guaranteed is the unrestricted transfer of investments and return. Again, disputes between investor and host state are to be settled by an international tribunal if the matter is unsettled after three months. 4.56 St. Lucia's policies on foreign investment are flexible. There are certain areas where it would like to see St. Lucians predominate, but it is prepared to welcome foreign investors if the latter can "demonstrate the benefits to St. Lucia." These areas include: distribution; restaurants; real estate development; agricultural produce; garments; handicraft; furniture; and printing for the domestic market; quarrying; services, including hairdressing; laundry; internal hire; transportation; and auto and other repairs; entertainment; advertising; building construction; repair and maintenance; hotels and guest houses of less than 15 rooms or investment of less than US$37,000; and manufacturing or processing that requires an investment of less than US$37,000. The benefits to St. Lucia are employment, use of local raw materials, contribution to foreign exchange earnings, transfer of technology, and management and entrepreneurial skills. 4.57 A policy toward foreign investment has evolved in the context of the development framework to which the Government has committed itself. Generally, the Government sees its role as providing the basic infrastructure, the legal, commercial and financial framework, and the incentive of a favorable social and political environment. Investment in productive enterprises and the associated risk-taking have to come from the private sector, both local and foreign. Over time, it is hoped that nationals will become increasingly involved in manufacturing and will increase their participation in the hotel and other tourism sectors. This goal will require conscious programs to encourage entrepreneurship and training. In this regard, private enterprises benefitting from Government incentives should be encouraged to provide training that equips nationals to fill various positions. Financial institutions also have a role to play in developing entrepreneurship by providing not only capital, but advice in terms of project identification and formulation, performance, assessment, monitoring, etc. - 36 - V. THE SOCIAL AND ECONOMIC INFRASTRUCTURE Electricity 5.1 In the area of commercial energy, it has been estimated that St. Lucia relies on imported petroleum products for about 61% of all primary energy used, while firewood provides 37% and coconut shells, 2%. In 1984, the fuel bill was estimated to be about US$13 million, as compared to about US$5 million in 1977. This increase is more a reflection of prices than of volume. 5.2 About 40% of the imported fuel is used by St. Lucia Electricity Services (LUCELEC) to generate electricity. As all units are diesel-fired, LUCELEC uses about 75% of all the diesel fuel imported into the country. 5.3 LUCELEC relies on two separate networks to provide electricity: a northern systema supplied by Union power station, which was commissioned in 1971 and has an :Lnstalled capacity of 12.105 MW; and a southern system supplied by the Vieux Fort station, which was commissioned in 1965 and has an installed capacity of 4.12 MW. Total installed capacity was expected to increase by 2.8 MW at the end of February 1985. 5.4 The total power generated by both systems in 1984 was 69.7 GWh, as compared to 44.9 GWh in 1976 (Annex Table 7.3). Of the 1984 figure, 54.3 GWh were actually sold, 3.9 GWh went for LUCELEC's own use, and line losses were 11.5 GWh (16.5%). Of the amount sold, 32.5% was for domestic uses, 51.7% for commercial, 13.8% for industrial and 1.8% for street lighting. 5.5 At present, LUCELEC has about 18,000 customers. Of this number, 4,000 are commercial and industrial enterprises. As to households, there are about 22,000, based on the population estimate of 135,000, and an average of 6 persons per household. As such, over 60% of the households have electricity. However, some parts of the island are presently not served. Given the scattered nature of the population, this service may not be economically feasible at the moment, despite the Government's intention to expand its rural electrification program. 5.6 The Conimonwealth Development Corporation (CDC) became involved in St. Lucia's electricity in 1965 with the formation of LUCELEC. At present, it owns 52% of its voting shares, while the Government holds 26% and the Castries City Council, 22%. Under an agreement with LUCELEC, CDC provides technical and other advice relating to accounting, capital estimates and revenue needs. In addition, at least once a year an executive or engineer of the CDC reviews company management and makes recommendations. The CDC also recruits the senior management staff for LUCELEC and acts as a buying agent. 5.7 LUCELEC appears to be well-managed. An issue at present is the CDC's offer to withdraw from St. Lucia, as it has been doing with some of the other islands. While it has been persuaded to stay on for the moment, - 37 - LUCELEC needs to gear itself to this eventuality by intensifying its training. One constraint it faces is a shortage of personnel and linesmen. 5.8 With respect to finances, the company is doing well. Profits were estimated to be EC$3.3 million in 1984, as compared to EC$1.9 million in 1982. Nor do these figures include the debt of the Government (including other public sectors) for electricity, which stood at EC$3.674 million at the end of January 1985. This debt has been increasing at the rate of about EC$400,000 a month. LUCELEC's financial success should be enhanced by the reduction of line losses. 5.9 As indicated earlier, imported petroleum supplies 61% of the primary energy needs, of which about 40% is used to generate electricity. Thus the development of alternative sources of energy could be important. Of the possible sources, geothermal energy seems the most promising. The stage is set for the drilling of exploratory wells, but even if these prove successful, the first geothermal unit could not come on-stream before 1990. There is also some scope for the use of solar water heaters in homes and hotels. On the other hand, the potential for hydro-power is quite limited. 5.10 Another program should be conservation of energy at home and in hotels, factories and transport. In fact, St. Lucia needs to articulate a proper energy conservation program. While some measures and policies, particularly those relating to the use of energy for transport, may be medium- and long-term in nature, some short-term measures could reduce energy consumption. The Joint Report of the UNDP/World Bank Energy Sector Assessment Program has indicated that an investment of US$1.5 million in the energy conservation opportunities (ECOs) it identified in the hotel sector could lower electricity use by 25%, diesel by 25% and LPG by 40% within three years. In the commercial sector, an expenditure of US$750,000 to improve air conditioning and lighting efficiency could yield a 17% reduction in electricity consumption. The Joint Mission estimated that an investment of about US$2.5 million in conservation at the end-use level could save about 8% of present gross electricity generated in the hotel, commercial and manufacturing sectors over the next three years. 5.11 At the moment LUCELEC is well-placed to meet current electricity demand. However, as demand increases and generators get old, there will be a need for further investment. The Joint UNDP/World Bank Mission has estimated that over the next five years it will amount to US$30 million (1983 prices), excluding physical and price contingencies (US$10 million). This figure includes US$16.6 million for geothermal exploration and development. In the event that it is decided in 1986 not to proceed with the geothermal program, investment in the energy sector between 1984-86 would decline to about US$14 million (1983 prices), excluding physical and price contingencies. The Joint Mission took an optimistic view of the prospects for geothermal power generation and concluded that, by 1990, geothermal sources could satisfy about 4% to 5% of primary energy demand. Roads 5.12 St. Lucia has about 600 miles of primary and secondary roads (including feeders). Of these, about 110 miles (or about 18%) are unpaved. 5.13 In general, road maintenance is the critical issue in St. Lucia. Because of the topography of the land, the roads generally have steep - 38 - slopes. This characteristic, combined with the heavy rainfall and inadequate drainage in many parts, has affected their quality. In addition, many of the roads were not built to handle the present volume or weight of traffic. 5.14 Because of these factors, maintenance costs are high and are required at a frequency the authorities cannot meet. The Ministry of Works has estimated that it requires about EC$18 million annually for road maintenance alone, as compared to the present allocation of about EC$6 million. The problem is largely financial rather than physical or technical. 5.15 There are compelling reasons for regular road maintenance. If roads are maintained on a regular basis, they are unlikely to deteriorate to the point where huge sums are required to rehabilitate or repair them. The East Coast Road linking Hewanorra Airport and the south of the country to Castries is a case in point, where rehabilitation has been quite inadequate. Further, the road system as a whole is largely oriented toward serving the country's agricultural base, in which bananas feature prominently. Bananas are delicate and can be easily damaged in handling and transport. At the same time, buyers have exacting standards. Thus the roads have to be kept in a passable state. The roads are also the means by which farmers get inputs to their farms at minimum cost and their products to market. Thus roads can be an incentive or disincentive to production. In the context of tourism, motorable roads are clearly important. Finally, badly kept roads lead to high maintenance costs for motor vehicles and undoubtedly also affect transport costs. There is also the problem of danger. 5.16 Clearly, the road infrastructure is critical to St. Lucia's life. The Government's policy is aimed largely at repairing, maintaining and rehabilitating existing roads rather than building new ones. Plans for the near future include the construction of 11 miles of feeder roads (mainly in agricultural areas) and the rehabilitation of the West Coast Road. The latter, which stretches for about 28 miles (40 km), has not only deteriorated badly, but needs to be re-designed at certain points to make it less hazardous., The project is key for two reasons. First, the road connects Castries with villages such as Anse La Raye, Canaries and Soufriere, and is the only transport link for people living in those areas and the capital city, where many work or go to school. Because of the poor condition of the road, people often choose to remain in Castries rather than commute, thus putting pressure on the social services there and adding to congestion. The second reason is that the road passes through areas of great agricultural and tourism potential that cannot be fully exploited in the absence of a proper link. 5.17 Under the circumstances, the Government's road policy makes sense. In cases where serious repairs or rehabilitation have to be undertaken, the emphasis should be on the use of materials and designs that contribute to longer life. 5.18 As far as the transport of people is concerned, there is no public transport system as such. Instead, transportation is largely handled by private individuals using medium-sized- and mini-buses. This system is not well-organized, as there is no schedule, but people have some notion of - 39 - frequency with respect to both days and time. There is a system of hired motor cars, but it operates largely in the cities and caters more to visitors. The Government's few buses are used mostly for the schools. In addition, the Government subsidizes the transport of school children by private operators. There is no rail system. Communications 5.19 The telephone system is owned and operated by Cable and Wireless (a foreign-based private concern), which is responsible for both internal and external links. At the moment, there are 7,000 telephones (lines) in operation. Of this, 310 are Government, 1,700 commercial and 5,990 residential. While the tariffs are standard, the rental rates are slightly higher for residents. Of the 7,000 phones, more than half (3,780) are in Castries proper, with another 1,400 in its environs. Vieux Fort has 530, while Soufriere has 180. There are 142 telex subscribers. 5.20 The Castries exchange, inaugurated in early 1983, marked the introduction of the digital system into St. Lucia and is a significant improvement with respect to both internal and external calls. For example, it permits direct international dialing for Castries and environs. At present, Vieux Fort and Soufriere can receive direct calls from abroad, but cannot make them. The digital exchange can handle 20,000 lines. 5.21 The existing communication system has the capacity to meet increases in demand (at the least in the major industrial/population centers) in the next few years. The present rate of expansion has been in the region of 1,000 lines a year in recent times (it takes about four weeks to get a telephone in Castries). Moreover, the new computerized exchange system in Castries can accommodate well over double the existing number of phones. While Vieux Fort has 530 lines at the moment, its exchange has the capacity for about 1,000. 5.22 As far as expansion into rural areas is concerned, Cable and Wireless does not think the prospective volume of business justifies the capital expenditures required to service many of the areas at the moment. The company finances its capital program by borrowing at commercial terms, and its decisions are strictly economic. If the system were expanded into areas that do not yield a return sufficient to service borrowed funds, the charges on existing users would be raised, the equivalent of a subsidy. This situation does not seem justified. Seaports 5.23 St. Lucia has only two main deep water ports - one at Castries on the western coast of the island and the other at Vieux Fort on the southwestern extremity. The berthing facilities at Castries have been developed in recent years to the point where several vessels (of 700-900 feet and draught around 33-38 feet) can be accommodated at the same time. Separate berthing facilities for cruise ships are being built. There are also roll-on/roll-off container facilities at Castries. The port at Vieux Fort has a pier of about 1,150 feet, and ships can berth on both sides. The water, even at the outer end of the pier, is, however, not as deep as at Castries and cannot accommodate vessels the way Castries can. Moreover, the pier itself, which has largely been used for loading bananas, is very old - 40 - and may need replacing. There is a banana shed on it which will be removed shortly. While containers can be loaded and off-loaded at the Vieux Fort port, there are no mechanical facilities. 5.24 Turnaround is quite quick at the Castries port, and the facility is efficiently' managed. The labor problems that affect it from time to time may, however, give a different impression. At the moment, the Castries port is well-equipped to handle the present volume of traffic. With respect to its revenue position, it has been operating at a profit, although its last tariff review was some five years ago. New tariffs have been approved and should come into effect shortly. 5.25 The absence of roll-on/roll-off container facilities at Vieux Fort is a controversial issue. At present, almost all containers entering or leaving the country do so through the Castries port. Containers to and from Vieux Fort have to travel along a winding, hilly stretch of road of some 40 miles, while air freight is costly. Some view this situation as a disincentive to prospective manufacturers who may be interested in locating at Vieux Fort. It has been found that only certain types of activities are being attracted. On the other hand, the Government does not feel that the present volume of traffic warrants the kind of expenditure that a roll-on/roll-off capability entails. 5.26 There is merit to both arguments, and the decision whether a small, underdeveloped country should operate two full-fledged ports is not easy. It must be viewed not only from a development perspective, in which the port may be seen as a catalyst, but also in the context of limited human and financial resources. Inasmuch as Vieux Fort is being promoted as the major industrial center in the country, this situation must be kept under close review. 5.27 St. Lucia also has a number of smaller harbors and bays that are used by yachts and other small vessels. Airports 5.28 There are two airports within a distance of 40 miles--Vigie, which is in Castries, and Hewanorra, in the south of the island just outside Vieux Fort. The need for the second one arose from the physical constraints facing the expansion of Vigie because of its location, as well as the country's development thrust, based on tourism and the encouragement of industry in the southern part of the country. Moreover, the U.S. military had left a legacy of infrastructure, including an airfield, at Vieux Fort. 5.29 The Vigie airport at Castries has an asphalt runway of 5,700 feet, that can handle a range of small- and medium-sized planes. They provide scheduled and non-scheduled passenger and cargo services. The airport also has facilities for night landings. The runway is now being expanded by another 500 feet, but there will still be limits on the kind of aircraft it can handle, particularly in view of its location. The Government has plans to upgrade the airport to international standards. 5.30 Hewanorra at Vieux Fort is surrounded by a large expanse of flat land, and has a runway of 9,000 feet, both of which factors make for easy landing by jumbo aircraft. It is currently being used by carriers like BWIA, British Airways and Pan-Am. Hewanorra can handle a great deal more - 41 - traffic than it is doing at present. As far as the development of tourism and industry in the southern part of the island is concerned, this airport is poised to play a catalytic role. However, there is a need for greater storage and cargo handling facilities. CDB has recently approved an EC$1.7 million loan for improvement of air cargo facilities. Water and Sewerage 5.31 Sewerage was in the portfolio of the Ministry of Health until recently. It has now been passed on to the newly formed St. Lucia Water and Sewerage Authority. However, it is not yet fully functional, and the administration of the two activities has not yet merged. 5.32 The provision of water has improved significantly since the 1960s in terms of both quantity and quality. Two decades ago, about 1.4 million gallons of drinking water a day was produced, of which about 15% was considered unsafe. In fact, water-borne diseases were among the major health problems. At that time more than half the island's population was not served by public water. 5.33 At present, about 80-85% of the population has access to pipe- borne water of reasonably high quality. The Authority is generating an average of about 5 million gallons a day, a volume that just about meets current demands. In certain areas, shortages do occur during the dry season. Demand is projected to increase by about 6% annually until 1991, after which it is expected to taper off to about 3%. 5.34 As far as finances are concerned, the Authority has been operating at a deficit in recent years. In 1983 it came to EC$111,000, as compared to EC$215,000 in 1982, but is estimated to be EC$500,000 in 1984. The Government is listed on the Authority's books as owing EC$4.8 million at the end of 1984, making it a major debtor. This debt has arisen largely as a result of the Government's subsidization of rural water supplies in response to a serious health problem. To improve its finances, the Authority has applied to the Public Utilities Commission for a rate increase of an average of 50% over current rates. 5.35 With respect to sewerage, there are two systems. One is a city system that has served central Castries for many years. Given the growth of population in the area and in the adjoining districts, this system needs to be expanded. The second one, which is owned by a private company, is in the Rodney Bay area. This area is attractive and offers considerable potential for residential and tourism development. However, at present, the sewerage system is overloaded, and the untreated waste is causing a serious pollution problem in the Rodney Bay Lagoon, a condition that is aggravated by the water circulation patterns in the lagoon. Because of the nature of the soil, the use of septic tanks does not appear to be a feasible alternative. Therefore the authorities are contemplating expanding the sewerage system (including proper solid waste disposal facilities) to serve all the lands surrounding the Rodney Bay Lagoon. 5.36 Given the high priority the Government has placed on the health of the population, and the great emphasis that is being put on the development of tourism, matters that affect the environment have to be closely monitored. To prevent crises from developing, there has to be a certain amount of planning related to the projected growth of population and tourists. With respect to increasing the supply of water, attention is - 42 - focused on the Roseau Dam Project, for which the prefeasibility work has been completed and which is now at the feasibility stage. The CIDA is playing a leading role here. Medical and Health Care Services 5.37 St. Lucia's public health care services are organized around the following facilities: . 28 health centers, located in various parts of the country, which are visited by doctors once or twice a week; . 2 district hospitals (Soufriere and Dennery), each with a capacity of about 20 beds; . 1 general hospital (Victoria, located at Castries), with a capacity of 213 beds; and . 1 psychiatric hospital (Golden Hope), with a capacity of 166 beds. There is also a privately run hospital, St. Jude's, with 100 beds. Located at Vieux Fort, it is a general hospital administered by the Order of Sorrowful Sisters of Mary. The Government assists with an annual subvention. In addition to these facilities, there are 15 to 20 general practitioners who operate out of private offices. 5.38 The spread of health centers throughout the country is the result of a foremost government policy to decentralize health services and improve the primary health care available to rural communities. Health centers were located so that patients would not have to walk more than three miles. Each center has a fuLl-time nurse-midwife and provides simple curative services on a daily basis. The rural ones are visited once or twice a week by doctors. Doctors are present every day at the main population centers (e.g., Castries, Vieux Fort and Soufriere). 5.39 The health standards in St. Lucia have improved markedly since the 1960s as a result of progress in both preventive and curative medical care. Life expectancy at birth is now about 70 years, the infant mortality rate is around 20 deaths per 1,000 live births, and the mortality rate for children aged 1-4 years is about 1 per 1,000. The increase in the number of doctors, dentists and nurses has also contributed to this improvement. The average number of persons per doctor in 1984 was around 3,000. 5.40 Despite this progress, there is still scope for improvements: infant mortality could be further reduced; some health centers and hospitals are overcrowded; the Victoria Hospital at Castries needs renovation and refurbishing, if not complete rebuilding; there is a need for certain types of equipment, including several ambulances; and further specialist training for doctors, nurses, and persons who maintain equipment, is required. 5.41 Health services are estimated to have cost the Government EC$15.3 million (11.8% of current expenditure) in FY84/85, as compared to actual expenditures of EC$9.5 million (8.5% of current expenditures) in FY82/83. The projection estimates for 1985/86 are in the region of EC$17 million. In 1980, the then administration made a decision to provide public medical - 43 - services free to everyone. To recover part of the costs of health care, in 1984 the present Government reintroduced charges on the grounds that many users could afford to pay. Children under 16 or attending school and persons over 60 years were exempted. A charge of 10% on the income from health insurance premiums was also imposed on insurance companies. At the private St. Jude's Hospital, care is provided on a fee-for-service basis, although it is estimated that about 50% of the patients cannot pay and receive free treatment. Education 5.42 Over the last two decades, the country's educational infrastructure has undergone a rapid transformation, both qualitatively and quantitatively. The school facilities are as follows: Type of Institution Enrollment . 79 pre-schools, largely privately owned and catering mainly to the 1-5 age group. 5,000 *82 primary schools. 35,000 . 5 junior secondary schools (first three years of secondary education). 1,800 .6 regular secondary schools (forms 1 to 5). Of these, two (with an enrollment of 1,200) are comprehensive, i.e., in addition to the normal academic education, they offer some vocational training in fields such as industrial arts, woodwork, electrical installation, home economics, typing, etc. A new school (Hess) will be opening in September 1985. Enrollment will be 450, but it has a capacity of 1,200. (Not included in the above statistics is a private secondary school run by the Seventh Day Adventists, with an enrollment of 450-500.) 3,088 .1 'A' level (6th form) college 135 .1 teachers' training college 110 .1 technical college 190 .1 hotel trade school (operates as a department of Morne Technical College) 20 .1 technical teachers college 20 5.43 As of September 1985, all tertiary schools will be integrated into the Sir Arthur Lewis' College, which will also offer middle-management courses and first year university programs, and will include a Health Science Division to train nurses, and promote environmental studies and family life education. - 44 - 5.44 Student/teacher ratios are now within acceptable limits: 20 to 1 at the primary level, 17 to 1 at the secondary. In the latter case, there is some scope for increasing the number of students per teacher. About 40% of the primary school teachers have received training. Thus the ratio of trained teachers to students in 1984 was about 1:74, below the desired level of 1:50. About 10% to 12% of the backlog is expected to be trained each year. At the secondary level, about a third are graduates. 5.45 Education at the primary and secondary level is generally free. Students at the technical college are required to pay a small fee of EC$225 a year, as against a cost to the Ministry of Education of over EC$3,000. 5.46 Plans include upgrading the junior secondary schools to provide forms 1-5. As part of the upgrading, the curriculum will be reformed to make the courses more work-oriented. The senior secondary schools are targeted to become comprehensive schools. Finally, the Ministry of Education has taken over responsibility for the pre-schools from the Ministry of Community Development. 5.47 Four broad issues and problems need to be addressed in the education sector: J School Space. The damage done to school buildings by Hurricane Allen in 1980 has led to serious overcrowding problems in primary schools in the Castries area. To deal with this situation, a number of schools were put on a shift system, but that solution created a different kind of problem: a marked increase in absenteeism, delinquency and truancy. The overcrowding has been relieved to some extent by the addition of pre-fab units to a number of schools. In some cases, however, there is no room for physical expansion. Some school buildings simply need replacement or refurbishing. As far as space at the junior or five-form secondary schools is concerned, only about 30% of all students are able to secure entrance. The majority of students complete their education at primary level. . Teacher Training. The training of primary school teachers needs to be accelerated, a process that will require changes in the curriculum at the teachers' training college. Some attention will also have to be given to the training of secondary school teachers. Teaching is a specialized skill and can elude even graduates. Given the increasing emphasis being placed on technLcal/vocational training and the enormous cost involved in training specialized teachers, this aspect may best be tackled at the regional level. . Curriculum Reform. For the educational system to contribute to economic development, its structure and orientation must be linked to development strategies and goals. Training and education of human resources should be driven by the projected demand for partic:ular skills, or the result may be a large number of unemployable graduates who end up in jobs they are not equipped to handle. It is estimated that there are some 2,000 to 3,000 new entrants into the labor market every year, a large part of whom - 45 - come directly from the primary schools. Given the difficulty of getting into the secondary schools, it may be necessary to teach certain elementary trade skills (including aspects of agriculture) at the elementary level. The curriculum at the technical school may also have to be reformed to produce the higher grade of skills required by the hotel and manufacturing industries. Theoretical education ought to be linked to a program of on-the-job training in order to produce a more usable graduate. Illiteracy. Despite obvious progress, it was estimated that 30,000 people (or about 25% of the population) were functionally illiterate in 1980. Of these, 18,500 (61%) were in the age group 25-64, while the others were in the groups 15-24 and over 65. To deal with the problem, the Government has set up a National Literacy Council. The problem of illiteracy in St. Lucia is linked to the widespread use of a creole, particularly in the rural districts. Whatever the origin or cause of the problem, the inability to read or write English is a serious hardship that affects the potential productivity of the work force and has to be dealt with as a matter of urgency. - 46 - VI. PUBLIC SECTOR INVESTMENT PROGRAM 6.1 The Government's economic strategy focuses on export promotion and employment generation through the development of agriculture, manufacturing and tourism. Generally, the composition of the public sector investment program (PSIP) has been consistent with this strategy of increasing emphasis on diversification of the productive base of the economy and the strengthening and restoration of the supporting infrastructure. Implementation of the PSIP 6.2 The level of disbursements in 1983/84, although below that forecast, was satisfactory, particularly in view of the difficult financial situation the public sector faced. Actual expenditures amounted to EC$38.5 million, or 10% of GDP. An increase of 23% over the outlays in 1982/83 of EC$31.3 million, these expenditures were mainly accounted for by the new Industrial Estate and Mortgage Finance Programs and by the large outlays on the Roseau Agricultural Diversification and Resettlement Scheme, the Fisheries Development Project and the Productive Infrastructure Rehabilitation Program. 6.3 After long delays, construction of the CIDA-financed Castries Fisheries Complex finally started. This fish storage, processing and distribution facility was completed in 1984/85, along with a Fisheries Development Plan. The project will improve the availability of fish protein in St. Lucia, stabilize the income of fishermen and improve St. Lucia's balance of payments position through import substitution. 6.4 In previous years, the subdivision of the 1,60U-acre Roseau Estate into 180 small holderships was slower than expected, primarily because of the project's complexity. As of 1983, the land tenure problems were solved, and farmers' response and yields improved. By June 1985, 77 farmers will have been settled and a total of 470 acres of arable land developed. The funds are now exhausted, and a second phase is currently being negotiated, with financing from the CDC and the EC. 6.5 Work on the fifth CDB-financed Industrial Estates Project has proceeded ahead of schedule. Construction of 38,480 square feet of factory space at the Bisee, Vieux Fort and Dennery Industrial Estates was completed in early 1984. A, sixth loan amounting to EC$15.9 million was recently approved by the CDB for an additional 150,000 square feet; construction started in January 1985 and should be completed by 1987. 6.6 Implementation of the EC$25.8 million Productive Infrastructure Rehabilitation Program, which started in 1982/83 with assistance provided by USAID, has also proceeded on target and is very close to budget. When completed in late 1984/85, it will have rehabilitated 109 miles of main, secondary and feeder roads throughout the country, along with 1 bridge. The project also aims at strengthening the Government's road maintenance/construction capabilities through the provision of mobile maintenance units and technical assistance. - 47 - 6.7 Other outlays during the period included a Banana Rehabilitation project, needed because of the wind storms of late 1983 and funded with assistance from the CIDA; construction of a new Boys School in Castries, with funding from the UK; and reconstruction of hurricane-damaged schools, with private financing. This last project is scheduled to be completed in early 1985 at an estimated cost of EC$23.3 million. 6.8 The level of expenditures in 1983/84 was about 77% of that forecast. A large proportion of the shortfall was accounted for by delays encountered in the implementation of the USAID-financed Agricultural Structural Adjustment Project. This effort, which will cost EC$33.2 million, is designed to address major constraints of the St. Lucian economy by supporting agricultural diversification. It has three components: (1) land registration and titling; (2) market development; and (3) banana replanting. The project got underway in 1983/84, but expenditures fell far short of the programmed level of EC$6 million because of the delays following from the need to increase project financing; the shortfall in financing became evident when tenders were received for the supply of the required technical assistance. However, by the end of 1984, a draft agriculture marketing strategy had been completed; demarcation of land parcels had begun; and the computerized accounting system for the Banana Growers' Association (BGA) was developed. The project is approximately one year behind schedule and should now be completed in 1987/88. 6.9 Procedural problems relating to the conditions for disbursement have delayed the completion of the CDB-financed Second Power Project until 1984/85. A modification of the project's scope and a decline in the external value of the pound sterling have also resulted in significant cost reductions. The 2.7MW diesel generating unit is now being delivered, and the project is nearing completion. The Medium-Term Program, FY84/85-FY87/88 6.10 Public sector investment for FY84/85-FY87/88 is projected to reach approximately EC$50 million a year. A large part of the program aims at completing projects in progress. With regard to proposed projects, expenditures have only been estimated for those at sufficiently advanced stages of preparation and for which interested donors/lenders have been identified. The size and composition of the PSIP for FY84/85-FY87/88 should therefore be regarded as indicative only (Table 10). - 48 - Table 101 ST. LUCIA - PSIP SSMRY W MAL DIS1ESEIANTS, FY&U/r87/U (EC ml II msen Z) F1840ISS FtO356 Fl86/7 FYS7I8 F'84/0547/88 Totel Exterml Local Total Extamal Local Totel Externl Local Totel Ext ral Local Totel Exterml Local AWrowd Projocts 40.5 29.7 IO 40.4 35.9 4.5 34.1 2.7 4.4 29 25.2 4. 144.6 120.5 24.1 Proposed Projects O.t - 0.1 .s 6.2 2.3 20.2 17.4 Z2 26.3 25.0 3.3 55.1 46.6 8a5 Totel Capital Expndltures (ECa Ill Ion) 40 29.7 10.9 48.9 42.1 6.8 54.3 47.1 7.2 55.9 4.2 7.7 199.7 167.1 32.6 Total CapItal Expemdlbarea CZ) 100 100 100 100 100 Extsral 73 86 87 86 U4 Local 27 14 13 14 16 Totel Capital Expendlbarn () 100 tO 100 100 100 ApWroed 100 63 63 53 72 Propeod - 17 37 47 2B Total External FIn ncIng () 100 100 100 100 100 AWred tC0 85 63 37 72 Prop_ d 15 37 48 2B Swce, Mislsin eatlnats. The following conclusions emerge from an analysis of the PSIP: (1) The projects in progress account for approximately 70% of the total projected outlays. This percentage is much higher than in previous PSIPs. One reason is that a considerable number of projects were moved from proposed to ongoing during the first year of this program, 1984/85. They include the Small Farmers Agricultural Development, Industrial Estates IV, Pt. Seraphine Tourist Centre, Student Loans IV, and Water Supplies II, all with financing provided by the CDB; a Drainage and Land Conservation Project for the Cul de Sac, Roseau and Dennery Regions, financed by the EC; Integrated Water Development, with funds from the UK; and a Second Basic Needs Social Infrastructure Project, sponsored by USAID. Second, large outlays are programmed throughout the program period for projects that are already in progress, such as the Agriculture Structural Adjustment Project. (2) As a reflection of the Government's strategic economic objectives, some 51% of the program is allocated to investments in the agriculture, industry and tourism sectors; 16% to economic - 49 - infrastructure; while the remaining 33% is allocated to investments in other sectors, including housing, health, education and administration. (3) This year's program does not substantially differ in content from last year's; the priorities remain basically the same. There are, however, fewer projects for which financing is sought: the list has been reduced by over one-third over last year. This shift in part reflects the Government's success in securing financing for its PSIP, but also its efforts to concentrate on fewer projects that it considers of primary importance to achieve economic growth and eliminate constraints. (4) The projected level of investment appears manageable. It is not significantly higher than what is currently in place, and the institutional capability to implement it is sound--the force account method of construction has been applied very successfully; several projects are expected to be executed by private contractors; and a large technical cooperation program is in progress. (5) The projected level of investment should be sufficient to contribute to a growth rate of 4-5% a year, on average. (6) Fixed investments are projected to account for approximately 92% of the PSIP, or EC$184.6 million a year. The remainder is accounted for by other investments, which consist of asset acquisitions and financial investments such as development loans, student loans and mortgage financing to the private sector, all of which are channelled through the SLDB. The financial investments are estimated to average EC$3.5 million a year, which seem adequate to finance local private sector requirements (Table 11). - 50 - Table 11: ST. LUCIA - COMPOSITION OF THE PSIP, FY84/85-87/88 (EC$ mi lion; S) 1984/85 1985/86 1986/87 1987/88 1984/85-87/88 Amount S Amount S Amount S Amount S Amount S Fixed Investments 36.0 89 45.4 93 49.7 91 53.5 96 184.6 92 (Approved) (35.9 (36.9) (29.5) (27.2) (129.5) (Proposed) (0.1) (8.5) (20.2) (26.3) (55.1) Other Investments 4.6 11 3.5 7 4.6 9 2.4 4 15.1 8 Approved (4.6) (3.5) (4.6) (2.4) (15.1) (Proposed) -) C--) C--) C--) C--) Total 40.6 100 48.9 100 54.3 100 55.9 100 199.7 100 Approved 40.5 100 40.4 83 34.1 63 29.6 53 144.6 72 Proposed 0.1 -- 8.5 17 20.2 37 26.3 47 55.1 28 Sources (7) About 84% of the program is forecast to be financed from external sources. Over the past three years, the contribution from local sources to the PSIP was around 30%, most of it accounted for by wholly locally financed projects. More moderate projections have been made for this period in view of the Government's critical financial position. (8) Reliance on loan financing, including that at non-concessionary terms, will increase as the period progresses: in 1984/85, grants are estimated to represent 86% of total inflows whereas by 1987/88 that proportion is estimated to decrease to 59%. (9) Donor/lenders have been identified that have indicated an interest in approximately 65% of all proposed projects. 6.11 The priority list of new projects in agriculture includes construction of additional feeder roads, agricultural resettlement and diversification in Roseau and Dennery, and forestry management and conservation. Public sector investments in industry concentrate on the development of industrial sites and the establishment of a cement blending facility which would use local pumice for the manufacture of pozzolanic cement. In tourism, the Government is seeking assistance for the development of attractions. Investments in economic infrastructure emphasize development of the country's indigenous energy sources, improvement of the road infrastructure and the Vigie Airport. Other projects for which assistance is sought during this period include upgrading the Castries Hospital, provision of low-cost housing and construction of office space. 6.12 In terms of the productive sectors, agriculture clearly remains the most important. Despite its preeminence in the economy as a source of employment and income and as a means of alleviating the balance of payments - 51 - constraints on overall growth through increased exports and a reduction of food imports, its full potential has not yet been realized. The Government seeks to improve performance through the implementation of selected public sector investment projects. Here the primary objectives are strengthening and diversifying the sector, rather than expanding it. This approach, essentially correct, should focus on improving the profitability and international competitiveness of products and on broadening the agricultural base, thereby reducing the dependence on one crop--bananas--as a major source of export earnings. The ongoing Structural Adjustment Project, the Roseau Resettlement and Diversification Scheme and the Tree Crop Diversification Projects will all contribute to that objective. Both the EC and CDC have indicated an interest in these projects. The Government plans to continue its strategy of dividing large landholdings into small productive units. St. Lucia is also making commendable efforts to protect its lands and forests from depletion and erosion. With the assistance of the CIDA, a Forest Management Plan was recently completed, which should be implemented starting FY85/86. 6.13 The Government's investment program in industry and tourism focuses on the provision of the infrastructure necessary to attract private investments: development of industrial estates and sites, construction of tourist attractions and establishment of basic facilities. The Government sees the potential of these two sectors as best realized through increased private sector involvement, with the Government providing various incentives, including physical facilities. In light of this policy, the Government may wish to reconsider its participation in the proposed Pozzolana cement plant venture. In terms of upcoming activities, since the World Bank's last report of October 1983, several projects have been approved, including the construction of tourist facilities at the Western side of Castries Harbor, the construction of 10 factory shells at 3 industrial estates, and the construction of a cargo warehouse and access road at Hewanorra Airport. Except for the Industrial Estate project, which commenced in 1984/85, all these projects are scheduled to come on-stream in 1985/86. 6.14 The Government is still seeking financing for the establishment of the Hewanorra Free Zone and the Cul de Sac Industrial Park. The Hewanorra project, which is part of a strategy to develop southern St. Lucia, merits support, especially in view of the substantial infrastructure already in place and the proximity of the international airport and seaport. With regard to the Cul de Sac development, several issues emerge, including a possible excess supply of industrial space, a high concentration of economic activity in the area and an unfavorable location vis-a-vis the air and seaports. A full feasibility study will be required before the proposal is pursued. 6.15 As noted earlier, the Government is attaching increasing importance to the restoration and upgrading of supporting infrastructure. The conditions for disbursements for the UK- and CDB-financed water supply projects have now been met, and they should come on-stream in 1985/86. A prefeasibility and hydrological study for a multi-purpose dam in the Roseau Valley to address water shortages in the northern part of the island was completed in 1983/84 with assistance provided by the CIDA; that agency is now financing a full feasibility study and detailed designs. If it proves - 52 - feasible, the project, tentatively estimated at EC$86 million, will not come on-stream before 1988/89, but its impact will still have to be taken into consideration at an early stage. 6.16 St. Lucia's strategy in the energy sector is to exploit its geothermal resources. It is expected that this project, for which financing has been identified, will come on-stream in January 1986. 6.17 The Government has maintained its interest in upgrading the Vigie Airport to international standards. While consideration should certainly be given to improvements, any substantial expenditures on further extension of the runway should be evaluated very carefully. 6.18 Donors have indicated an interest in financing the proposed road construction and rehabilitation projects. Hopefully the Government will continue its efforts to develop a local maintenance capability to complement the investments it is making in upgrading the primary, secondary and feeder road network. Financing 6.19 Of the proposed PSIP, amounting to EC$199.7 million for the 1984/85-1987/88 period, approximately 84% of the total program outlay, or EC$167.1 million, is projected to be financed from external sources. Table 12s ST. LUCIA - PUBLIC SECTOR CAPITAL EXPENDITURES AND FINANCING. 1981/82-1987/88 (ECS millions) 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 Actual Actual Actual EstImated Projected Projected Projected Uae_ 34.7 34.4 40.8 43.3 52.4 57.0 58.7 Capital Expenditures 33.6 31.3 38.5 40.7 49.0 54.3 55.9 Amortization 1.1 3.1 2.3 2.6 3.4 2.7 2.8 Sources 34.7 34.4 40.8 43.3 52.4 57.0 58.7 External Inflows (Gross) 19.3 20.6 26.1 29.7 42.1 47.1 48.2 Grants (16.4) (16.6) (21.0) (25.5) (24.6) (28.1) (28.6) Loans (2.9) (4.0) (5.1) (4.2) (17.5) (19.0) (19.6) Public Sector Savings 8.3 1.1 12.1 2.6 10.3 9.9 10.5 Other 7.1 12.7 2.6 11.0 Sources Mission estimates. - 53 - 6.20 Project-related disbursements from external funds already committed are estimated at EC$120.5 million, leaving EC$46.6 million to be mobilized. As noted earlier, disbursements have only been projected for those proposed projects for which a potential donor/lender has been identified and which are at a sufficiently advanced stage of preparation. The Government is, however, seeking financing for all projects included in the proposed list. Approximately 36% of the external inflows is expected to be loan financing, of which approximately 20% is forecast to be at nonconcessionary terms. 6.21 Over the past three years, the Government has financed a substantial part of the PSIP from local sources--an annual average of 30%. Most of these funds were applied against wholly locally financed projects, with emphasis on the administrative and social sectors. As noted earlier, in view of the difficult financial position of the public sector, a substantial deceleration in expenditures on wholly locally financed projects and asset aquisitions is assumed as of 1985/86. Still, some 16% of the PSIP for 1984/85-1987/88 will need to be financed from domestic sources. Thus, it is imperative that there be adequate public savings for full implementation of the program, as an increase in the already heavy burden on the domestic banking system should be avoided. Selected Issues in PSIP: Project Selection 6.22 Project selection and preparation have improved considerably over the past three years. Since the organization of the Ministry of Finance in 1982, the Central Planning Unit has become well-staffed, and its economic section has been substantially strengthened. The CPU's function is not limited to mobilizing project financing; it also plays an important role in individual sector and inter-sectoral programming. In 1983 and 1984, comprehensive sector studies were undertaken for a national development plan, but the exercise has been discontinued. 6.23 Areas for possible improvement are (1) completion of the national plan, since this is the ideal framework for project selection; (2) the integration of the PSIP and the annual budget--implications of the capital budget for the current budget are not being taken into consideration sufficiently; and (3) improvement of the implementing capabilities of the ministries and institutions. Project Implementation and Monitoring 6.24 St. Lucia's institutional implementation capability is satisfactory. With regard to project and program monitoring, a capital warrant system was established in 1982, whereby the release of funds by the Ministry of Finance for individual projects is conditional upon the presentation of project accounts by the executing ministries. This system has strengthened the administrative capabilities of line agencies and is a sound basis for establishing a public monitoring system. It is restricted, however, to Central Government operations and to monitoring the financial aspect of project execution. With the assistance of IARM, the Government is establishing a full-scale system for project monitoring that will address these limitations. Linked with the capital warrant system, it will - 54 - also improve the reconciliation of project expenditure with the physical progress of the project. This will promote greater coordination between the Ministry's Budget Division, which has responsibility for financial control and the Central Planning Unit, which is responsible for physical monitoring. Technical Cooperation Program 6.25 Based on the size and nature of operations, St. Lucia has received a substantial amount of technical assistance in recent years, both in support of the PSIP and for other purposes, including institution- building, training and operational assistance. Project-Related Technical Assistance 6.26 Since last year's memorandum, several developments have taken place. In agriculture, a CIDA-financed Fisheries Development Plan, Forestry Management Plan and EC-financed Drainage and Soil Conservation Study for the Dennery, Roseau and Cul de Sac Valley were completed in 1984/85. CIDA has indicated an interest in financing the implementation of the Forestry Management Plan. Execution of the Drainage and Soil Conservation Project commenced in January 1985, with EC financing. An agricultural census that was prepared with assistance provided by the FAO is scheduled to be implemented this year, with assistance by USAID and the IICA. A global feasibility study for the construction of feeder roads was completed by the CDB in 1984/85; the study is being revised, and tender documents will be prepared in 1985. 6.27 With regard to mining and quarrying, a mineral resource assessment undertaken by the CDB and CFTC studied the availability of pumic resources for the manufacture of Pozzolana cement. 6.28 In support of the proposed construction of a west coast road, the EC financed a pre-feasibility study and preliminary designs in 1983/84; the CDB is assisting with the full feasibility and detailed designs, which should be completed in 1985/86. 6.29 In the field of water supply, a hydrological study for the construction of a multi-purpose dam in the Roseau Valley was completed in 1983/84 with the assistance of the CIDA; in early 1985/86 the full feasibility study and detailed designs, estimated at EC$6 million, are expected to come on-stream. 6.30 The (,overnment is seeking assistance in preparing the following projects, which are included in the proposed investment program but for which potential donors/lenders have not yet been identified: construction of a national abattoir, the Cul de Sac industrial park, and the Hewanorra free zone, and the extension of the Vigie Airport. 6.31 Other project-related technical assistance for which potential sources of assistance have not yet been identified include the preparation of a soil conservation project for southern St. Lucia and the computerization of Government Funding Scheme operations. - 55 - Other Technical Assistance 6.32 The following programs appear to be progressing satisfactorily: long-term technical assistance to strengthen various ministries and institutions, including positions such as Farm Management Advisor (Ministry of Agriculture and provided by CFTC), Crafts Industry Advisor (Ministry of Community Development, CFTC), Port Authority Advisor (CDB, UNDP), Engineering Management Advisor (LUCELEC, CFTC), and Export Promotion Advisor (Ministry of Trade, Industry and Tourism, CFTC). Several long-term assignments can be classified as OPAS (operational assistance), where the expert actually takes up a line job (or Government position). Presently, these include Registrar of Cooperative Societies (Ministry of Agriculture, provided by CFTC), Senior Assistant Engineer (Ministry of Works, BDD), Legal Draftsman (Ministry of Legal Affairs, CFTC), and Economic Statistician (Ministry of Finance, CFTC). Several formal vocational and in-service training programs are also ongoing, with assistance from donors, including BDD, CFTC, UNDP and CIDA. 6.33 The authorities are requesting additional assistance for: further multi-sectoral training; training in industrial appraisal for the SLDB; and further strengthening of the Health Services, the Water and Sewerage Authority, and the Ministries of Works and Trade. With the exception of the proposed reactivation of the Price Commission, potential donors have been identified for all these requests. 6.34 For this nonproject-related technical assistance to have a meaningful long-term impact on the economy, it is essential that counterpart staff be assigned to the experts at all times, so that the assistance provided can be absorbed and a strong cadre of managerial and administrative personnel be formed. - 56 - ANNEX A Page 1 of 7 ST. LUCIA GOVERNMENT'S INVESTMENT PROGRAM AND TECHNICAL COOPERATION REQUIREMENTS - 57 - ANNEX A ST. LUCIA - MAJOR APPROVED IWVESTAERT PROJECTS Page 2 of 7 [El 1O000 Eoternal Flnaocin Taerms L Coeditions Duraton Total ---------------------------------- ------I------------------ -- s41 Fced I-tanenat Co,t Amount I Source Interest Ao rt. Grace 12) 1 Status Rate Perod Perid Start Completon [p-rcent) years) [eyarsi ECONOMIC SERvICES qr-i.lt,re, ForesTry, Fisheries o.coulture tie,nsiac Project 11 972 972 100 USAIT - - - 1983/84 19[1/7 On time. anaea Input Supply Scheme 2[G 2522 A9 CDS I 15 5 1985PA 19RIsT7 Ant t -nctiated. Barana Au -ension & Tr-inip B30/t1 439 A39 [US GDO - - - 19[3/R 1984/85 Complted Ganana Sniension - Tra-iq HAST A0 i AO [oo BTOl - - 9841[M I 19[ASTS En time Etaissed Card System SLItA 94 94 100 tDD - - - 19Rt/SO [9PA/5 On time. Aqr-iullure Structure Ad1ustment 03210 2550 77 USAID - - - 1913/A4 19[7P/A n ti. Small Farmers Aqrncultare Den [lt72 6552 7T IFAD/CO -;4 -;IS -;IS 19PAST 1989/90 nt pet yd italet.d TreI Crap Occ-rs ficat-n I 6Tu T70 [SI GOT - - - 1979tTA [1RAT/A AehiAd schedole. Tree Crop D-cers-t.a . 11 1108 0I1O 100 ADD - - - PA3TR4 1[R7A/GA On time. Rsottlemeet G Dversilfnaior I EbCT3 SA3 75 EC/COC/6eest -;[ -;10 -TS [9POABQ 19M/G85 ReiS sohedale. Reauseuj.r Lne.. teo Sec. 2472 2457 P9 EC - - - ;979/it 19P4R/5 ehind sctedle. Land & Water Use Omit 362 3T2 [U EC - - [97910 19A/G85 O enid schedale. Fisheries Seelopmert 100S3 92P 92 CIDA 1- 77T/7 19PS/87 GerSd chTedule. Wied-poor-d Fish Chtcl Room 121 121 100 CDBt TEUA - - - 19A2 199[A/S Behind uched,le. Draiea9e G Land Coesereatio I R075 TA0U 93 EC - - - PAR/A 197R/88 in te. RunuP act ering Indistral EAstatmo v 285M 256B 90 CDA 4 Is 5 1913/P1T 1981/5 On time Indoustral Estates RI 17224 1581 92 CDB 4 15 5 19[PlAT 198PA8T Nat vet -ntated. Tourism Pte Seraphe Toirsa Ceere 10573 7573 72 CDS A [0 1 [PPS5 19P7/BA Sn ti. Co-oncatioom Product/ce Infratructure RAa. 25852 23355 90 USAID - - - 1982153 19[4/A5 On ti... fe.anorra Air Carqo Faclit/es lAI9 1377 82 CDO A is 2 198[1S5 198P 7 Mlot yet nctatoa NWacqatiotal Epuipmet 352 352 100 ADD - - - 19PS2/A 19AM55 A thind octhd8e. Po- Sapplp Secood Paer Project 9113 72T0 tt CD8 I[ST;A [0/;0 I[O.O l A9S1/5 19PRO5e ieliU ahj,uleo Wtr SAUply ntegtrated Natw DOeseleipm t I 1011 A03 MO SDD - - - 19213 19MA5/At Ahi.d scredulr. tnteprate later enmlepmiro t t 11 14[1 1R9 100 SDD - - - 19PSAS 19[I/A' Not Wm -itiatec. mtu SuppetPs 11 nT25 5151 Ae CDI t Is 5 1981/82 1984P S Aehind sched,[e. Waler upplies Ill 16S79 1T[lS a7 CDI T75;4 40R 5 715 19T 5,86 19PA89 Nlot yet -itited. lter Systems Taprmemnts 1002 1002 1DO USAIODRiMI[ - - - 195M/At 19[AS4A Mat yet nitatetd WSCIAL SERMICES Edcoation Schools EAte.seIn 198 199 Io0 US[SAID/AO - - - [MA/AS PA85T1/G Mt peT intiated. St. Alpsim BSops School 1727 1727 100 ADD 1 - [952/IT 19PR/A S t/-. School Rehabilitatcon 23256 22500 97 Pr-mtm - - - 1910A11 I9O/IS On tme. Health S Aeruq Feeding of Vulnrerable Areps 5T77 40M3 72 dFP - - - 197tT7[ 19[MA/S Completed. Pret-ecool and School FPedein A707 29MA 63 IFP - - 19ES/b 19MA91P Rot net i-tiatee Itprome,oet of Nelth Centrem 644 blA 100 USAIDISHiN - - - 19[5/AS 19P5/t Not t iy ntatod. Public health care deelopmet 109t 1591 IDo Priate 19-F dP 19aW[8US Completed. Ruum.nq A Commuitp SErvicei eultipurpoes Centrm AD5 5 1Ao005 USARID[BMA 19-5A 19M/s PAT Rot yet AniTati. Self-help Coucnitp Pruj.cts Il1 Itt 100 Frnce - - - 1984R 85 1985/AS Dn time GENERAL PU17IC SEPO CES Adminisration A Plmnninq Purchase of Police Radios 294 29 IDO SODD - - - I9O5/U 19P5/86 Behind sihedole. La ITo Police Traininq ntre 2S 2M 100 ODD - - - IR92/13 IM8/85 Senid shdule. Financual Innestmts uortgavg Financm it WiM99 2;00 ; coo 121M iTi;l 5t;5 [MA3O/G i9P6SA On Aice. ALDB Strengtheninq 59 5400 90 CDO St .-t 5 1510 5;9 92M/S3 PI9/A89 Shiad sichdule. SLOB Strengthetinq 2234 2204 i00 EAt 2;7 25;12 ,clI 198P BSs 19RSS9 Not pet -nitiated. Studeet Loans 1t 1447 1197 93 cuO 1977 tNI4/55 On time. StudnAt Le Ill o1t 100 t l CDI A IS 5 19E3/ 18t IP5Si On tim" Sludtot LoansD f lS IPS IDD COi A 10 S ;9851A6 197/13 AStS nt initated. [1t Projects forBmllp approted by dlonr alSncy andtor bp cbl,cmt 12[ Estmatmd initial disburseoent datm actual project omplemmtation 13)Est-[A ted At-inal 6l -hursemnt daSe 14) Plead/not yet -nitaGed/en Aim/behned motedulm/suspended/iscnttcnumd/cumpletd Doiroesi Enoerement of St. Lucial doner ageniteel IAR. - 58 - ANNEX A ST. LLCIA - RAJDR PRDPOSED INVESTYENI PROJECTS Page 3 of 7 IEC $6000) External Financing Terms & Conditions Duration Total ------------- (3) Fixed Investeents Cost Amount I Source Interest Asort. Grace t1) (2) Status Rate Period Period Start Completion (percentl (yearsl iyears) CAPITAL PROJECTS ECDNONIC SERVICES Agriculture, FDrestry, Fisheries Castries larket Improvesent . 100 CIDA - - - Identification. Wational Abbatoir 100 CIDA - - - .Fre-easibility. Feeder Roads IV 11600 10384 go COB 4 IS 5 195/sb6 198BiB9 Feasibilityjappraisal. Feeder Roads V 14067 12379 RB CDB 4 15 5 1988i9 1989/90 Identification. Agric. Resettlement 11 (Roseau) 10000 10000 100 EC,CDC -; 1-5 -;5 1985/B 6 19y88'9 Ready for impleentatian. Agric. Resettleeset Zll IDennery) 2200 2200 100 EC - - - Identification. Drainage & Land Conservation 11 3500 3500 100 EC - - - Pre-feasibility. Forestry Management & Conservation 10854 1OB54 100 CIDA - - - 19B5/86 1990/91 Appraisal. Feeder RDads 6250 6250 100 EC - - - Identification. Manufacturing Newanorra Industrial Free Zone 9625 BBIO 92 Unknown Prefeasibility/fvas2bility. Cul de Sac Industrial Park 21600 19000 88 Unknown Identification. Pozzalana Cement Plant 6075 3341 55 IFC;Private Feasibility:appraisal. Castries Craft Centre 449 449 100 CIDA - - - Pre-feasibility. Touriss Pigeon Island Developeent 2200 1980 90 CDB 4 15 5 1986/87 1909/9o Appraisal. Comunications Vigie Airport Improvesents Z8900 16065 es CIDA;Unknown -; -; -; Identification. West Coast Road Construction 27000 24300 90 CDB;OPEC;BDD -;4;.. -;15;.. -;5.. 1985/0b 1989190 Feasibilityidetailed desian, Suburban Road Rehabilitation 3142 2662 91 BDO - - - 1986/87 19Y88/9 Identification. Castries Drainage 1 2043 2043 100 BDD - - - 1985/86 198b;B7 Prefeasibility. Power Supply Geothermal Energy Development 27000 27000 100 UNRFNRE;UShAD -; -; -; 1985/86 19B9/90 Identification. Water Supply Roseau Daa Construction 66B30 73810 85 CIDA;Unknown -; -i -; 198/69 1990/91 Feasibilitvidetailed design. Social Services Health Hew Hospital - Castries 1)000 10000 100 EC - - - Ident;fication. Housing & Coumaity Services RatiDonal Cultural Complex .1320 3670 85 Unknown identification. Low Cost Housing 1250 3613 85 Unknown A. ppraisal. 6eneral Public Services Administration & Planning 6overnment Office Bldg. - Conway 10000 10000 100 Export Credit;Priv 1986/87 19BB/89 Detailed designs. HIS Office Bldg. - Conway fiOOO 15000 100 Export Credit;Priv 1. 96B7 1908/89 Detailed designs. 11) Estisated initial disbursesent date; actual project isplementation. 12) Estimated terminal disbursement date. 13) ldentification/pre-feasibility study/feasibility study/appraisal/detailed designs/ bidding documents. Sources: Government of St. Lucia; IhRM. 593 - ST. LUCIA ASSESJ A PuR. 4 ci LIST OF TECHNICAL COOPERATION PROGRAMMES IN PROGRESS 11PTY 84/85 - FY 87/188 XEC VSSS0) TITLEISUBJECT TOTAL COST EXTERNAL FINANXIta DURATION CLASSIFICATION AMOUNT SOURtCE EXECUTING AGENCY STARTT21 COM[PLETZON131 DURATION STATUS4 PROJHECTREA D ECUNOMIC StEVOCUS tiutaeeten Assitanc*to RGA 681 681 RaD 85 Nov 1942 Ort 1984 2 year Copleted Usher Agricultural 0ev I Nature1 Reeuurc.. 1,946 1,395 OAS sir. Flat. JaR. 1984 D-n 1985 2 Fears ..Uher Fans Ranaeest Adyie- - 400 400 CUTE Mit. Agrlu. Rep 1982 Sap 1989 3 Year Qg else Other noa1 Farmer Agiulualle. Projert 161 162 CoB/TOP ale. Agrir. 1984 1965 ftiaStklg tervirms Rmhied Snhedale rjc-eae to 1989. rrrrtu OFteAriotrl ess 06 156 PAO Mi.. Agrir. Sag 19R3 Ja,1984 Short term ComletedFrjc-saA Cr-ct Htrie Cnrtrc 23 5 235 FAOl trio Agrin. 1984 tie 1981 6 -o eat-soo Rehs-S thedule Pruj-ct-retd lWo 84 - Mier Rh) atA I Wst- use Unit (lJUtri 600 600 EC LVIIU J.. 1983 Jul 1985 8l osa tm P-r-1et-Feloted O-tney ho-y 480 480 00 I.WUU Fb 1984 Sag 1984 6 enP-3ieedFn1c-rrlatd Fnretry Katogeett Assistarce 2,212 1.680 CsDS Nsis ASgrio F1190/Rl San 1985 FIes cipleted Ag Ti- Frtject..ta..ted Ft 94/85 Soi-ec I A cut-l Aspenta uf Fishing 144 044 Fm Mi.. Agric tsa 19R4 Ja- 1944 4 -n Cumpletd rrugrt-re1lstd Fisheries Oevelu.p,t rIee 21i3 203 CIDA Min. Agrin. Ft 1093/84 Fr 1984/95 Shnrt term C-,aleted ttime Pnet-eas Ted-r ountvtt tf- Feeder R-sA Cu1r 62 135 CSTRFO K Co..eurh 1984 er1984 uh-r term Copleted Prnject-1eltrd F-der -od Feacahility Otudy 54 54 CUR His. earks Jao 1984 Sec 0984 7 meCompetd Pojn-eae noS-s Fishery Proler . ... 08 Mi.. Agric. 1983 so1985 Short. her A Thee Fr-3at-riated Hori.e Hschaeic Training l'rjmt . . CIOA Kis. Agrin. Dec 1982 Sac- 1094 2yraur C-mpleted Other Farmiag uyetem late..aic Trsliug ...Mrav ir. Agric. apr 2984 Aug 1985 1 - psa O sue otltar OSnou.. Frit Agalary CoffineRIr RO.. 80 VONRis eid 19a3 aid 1985 2 yeeee- ce Or roe Oltst- rrtsr-Cruppasg 151 .. .. ~~~~~~~~~~~~~toCr0 8188.AN Dec 1981 Dec 1984 3yrears C.91.ted Other Fit_iasia Adio ll. . S 811495 Fb 0984 PeA 1986 2 Yeses aev,, A vise uth-r Plene rthenlugist(g 81 S W8588B8 1984 0986 2Yres.. Cg time th-r anttehoiretn u-t f eerhl .. a-0 5tiAM len 0984 Say 0986 03 -o Qg te. Other Ccopert-c nun leto- Registr- 228 190 CF10 Mi.. uric- aug 1983 16ag 0985 2yer P. other Laret ut rrojecn. 138 78 CAR J.l. Agrir. 1992 Seo 1985 P-Fr3-c-related Cavihbeer Agrinaitare1 D-t I Trainirigls) 159 159 OROr Rie. Atric. 1962 1985 Sthee tck Coetro1 66.8 64.8 GAS Mi.. Mete. 84/85 85/86 3 yeartA TI.. Estee... j_ rplsre-Releted tmrlrmeestirt ufhgeinalsure steo. 648 469 IICA,CSAID Sir. Aseio its 81 8cr 83 I Y-,r N.t Fri leitlased Fcestse Frees Colture heady so 80 EC 1.W01 1984 MOr 8A Shttarr-F CompletedPrlnRFad L-ed S-rvy- BD 0 li.n. AtiOr 1985/88 84/87 i y-a Nor Gee tolsiered O,the Ag-. Praduce ie-ksaID, FK.Ell C,, FTC Mtierteeen Aserd ...Shor-Ter sls-p;NtOe Folu-ee namek -lpert I8O 146 cmn Mi.. ltd. Fe 1982 Sep 1984 2"rear a I n Cumplered theet PDAFI' U... OAIP iloC Ore 1981 Sap 0987 6V. MtaeG tim r3n-eae Toat. Dsavloieert rrulsot 1, D99 721 GAS Fourier Ra-d 1081 en1980 .t A CiM Ge- "intl sooag-ee Cnur..s 38 34 ClOT ti.. EctaS. Ort 1981 Ju 1984 1 osar CompLeted Othisi Motel Kunesm-t C-sa 13 13 lISA Taur ie Roerd Sep, 1984 Aug 1985 1year Ag tiLM uther road sad Ren-rsg Coarse 31 31 cmr .Sep 1983 1985 2Y. flr Oth-r Cteyr Induetry Adviso 221 221 Crn Moe- Cuemeity C.,. Jul 1991 Jso 1985 2P yerssote.Ute -eenlg rinin CHIt 61 61 OFIC Mi.. IsleS. Sal 1882 1988 4Y-sr.0 tiemute eetsur..luy Trainin Ce 47 47 Cr10 Min . Ltb. Oct 1981 1886 I year l - theOttet ..... ~ A.-t- 125 125 aol Mon Sars Apr 1982 spr 1985 3 y..r.. t-e .h.ha P-rtouthoritr erni-m and Tr-ieo 324 124 COB/TAr S-a & Airpot. Auth. SeP 19881 Aug 1985 2. ytar shiud Soedals chest Mee Coas tad Cu...tru-i- tudy 494 417 CON Moe. W-oth MNer 1985 Der 1985 10 -o est yet initate penlect-esiated Tesino,g-s -Fusta1 -asg.t 13 23 lMOP rMet Iffire J..s 1984 Jul 1985 7 -a e-geded f- g slam Olhee 2ed lmao.1 su Air Traito Control Tra-isug . CFTC See & AoyPrta Auth. Jet 1984 Ja1 1984 ii osCompleted 1ther hOc Teetfic C-vtru11- Trs-ieg Prtg.(8) ... CIDA Sea A AirPartte Auth. D.n 1984 Jut 1985 6 en 0 time rthes CaohsnMrtiaeAesen Pogrtm(81 . . CODA . 1981 09588 - r tr.o..ng Or tom othes Pellu-oip mr hircrFt eai--ssor 28 28 800 . ju- 1984 Det 1984 6esCw1esmd GeSar .4 '4 '4 4 .4 4. - - - 4 - 4 04 - ..444 4 I 444444.4444.44444 4 4 4 4 4 4 4 4 4 6 4 .. 44 44z 4. 0 0 0 4. 4. '. 4? 4? 0 0 0 0 0 4. 4 0 0 4. 0 0 0 0 0 0 0 0 0 0 0 0 4.4.4.40 a a .4 .4 4 .4  a8:2 a 4 2 2 2 4 4 4 4 4 4 4 4 4 .4 4 4 4 4 .4 4 4 4 4  2 44 4 N .4 4 4 N .4 .4.4.4.4.4 .4 .4 .4 4 .4 .4 .4 .4 .4 22 22 4 .444 .4 4 4 .4 .4 44.4 .4 4 44.4 0 .4 .4 - .4 .4 .4 4.4.4.-.- .4 .4 .4 .4 .4 - .4 .4 .4 .4. .4 0 4.4.  N .4 N N .4 .4 .4 4 .4 .4 N .4 .4 4 .4 .4 4 .4 .4 0.4.4.4.44 .4 4 .4 2 4.444 444 2 .4 2 222 .4 .4 .4.4.4.4 .4 .4.4 .44.4.4 .4 .4 .4 4 .4 .4 4 .4 4 .4;7 42 .444 'a: 2 44.4 44 0 2 2 g 222  .4 2 4.4 -4 *.4 .4.4 44.4.4.4.4 .4.4  1 .4.4.4.4.4 . 44 . . 4 000 44 .444.4 '' 8 C 4444.4402.4222220 444 4. 444 4.4.4   .2.. " .4 4 .4 444444444        '   0 .4 2 .4aa.4.4.4.4.4.4.422 4 4 444 22ta2222b222!2 .4 .4 4 4 .4 .4 .4 .4 .4 .4 4 .4 .4 .4 .4 .4 .4 .4 .4 .4 0 g a 0 0 .4 .4 4 .4 0 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 .4 0 2 2 2. a  2 I 2j4  I: a: a2 2424 1 44 .4 4j 4 2 a 44 21 22 a8 4aa44 '44 44.40 2 II .4.44.4 2.4.4.4.44.4.4.44 42 4 5.404 4  .4.4.4.444.44.4 a 844..44.4.4.44.4 24.4424.44 .444.4.4 8 22.21 4(44(4404 282 4. 4. .4 .4 044 - 61 - ST. LUCIA AN14EX A SZFg. 6 cE 7 LIST OT TOJICAL COOP IIATN PrOANL IN 111 iEES FT 84/85 - YY 87/88 CDSD (MC t'OOI) TITlh /SU80CST SOTAL CoSn UTTL _ I________ DURATI[II _ _)4) CLASdIFICATICN ANDtWT sounm XXWUTISG ~~STOAT nET(2SR)IH A) ROUIu USICG AGr START COMrL lS1 011 WRAXION SSASU6 OR OTHER Prblic S"ryice. (Ni=ell-D) -hq-p_. Diop-nt for Inforsaioc Servi.e. 50 32 Od Mi.. Ed duction 1985 1986 1 year ehind Schedule Other (11 12) Apped ad/or in eeecotioe De of apioi-nt or initial diebrur_t dat. 4)P et of tec.inetion of teruinel di.becnt date Ahaad/On tie/lOt yet initi ted/rehind Sedol/Sended/tieoo.tioued/C iled Volunt ry esjtnce (VWO, Pece cor U 8V, 0COW, etc.) i. not ineludd. Troining coo -... OorkehoS,e ei-ars ueder thrne onth. .r not includd. (R) pr-t Of e ragioSel progr Soortee Gorenunt of St. lia, donor gecie., USe, NDP. - 62 - ST. LUCIA ANNEX A Page 7 of 7 LIST OH P1OSrD TCIICAL COOPfATION fOGtAMS T19H/85 - P51907/08 (ECS 500) CLASSSPICATI09 PROFILE TITLK/SU=CT TOTAL COST Kt%ZClNAL fICtND cX rIC C DURATION PROJBCT-SXLATED PACC NO. dM0571? 50111CR ACC OR OTNHU Alr.lalctre. treat,. Piah-Tiaa Sa1S Ceo terveoiee Project - Southaro St. Lti- 300 300 To bh identif td LWIJ7 7 ac-acrhe Projert-relared I TSchnical Ind-rtottl AiSct too 10B CFtC Mio. Trad. led-ry & To-Is. 1 year Other 2 Tretieit A. Appraiaa/e So,pa of Sm11 Iodoftail Prisects CFTC SLDE Short-to Other 3 Ageitanos to Pr-p ractie of Reort Direttory 13 15 CPIC Mic. Trade, ltdatry & To-it. Short-cern ProJect-related 4 Stedy o- the teocalo Sweat of Toarta it St. L-ia 175 135 OAS TootrIt Board 1 a-rehek Projert-re-ated 5 Co_t..tao.. Bood I.tcretor . DD eit. Ctricaticoa & Works 2-3 a-aotttho Other 6 tod lorettery talitan schdl SO 50 BOD SIc Ccaitatic- & *Aorkh 4 -no-mathe Project-related I teleral^mtcaieoa hn*tnfier ITC Mic. Ct_icetitco A W-ork 2-3 r-ao-the ProJoot--elatod a TrtIIng, ad OTietation of Crad-aat rngB r ...... BDD WASA Approc 3 - Other 9 Icnoomoad Servicen.M Oucnllseea CewoaTirSatSoe ofte rto- ad ISretory (feeIbllity atudy) 20 20 Cov-rnent PuFditg Schem 4 eack. Proj-ct-related 10 blcti-A-atel TreIing 1966 - 190 750 750 SC Mif-Sorr of Fitcae S-ecral y-a Other llnth C-aaIet-e PBcheleplaS .DD (ODA) KIietry of alcIth 2 .eera Other 12 Ca-selctat S-ergee. CFTC NinMefry of Health 2-3 ae.re other 13 .dIoal soccer Preec Mt eSer rniatry of Naalth I year Other 14 Her Coepera.ttoc atIaes ad Cneitc SHervico- P-fe...l i l oetbhell Coach .Cearcct Hf 7Peace Mio. Cozuity D-ralcp-o 3 notha Other 15 n .crtScn. FP e nd PtaBetas Techeicel Aaitcat to Price Cteatn 103 106 To be idotifid Mia. Trade, ld-try & T.ct" I year Othe 1 SONRCE: oveent of St Ltort, AX, fUDP - 63 - STATISTICAL APPENDIX TABLE OF CONTENTS I. POPULATION AND LABOR FORCE 1.1 Population Trends 1.2 Labor Force and Employment II. NATIONAL ACCOUNTS 2.1 Sectoral Origin of GDP at Current Factor Cost 2.2 Sectoral Origin of GDP at Constant Factor Cost 2.3 Expenditure on GDP at Current Prices 2.4 Expenditure on GDP at Constant Prices 2.5 Actual and Projected National Accounts 2.6 Actual and Projected Trade Growth Rates and Price Indices 2.7 Actual and Projected Balance of Payments 2.8 Actual and Projected Balance of Payments, Alternative 1 III. BALANCE OF PAYMENTS 3.1 Balance of Payments 3.2 Merchandise Imports by End-use 3.3 Merchandise Exports (F.O.B.) 3.4 Direction of Trade IV. EXTERNAL PUBLIC DEBT 4.1 Summary of External Public Debt Operations V. PUBLIC SECTOR FINANCES 5.1 Central Government Operations 5.2 Central Government Revenues and Grants 5.3 Central Government Current Expenditure 5.4 Central Government Subsidies and Other Current Transfers 5.5 Public Sector Investment Program, FY84/85-87/88 5.6 Operations of the Consolidated Public Sector VI. MONEY AND BANKING 6.1 Eastern Caribbean Central Bank 6.2 Commercial Bank Operations 6.3 Commercial Bank Loans and Advances to the Private Sector 6.4 Interest Rates Structure 6.5 Commercial Banks' Liquidity Position - 64 - VII. MISCELLANEOUS 7.1 Retail Price Index 7.2 Output of Selected Commodities 7.3 Energy: Consumption and Retail Prices 7.4 Index of Manufacturing Production 7.5 Selected Tourism Statistics 7.6 Total Quantity of Local and Imported Foodstuffs Consumed by Hotels in 1983 Survey - 65 - Table 1.1: ST. LUCIA - POPULATION TRENDS 1976 1977 1978 1979 1980 1981 1982 1983 1984 Total Population (mid-year) 114270 116575 118927 121326 123773 126270 128817 131415 134066 Crude Birth Rate (per 1000) 34.3 35.4 33.9 30.8 30.6 30.6 31.4 31.0 30.0 Crude Death Rate (per 1000) 7.7 7.0 6.6 7.0 6.8 6.7 6.3 6.0 5.4 Rate of Natural Increase 26.6 28.4 27.3 23.8 23.8 23.9 25.1 25.0 24.5 (per 1000) Total Births 3920 4127 4029 3732 3789 3860 4045 4069 4017 Total Deaths 883 816 781 850 843 843 817 782 728 Natural Population Increase 3037 3311 3248 2882 2946 3017 3228 3287 3289 Net Migration 839 1006 896 483 499 520 681 689 638 Net Population Increase 2198 2305 2352 2399 2447 2497 2547 2598 2651 Annual percentage growth rate 1.6 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Source: 60vernment Statistical Office and OECS. - 66 - Table 1.2: ST. LUCIA - LABOR FORCE AND EMPLOYMENT Census Est. Est. Est. 1970 1975 1980 1983 (In thousands) Total population 99.8 ill. 1i20.2 125.0 Labor force '0.3 34.0 36.5 43.8 Employed 26.1 29.2 ,1.4 32.9 Agriculture & mining 10.4 11.6 13.7 13.0 Manufacturing 2.1 2.3 1.9 2.6 Construction 0.2 3.4 2.3 1.5 Tourism 3.0 3.4 3.6 4.0 Other services L0.4 6.5 7.9 11.6 Unemployed 4.2 4.6 5.1 10.9 IAs per cent of total population) Labor force 30.4 30.4 30.4 35.0 (As per cent of employed) Agriculture & mining 39.2 39.7 43.6 39.5 Manufacturing 8.0 7.9 6.1 7.9 Construction 0.8 11.6 7.3 4.6 Tourism 11.5 11.6 11.5 12.2 Other services 39.8 29.1 31.5 35.9 (As per cent of labor force, Unemployed 13.9 14.1 14.0 24.9 Sources: Government Statistical Office; DECS; and staff estimates. - 67 - Table 2.1: ST. LUCIA - SECTORAL ORIGIN OF GDP AT CURRENT FACTOR COST (In millions of East Caribbean dollars) 1977 1978 1979 1980 19B1 1982 1983 1984 Gross Desestic Product 157.2 192.9 233.7 264.6 293.8 314.6 328.5 348.2 Agriculture 24.5 33.7 34.4 30.6 29.8 36.4 41.6 47.9 Mining and quarrying 1.2 1.5 3.5 4.2 4.5 4.1 3.6 3.6 Manufacturing 13.8 17.1 24.2 27.1 27.5 29.9 35.4 35.5 Utilities 4.6 4.7 5.0 5.5 7.4 8.9 11.8 13.5 Construction 10.8 17.4 25.2 34.4 39.3 34.1 21.0 22.9 Transport & communications 17.6 21.0 25.4 30.3 34.0 34.6 37.4 37.4 Wholesale and retail trade 27.9 35.2 43.3 50.6 52.6 50.8 51.2 53.2 Hotels and restaurants 12.4 13.3 14.9 15.6 18.5 20.1 22.2 24.3 Banking, finance & housing 9.5 11.5 14.9 .15.9 21.0 22.4 24.8 25.9 Government services 27.3 29.8 34.6 38.9 50.7 62.7 69.2 72.9 Other services 14.8 16.8 19.1 23.5 28.4 30.6 32.3 34.3 Less imputed banking sevrvice charge 7.2 9.1 10.8 12.0 17.9 20.0 22.0 23.2 Sources: Ministry of Finance and Planning; OECS Secretariat and Mission estimates. - 68 - Table 2.2: ST. LUCIA - SECTORAL ORIGIN OF GDP AT CONSTANT FACTOR COST (In millions of 1977 East Caribbean dollars) 1977 1978 1979 1980 1981 1982 1983 1984 Gross Dosestic Product 157.2 178.1 183.6 183.2 183.6 191.9 195.7 205.3 Agriculture 24.5 28.9 27.4 21.6 18.7 24.1 27.5 29.0 Mining and quarrying 1.2 1.4 3.1 3.3 2.8 2.1 1.5 1.6 Manufacturing 13.8 16.0 13.4 15.5 15.8 17.0 18.8 18.4 Utilities 4.6 5.1 5.9 5.7 5.9 6.0 6.6 7.5 Construction 10.8 14.8 17.6 21.8 22.6 21.3 11.7 12.8 Transport & communications 17.6 19.2 19.4 19.1 18.5 18.6 20.2 21.5 Wholesale and retail 27.9 33.0 33.1 30.5 31.2 30.0 30.3 31.2 Hotels and restaurants 12.4 13.4 14.5 15.4 12.9 13.4 14.6 15.8 Banking, finance & housing 9.5 10.2 11.5 11.4 11.6 12.1 12.9 13.3 Bovernment services 27.3 28.5 30.4 31.1 35.6 39.1 43.1 45.5 Other services 14.8 15.3 15.9 16.4 17.2 17.7 18.4 19.0 Less imputed banking service charges 7.2 7.7 8.6 8.6 9.2 9.5 9.9 10.3 Sources: Ministry of Finance and Planning; OECS Secretariat and Mission estimates. - 69 - Table 2.3: ST. LUCIA - EXPENDITURE ON GDP AT CURRENT PRICES (In sillions of East Caribbean dollars) 1977 1978 1979 1980 1981 1982 19B3 1984 Total Consusption a/ 156.0 164.6 224.6 262.4 319.4 352.0 328.0 353.2 Private 115.9 122.4 179.8 198.7 248.3 259.9 230.5 250.5 Central government 40.1 42.2 44.8 63.7 71.1 92.1 97.5 102.7 Gross Domestic Investeent 87.7 147.8 155.8 181.2 198.8 155.5 127.2 142.4 Public Sector 18.1 16.6 26.3 33.2 33.4 26.1 33.3 39.1 Central Government 18.1 16.6 20.3 22.0 18.9 22.2 28.0 32.4 Private Sector 69.6 131.2 129.5 148.0 165.4 129.4 93.9 103.3 Goods & NFS Balance -59.1 -90.7 -108.3 -138.5 -177.4 -144.2 -75.1 -87.2 Exports of Goods & NFS b/ 109.1 147.2 176.3 213.0 191.7 200.1 241.4 261.4 Imports of Goods & NFS b/ 168.2 237.9 284.6 351.5 369.1 344.3 316.4 348.6 Gross Domestic Product at Current Market Prices c/ 194.6 221.6 272.2 305.1 340.8 363.4 380.1 408.4 Minus: Indirect Taxes Met of Subsidies b/ 27.4 28.7 38.5 40.5 47.0 48.8 51.6 60.2 Gross Domestic Product at Current Factor Cost c/ 157.2 192.9 233.7 264.6 293.8 314.6 328.5 348.2 Net Factor Income Payments b/ -9.7 -10.0 -10.3 -11.3 -9.5 -10.8 -12.4 -9.6 Gross National Product at Current Factor Cost 147.5 182.9 223.4 253.3 284.4 303.8 316.1 33q.6 Gross Domestic Savings 28.6 57.1 47.5 42.7 21.4 11.3 52.1 55.2 Net Private Transfers from Abroad bl 20.5 20.B 21.1 30.0 40.2 35.1 32.4 37.8 Bross National Savings 39.4 67.9 58.3 61.3 52.2 35.6 72.1 84.4 a/ Residual Consumption estimates are preliminary. b/ Fros table 3.1. cJ Official data - Statistical Division, Ministry of Finance. Sourcect Mission estimate. - 70 - Table 2.4: ST. LUCIA - EXPENDITURE ON GDP AT CONSTANT PRICES (In millions of 1977 East Caribbean dollars) 1977 1978 1979 1980 1981 1982 1983 1984 Consumption a/ 156.0 160.8 184.5 183.6 228.0 271.8 251.1 264.8 Private 115.9 119.6 147.7 139.1 177.3 200.7 176.5 187.8 Public 40.1 41.2 36.8 44.6 50.8 71.1 74.7 77.0 6ross Domestic Investment 87.7 137.4 128.8 126.2 141.5 115.0 94.5 105.6 Private 69.6 122.0 107.1 103.1 117.6 95.7 69.7 76.6 Public 18.1 15.4 21.8 23.1 23.8 19.3 24.7 29.0 Resource Balance -59.1 -94.2 -96.0 -98.7 -157.8 -166.9 -120.8 -131.5 Exports of 6oods & NFS b/ 109.1 130.4 137.7 147.4 132.2 130.9 156.2 177.9 Imports of 6oods & NFS b/ 166.2 224.7 235.7 246.0 290.0 297.9 279.0 309.4 BDP at market prices 164.6 204.0 215.3 211.1 211.8 219.B 224.8 238.9 Minus: Indirect taxes Net of subsidies c/ 27.4 25.9 31.7 27.9 28.2 27.9 29.1 33.6 GOP at factor cost 157.2 176.1 183.6 183.2 183.6 191.9 195.7 205.3 Net Factor Payments d/ -9.7 -8.5 -7.8 -8.0 -7.0 -8.2 -9.8 -7.0 6NP at factor cost 147.5 169.6 175.8 175.2 176.6 183.7 185.9 196.3 a/ Residual. b/ Deflated by generated price indices. c/ Deflated by CPI. dl Deflated by MUV index. Source: Mission estimates. - 71 - Table 2.5: ST. LUCIA - ACTUAL AND PROJECTED NATIONAL ACCOUNTS (US$ billion) Actual Est. P R O J E C T E D 1983 1984 1985 1986 I?87 1988 1989 1990 1991 1992 1993 1994 1995 Gross domestic product 383.30 410.13 426.54 443.60 4b1.34 479.80 498.99 518.95 544.89 572.14 600.75 630.7B 662.32 Terns of trade adjustment .00 0.02 -0.03 -4.64 -7.92 -11.37 -15.02 -19.74 -22.24 -26.07 -30.25 -34.73 -39.62 gross domestic income 383.30 410.15 426.51 438.96 453.42 468.42 483.97 500.21 522.66 546.06 570.50 596.06 b22.70 leports of GNFS 316.76 358.83 360.39 37b.77 394.14 412.23 430.89 446.55 465.92 487.46 510.53 535.87 562.44 Exports (capacity to import)-241.39 -268.90 -287.30 -301.03 -318.80 -339.30 -362.10 -386.57 -411.24 -436.00 -460.38 -484.61 -508.91 Resource gap 75.37 89.92 73.09 75.74 75.33 72.93 68.79 59.97 54.67 51.46 50.15 51.26 53.53 Total resources 458.67 500.08 499.60 514.70 528.76 541.36 552.76 560.18 577.33 597.52 620.65 647.32 676.23 Consueption 368.67 397.54 392.97 406.02 41B.03 428.61 437.99 446.01 465.63 483.10 509.51 536.93 566.94 Investeent 90.00 102.53 106.63 108.6B 110.72 112.75 114.77 114.17 111.70 114.43 111.14 110.39 109.29 Private 49.00 57.42 59.72 59.89 59.97 59.97 59.88 57.08 51.76 51.49 45.06 41.00 36.43 Government 41.00 45.11 46.92 48.80 50.75 52.78 54.89? 57.08 59.94 62.94 66.08 69.39 72.86 Gross domestic savings 14.63 12.61 33.54 32.94 35.39 39.82 45.98 54.20 57.03 62.97 60.99 59.13 55.76 Private 16.93 29.37 24.20 24.39 26.75 27.20 29.04 32.45 30.02 30.09 21.70 12.82 1.74 Government -2.30 -16.76 9.34 8.55 8.64 12.61 16.94 21.75 27.01 32.88 39.29 46.31 54.01 Net factor payments -12.43 -8.90 -13.57 -15.41 -17.51 -19.82 -22.12 -23.97 -25.45 -27.01 -28.09 -2B.54 -29.02 Transfers 32.43 33.37 31.7B 29.56 27.37 25.34 23.47 21.73 20.69 19.71 18.77 18.62 19.44 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Gross national savings 34.63 37.0B 51.75 47.10 45.25 45.34 47.33 51.96 52.27 55.67 51.66 49.20 45.18 :ross national product 403.30 434.60 444.75 457.75 471.21 485.32 500.34 516.71 540.14 564.84 591.42 620.86 651.74 Gross national income 403.30 434.62 444.72 453.11 463.29 473.95 485.32 497.97 517.90 538.76 561.17 586.13 612.12 GDP deflator 100.00 105.00 110.25 115.76 121.55 127.63 134.01 140.71 147.75 155.13 162.89 171.03 179.59 GDP in current prices 383.30 430.64 470.26 513.52 560.76 612.35 668.69 730.21 805.06 887.57 978.55 1078.85 1189.44 Growth rates GDP 7.00 4.00 4.00 4.00 4.00 4.00 4.00 5.00 5.00 5.00 5.00 5.00 Total resources 9.03 -0.10 3.02 2.73 2.38 2.11 1.34 3.06 3.50 3.87 4.30 4.47 Investment 13.93 4.00 1.92 1.88 1.83 1.79 -0.52 -2.16 2.44 -2.98 -0.68 -1.00 Consumption 7.83 -1.15 3.32 2.96 2.53 2.19 1.83 4.40 3.75 5.47 5.38 5.59 Agriculture 5.52 4.33 4.33 4.33 4.33 4.33 4.33 3.44 3.44 3.44 3.44 3.44 Manufacturing -2.13 5.50 8.60 8.60 9.60 8.60 8.60 9.00 9.00 9.00 9.00 9.00 Government 16.67 7.00 8.50 8.50 8.50 8.50 8.50 8.00 8.00 8.00 8.00 8.00 Services 5.63 5.50 5.50 5.50 5.50 5.50 5.50 5.90 5.90 5.90 5.90 5.90 Percentages Investeent/GDY 23.48 25.00 25.00 24.50 24.00 23.50 23.00 22.00 20.50 20.00 18.50 17.50 16.50 GOS/GDY 3.82 3.07 7.86 7.43 7.67 8.30 9.21 10.44 10.47 11.01 10.15 9.37 8.42 GNS/GDY 9.04 9.04 12.13 10.62 9.81 9.45 9.49 10.01 9.59 9.73 8.60 7.80 6.82 ConsumptionlGOY 96.18 96.93 92.13 91.53 90.61 B9.33 87.78 85.95 85.45 84.44 84.81 85.12 85.60 Current revenue/GDP 29.04 27.33 27.41 26.89 26.50 26.90 26.99 27.10 27.30 27.20 27.10 27.20 27.30 Current expenditure/GDP 29.64 31.42 25.22 24.96 24.63 24.17 23.60 22.91 22.35 21.45 20.56 19.85 19.14 Current acct. balance/GDP -0.60 -4.09 2.19 1.93 1.87 2.63 3.39 4.19 4.96 5.75 6.54 7.34 8.16 Source: Mission estimates. - 72 - Table 2.6: ST. LUCIA - ACTUAL AND PROJECTED TRADE GROBTH RATES AND PRICE INDICES (US5 million) Actual Est. P R D J E C T E D 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Exports Growth Rates Bananas 29.78 5.00 5.00 5.50 6.00 6.50 6.00 5.50 5.00 4.50 4.00 4.00 Coconwit oil - unrefined 33.21 3.00 3.00 3.00 3.00 3.00 3.00 3.50 3.50 3.50 3.50 3.50 Coconut oil - refined 12.77 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 Fruits 101.12 16.00 16.00 16.00 16.00 14.00 12.00 10.00 10.00 10.00 10.00 10.00 Beer -16.14 5.00 5.00 5.00 5.00 5.00 5.00 5.50 6.00 6.50 6.50 6.50 Paper 1.79 6.00 6.00 6.00 6.00 6.00 6.00 3.00 3.00 3.00 3.00 3.00 Clothing -10.05 8.00 9.50 9.50 9.50 10.00 10.00 9.00 8.50 7.00 7.00 7.00 Other -30.39 4.49 4.94 5.44 5.98 6.58 7.24 7.96 8.76 9.63 10.60 11.66 Re-exports 2.8B 4.50 4.50 4.50 4.50 4.50 4.50 3.50 3.50 3.50 3.50 3.50 Total serchandise exports 9.70 5.94 6.12 6.42 6.70 7.00 6.75 6.03 5.79 5.44 5.25 5.30 Non-factor services 13.25 8.00 8.50 8.50 9.00 9.00 9.00 8.50 8.00 7.50 7.00 6.50 Total exports 11.27 6.87 7.21 7.38 7.78 7.94 7.82 7.22 6.87 6.46 6.12 5.90 Price Index (1983 = 100' Bananas 100.00 94.09 94.83 100.27 102.38 104.53 106.72 108.97 112.89 116.95 121.16 125.52 130.04 Coconut oil - unrefined 100.00 82.44 64.02 59.75 61.54 63.38 65.29 67.24 70.14 73.15 76.30 79.58 83.00 Coconut oil - refined 100.00 108.70 84.40 78.77 81.14 83.57 86.08 88.66 92.47 96.45 100.59 104.92 109.43 Fruits 100.00 50.90 5B.36 76.01 90.29 107.27 127.44 151.40 155.18 159.06 163.04 167.11 171.29 Beer 100.00 94.55 87.62 87.62 94.28 101.45 109.16 117.46 125.33 133.72 142.68 152.24 162.44 Paper 100.00 94.15 101.88 99.07 107.29 116.19 125.84 136.28 143.50 151.11 159.12 167.55 176.43 Clothing 100.00 122.84 118.78 129.08 139.67 151.12 163.51 176.92 186.12 195.80 205.98 216.69 227.96 Other 100.00 97.20 102.06 109.71 118.49 127.97 138.21 149.27 156.73 164.57 172.79 181.43 190.50 Re-exports 100.00 97.20 102.06 109.71 118.49 127.97 138.21 149.27 156.73 164.57 172.79 181.43 190.50 Merchandise exports 100.00 97.24 101.56 108.37 117.17 126.68 136.95 148.05 156.60 165.69 175.31 1B5.54 196.39 Non-factor services 100.00 97.20 102.06 109.71 118.49 127.97 138.21 149.27 156.73 164.57 172.79 181.43 190.50 Total exports 100.00 97.24 101.59 10B.46 117.25 126.76 137.03 148.13 156.61 165.61 175.15 185.26 195.99 Imports in 1983 Prices Fuel 13.00 13.22 14.01 14.46 14.92 15.37 15.83 16.31 16.80 17.13 17.47 17.91 18.36 Chesicals 12.80 13.6B 14.57 15.34 16.16 17.01 17.92 18.87 19.81 20.70 21.53 22.17 22.73 Food and beverages 27.70 28.09 29.77 31.35 33.01 34.76 36.50 38.14 40.05 42.25 44.79 47.92 51.28 Manufactured Products 31.90 38.60 41.00 42.64 44.35 46.12 47.97 48.74 49.52 50.75 52.02 53.32 54.66 Consumer goods 18.40 20.58 21.65 22.77 23.96 25.20 26.51 27.89 30.12 32.53 35.13 37.94 40.9B Other imports 3.00 3.50 3.66 3.82 3.99 4.17 4.36 4.56 4.83 5.12 5.43 5.75 6.10 Merchandise imports 106.80 117.75 124.66 130.39 136.39 142.64 149.09 154.50 161.12 168.49 176.37 185.03 194.10 Non-factor services 10.40 15.02 8.68 9.02 9.44 9.88 10.34 10.73 11.27 11.87 12.53 13.24 14.01 Total imports 117.20 132.77 133.34 139.41 145.83 152.53 159.43 165.22 172.39 180.36 1B8.90 198.27 208.10 Import price index - GNFS 100.00 97.24 101.59 108.46 117.25 126.76 137.03 148.13 156.61 165.61 175.15 IB5.26 195.99 leport growth rates Merchandise imports 10.25 5.87 4.60 4.60 4.58 4.52 3.63 4.29 4.57 4.68 4.91 4.90 Non-factor services 44.43 -42.19 3.82 4.71 4.70 4.63 3.73 5.06 5.37 5.49 5.74 5.75 Total imports 13.28 0.44 4.55 4.61 4.59 4.52 3.63 4.34 4.62 4.73 4.96 4.96 Terms of trade indices Export price index 100.00 97.29 101.17 102.78 108.19 114.0B 120.49 127.52 133.36 139.51 145.93 152.72 159.86 Import price index 100.00 97.24 101.56 108.37 117.17 126.68 136.95 148.05 156.60 165.69 175.31 185.54 196.39 Terms of trade index 100.00 100.05 99.62 94.84 92.34 90.05 87.98 B6.13 85.16 84.20 B3.24 B2.31 81.40 Source: Mission estimates. - 73 - Table 2.7: ST. LUCIA - ACTUAL AND PROJECTED BALANCE OF PAYMENTS IUS$ Billion) -. Actual Est. P R D J E C T E D 1983 1984 1985 198b6 1987 1988 1989 1990 1991 1992 1993 1994 1995 Exports of 6NFS 89.40 96.75 107.99 120.80 138.31 159.13 183.59 211.87 238.30 267.17 298.35 332.18 369.04 Imports of SNFS 117.20 129.10 135.47 151.20 170.99 193.34 218.47 244.74 269.98 298.70 330.85 367.32 407.86 Resource Balance -27.80 -32.35 -27.47 -30.39 -32.68 -34.21 -34.88 -32.87 -31.68 -31.53 -32.50 -35.14 -38.82 Net current transfers 12.00 14.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.50 13.00 Net factor payments -4.60 -3.70 -5.12 -6.25 -7.67 -9.38 -I1.31 -13.24 -14.76 -16.44 -17.96 -19.16 -20.46 Interest -1.30 -0.90 -1.12 -1.75 -2.67 -3.78 -5.01 -6.24 -7.36 -8.44 -9.56 -10.76 -12.06 Other NFS -3.30 -2.80 -4.00 -4.50 -5.00 -5.60 -6.30 -7.00 -7.40 -8.00 -B.40 -8.40 -8.40 Current account balance -20.40 -22.05 -20.60 -24.65 -28.36 -31.59 -34.19 -34.11 -34.44 -35.9B -38.46 -41.80 -46.27 Direct foreign investment 12.00 10.00 5.00 5.50 7.00 7.70 8.47 9.32 10.25 11.27 12.40 13.64 15.01 Grants 6.90 6.30 8.00 7.00 6.00 6.60 7.26 8.00 8.00 8.00 B.00 8.50 9.00 NMLT public debt (net) 1.80 0.20 8.56 13.41 16.56 18.49 18.50 16.75 16.17 16.67 18.07 19.65 22.22 Disbursement 3.20 1.40 10.50 16.60 21.00 23.80 25.20 25.20 26.60 29.20 32.70 36.50 41.50 Amortization 1.40 1.20 1.94 3.19 4.44 5.32 6.70 8.45 10.43 12.53 14.63 16.85 19.28 Arrears - - -1.30 -1.30 -1.30 -1.30 - - - - - - - Errors & omissions -0.20 5.65 - - - - - - - - - - - Change in reserves -0.10 -0.10 -0.20 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 (- = increase) Reserve level 0.00 0.20 0,30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 Memo: Reserve level as months of imports 0.00 0.02 0.02 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 Debt service ratio as X of exports of 6NFS 3.02 2.17 2.84 4.09 5.14 5.72 6.38 6.93 7.47 7.85 8.11 8.31 8.49 Debt service as I of current revenue 6.55 4.82 6.42 9.67 12.93 14.97 17.51 20.04 21.85 23.46 24.63 25.41 26.06 Source: Mission estimates. - 74 - Table 2.8: ST. LUCIA - ACTUAL AND PROJECTED BALANCE OF PAYMENTS, ALTERNATIVE I (USS million) - Actual Est. P R O J E C T E D 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Exports, 6NFS 89.40 96.75 107.99 120.80 138.31 159.13 163.59 211.87 23B.30 267.17 298.35 332.1B 369.04 leports, 6NFS 117.20 129.10 135.47 151.20 170.99 193.34 218.47 244.74 269.98 29B.70 330.85 367.32 407.86 Resource balance -27.80 -32.35 -27.47 -30.39 -32.68 -34.21 -34.88 -32.87 -31.68 -31.53 -32.50 -35.14 -38.82 Net transfers 12.00 14.00 [2.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.50 13.00 Net factor paysents -4.60 -3.70 -5.12 -6.26 -7.66 -9.36. -11.32 -13.27 -14.82 -16.58 -18.06 -19.24 -20.50 Interests -1.30 -0.90 -1.12 -1.76 -2.66 -3.76 -5.02 -6.27 -7.42 -8.58 -9.66 -10.84 -12.10 Other FSY -3.30 -2.80 -4.00 -4.50 -5.00 -5.60 -6.30 -7.00 -7.40 -8.00 -8.40 -8.40 -8.40 Current account balance -20.40 -22.05 -20.60 -24.65 -28.34 -31.57 -34.20 -34.14 -34.51 -36.11 -38.56 -41.88 -46.31 Direct foreign investeent 12.00 10.00 5.00 5.50 7.00 7.70 8.47 9.32 10.25 11.27 12.40 13.64 15.01 6rants 6.90 6.30 8.00 7.00 6.00 6.60 7.26 8.00 8.00 8.00 8.00 8.50 9.00 M< public debt Inet) 1.80 0.20 9.10 13.55 16.74 18.67 18.57 16.93 16.36 16.93 18.26 19.84 22.41 Disbursement 3.20 1.40 11.04 16.47 20.63 23.44 24.68 24.72 26.09 28.69 32.05 35.77 40.67 Amortization 1.40 1.20 1.94 2.92 3.89 4.77 6.11 7.80 9.73 11.76 13.79 15.93 18.27 Arrears - - -1.30 -1.30 -1.30 -1.30 - - - - - - Errors and omissions -0.20 5.65 - - - - - - - - - - Change in reserves -0.10 -0.10 -0.20 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 Level of reserves 0.10 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 Level of reserves as months imparts 0.01 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 Debt service ratio as X of exports.GNFS 2.17 2.84 3.87 4.74 5.36 6.06 6.64 7.20 7.61 7.86 8.06 8.23 Source: Mission estimates. - 75 - Table 3.1: ST. LUCIA - BALANCE OF PAYMENTS (US$ million) Prel. 1977 1978 1979 1900 191 1992 1983 1914 Trade Balance -36.7 -56.0 -69.3 -77.9 -97.3 -76.5 -57.1 -61.4 Total exports, f.o.b. 22.6 26.9 31.9 46.0 41.6 41.6 49.7 53.1 of which: re-exports 2.0 2.0 3.9 12.3 4.8 3.9 7.9 7.9 Imports, c.i.f. 59.3 92.8 101.2 123.8 129.9 118.1 106.8 114.5 of which: Hess Co. 12.0 14.2 19.0 23.8 29.1 14.0 6.2 ... Services Balance 11.2 19.7 25.4 22.3 19.1 19.1 24.7 25.4 Travel (net) 14.8 22.4 29.2 26.5 21.6 23.1 29.3 29.1 Receipts 17.9 27.7 33.4 329 29.4 32.5 39.7 43.7 Payments 3.0 5.3 4.2 6.4 7.8 9.4 10.4 14.6 Interest 0.0 -0.1 -0.2 -0.6 -0.7 -0.8 -1.3 -0.9 Receipts 0.3 0.4 0.4 0.1 0.2 0.2 0.1 0.1 Payments A/ 0.3 0.5 0.6 0.7 0.9 1.0 1.4 1.0 Profits from ECCB 0.4 0.5 0.6 0.9 1.3 1.4 1.7 1.3 Other factor services (net) -4.0 -4.1 -4.2 -4.5 -4.1 -4.6 -5.0 -4.1 Private transfers (net) 7.6 7.7 7.8 11.1 14.9 13.0 12.0 14.0 Current Account Balance -17.9 -29.6 -36.1 -44.4 -54.3 -44.4 -20.4 -22.0 Capital Account 16.7 27.3 32.6 38.3 44.4 33.2 19.3 15.3 Official capital (net) 1.9 2.7 7.1 5.1 8.6 9.9 13.5 6.5 Grants (project related) ... ... 3.4 3.5 5.4 3.4 6.9 6.3 Central governeent borroving 0.8 1.4 0.9 0.3 2.9 5.7 6.8 0.3 Other official bl ... ... 2.8 1.3 0.3 -0.2 -0.2 0.2 Commercial banks (net) 1.9 4.0 1.4 3.3 -1.5 -1.4 -5.6 -0.3 Private direct investeent 13.0 20.6 26.0 30.9 39.2 26.5 12.0 10.0 of which: Hess Co. 12.3 19.0 24.0 29.7 35.1 22.9 8.4 ... Currency holdings cl -1.9 -1.0 -0.9 -0.8 -0.6 -0.9 Errors and omissions 1.1 1.5 2.5 2.5 5.1 12.4 0.9 6.3 SDR allocation 0.0 0.0 0.0 0.5 0.5 0.0 0.0 Overall deficit -0.1 -0.8 -1.0 -3.1 -4.3 1.2 -0.2 -0.4 Financing 0.1 0.9 1.0 3.1 4.3 -1.2 0.2 0.4 Borrowing from ECCB (net) 0.0 0.7 1.2 0.9 0.4 0.5 0.3 1.0 IMF lending 0.0 0.0 0.0 2.3 3.5 -1.6 0.0 -0.5 60vernnnt foreign assets 0.1 0.1 -0.2 -0.1 0.4 -0.1 -0.1 -0.1 (increase a -) ai/ For governeent and governecnt-guaranteed loans. bl Includes disbursement of government-guaranteed loans to the private sector. ci Increase in East Caribbean dollars in circulation. Sources: Statistical Department, Ministry of Finance and Planning, IMF and mission estiemtes. - 76 - Table 3.2: ST. LUCIA - MERCHANDISE IMPORTS BY END-USE (US$ million) Est. Prel. 1977 1978 1979 1980 1981 1982 1983 1984 Merchandise lports, c.i.f. 59.3 82.8 101.2 123.8 128.9 118.1 106.8 114.5 Food 13.1 17.1 19.3 22.4 26.3 24.9 24.3 23.9 Beverages and tobacco 1.9 2.0 2.4 3.1 3.6 3.4 3.4 3.4 Crude materials 1.2 1.9 2.6 3.7 2.6 2.5 2.3 2.8 Fuels 4.7 5.4 10.0 12.4 12.6 13.8 13.0 12.9 Oils and fats 0.2 0.7 0.4 0.6 1.5 1.1 0.6 0.6 Chemicals 6.3 6.9 8.6 10.8 12.6 11.6 12.8 13.3 Manufactured goods 15.9 20.2 29.1 29.3 33.3 30.0 20.1 23.3 Machinery & transport eqpt. 10.1 21.7 19.9 29.3 25.6 20.3 18.4 20.0 Misc. manufactured goods 5.6 6.8 7.9 12.2 10.8 10.5 11.8 14.3 Miscellaneous 0.3 0.1 1.0 0.0 0.0 0.0 0.1 0.0 Source: Statistical Office. - 77 - Table 3.3: ST. LUCIA - MERCHANDISE EXPORTS (F.D.B.) (Value in thousands of US dollars; voluee in units indicated; and unit price in US dollars per unit) Est. 1977 1978 1979 1980 1981 1982 1983 1984 Total Domestic Exports 20591 24820 28005 33740 36793 37696 41803 45194 Bananas 9454 12113 13520 10511 14664 15633 20802 25448 Volume (metric tons) 41405 47820 48241 32824 42891 41697 53291 69221 Unit Price 0.23 0.25 0.28 0.32 0.34 0.37 0.39 0.37 Coconut oil (unrefined) 849 971 1627 1258 1135 435 713 783 Volume ('000 liters) 1466 1602 2370 1579 1212 464 635 848 Unit Price 0.58 0.61 0.69 0.80 0.94 0.94 1.12 0.92 Coconut oil (refined) 1193 1033 1044 1686 1434 2627 2117 2595 Volume ('000 liters) 1565 1228 950 1113 837 1499 1094 1237 Unit Price 0.76 0.84 1.10 1.51 1.71 1.75 I.94 2.10 Fruits and vegetables 280 440 638 421 401 349 423 433 Volume ('000 kgs) 1169 2352 1862 1507 1196 1047 1033 2075 Unit Price 0.24 0.19 0.34 0.28 0.34 0.33 0.41 0.21 Beer and ale 953 1131 1590 1219 1020 2098 1588 1259 Voluse ('000 gallons) 443 430 549 339 244 386 290 243 Unit Price 2.15 2.63 2.90 3.60 4.18 5.44 5.48 5.18 Paper and paper board 3508 2882 1923 2596 5578 5257 4537 4348 Voluae ('000 kgs) 5495 5136 3033 3490 7198 5753 5000 5075 Unit Price 0.64 0.56 0.63 0.74 0.77 0.91 0.91 0.86 Clothing 828 2211 1769 2836 3794 4094 5754 6358 Volume ('000 kgs) 85 158 91 138 169 178 219 197 Unit Price 9.74 13.99 19.44 20.55 22.45 23.00 26.27 32.26 Others 3526 4039 5994 13213 8767 7203 5869 3971 Sources: Statistical Office. - 78 - Table 3.4: ST. LUCIA - DIRECTION OF TRADE (In percent) Est. 1976 1977 1978 1979 1980 1981 1982 1983 1984 Total exports, f.a.b. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 United Kingdom 47.9 48.2 51.7 51.0 33.0 40.5 42.5 51.0 57.6 Canada 0.4 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 United States 2.6 2.0 1.8 4.7 23.1 6.8 7.7 9.1 16.0 CARICON countries 47.0 47.8 43.9 40.5 38.1 46.6 45.6 37.5 23.7 Barbados 7.8 9.8 9.0 6.1 4.9 7.2 5.5 5.7 4.4 Guyana 1.7 1.9 0.6 1.8 0.8 0.5 0.7 0.4 0.2 Jamaica 5.4 5.5 6.2 7.2 12.4 14.4 12.8 9.1 3.5 Trinidad and Tobago 9.4 6.1 8.8 8.5 7.1 3.2 11.6 11.9 5.7 Other 22.7 24.5 19.3 16.9 12.9 21.3 15.0 10.4 10.0 France 0.2 0.2 1.2 2.3 2.4 0.0 0.8 0.1 0.0 Netherlands 0.4 0.0 0.0 1.4 0.0 2.5 1.8 1.9 Rest of the world 1.5 1.7 1.4 1.5 2.0 6.1 0.9 0.5 0.8 Total imports, c.i.f. 100.0 100.0 100.0 100.0 100.0 100.0 100.6 100.0 100.0 United Kingdom 24.5 23.8 19.4 16.5 15.6 14.3 12.3 13.7 13.1 Canada 11.6 6.9 3.6 3.9 4.2 3.9 4.3 5.2 4.0 United States 19.8 24.9 36.3 29.6 31.3 38.6 36.7 35.5 36.9 CARICOH countries 23.8 21.5 17.0 20.1 21.7 21.0 19.8 16.9 16.9 Barbados 3.6 3.4 2.5 2.7 3.2 3.6 2.9 3.0 3.0 Guyana 2.2 1.9 1.6 1.2 2.0 1.4 0.7 0.6 0.6 Jamaica 2.1 2.0 1.6 2.3 1.8 2.1 1.8 1.6 1.4 Trinidad and Tobago 15.0 13.0 9.8 12.5 12.3 11.0 11.3 8.7 9.2 Other 0.9 1.2 1.5 1.4 2.4 2.9 3.1 3.0 2.7 Nest Germany 1.0 1.1 0.8 0.7 1.0 1.6 0.8 1.1 1.1 France 0.6 0.7 1.1 0.7 0.5 0.3 2.8 0.8 0.8 Netherlands 2.3 3.3 2.8 3.0 2.4 2.7 2.0 1.2 1.1 Venezuela 2.8 0.7 1.5 0.7 3.7 0.6 0.1 0.1 0.2 Honduras 1.4 1.3 1.3 1.2 1.0 0.9 0.6 0.4 0.5 Japin 2.4 4.6 4.7 9.8 5.7 4.9 4.7 4.7 7.3 China 0.5 0.6 0.5 0.7 0.4 0.2 0.3 0.5 0.3 Rest of the world 9.3 10.6 11.0 13.1 12.5 11.0 16.2 19.9 17.8 Source: Statistical Office. - 79 - Table 4.1: ST. LUCIA - SUMMARY OF EXTERNAL PUBLIC DEBT OPERATIONS a/ 1977 1978 1979 1980 1991 1982 1993 1984 (In thousands of U.S. dollars) Outstanding debt at end of period 8017 10471 14196 15711 19762 24030 31190 31242 Outstanding debt at beginning of period 6114 9017 10471 14196 15711 18762 24030 31190 Net drawings 1854 2675 3698 1652 3174 5469 7195 321 Drawings 1962 2692 3748 1979 3540 6510 8179 1173 Asortization (-) -8 -17 -50 -326 -366 -1050 -994 -952 Valuation adjustment 49 23 27 -137 -123 -200 -25 -269 Debt service payments 347 514 670 1060 1213 2089 2399 1924 Amortization 8 17 50 326 366 1050 994 849 Interest 339 497 620 734 847 1038 1405 975 (In percent) Debt outstanding/6DP 11.7 12.9 14.1 13.9 14.9 17.9 22.2 20.7 Net drawings/6DP 2.7 3.3 3.7 1.5 2.5 4.1 5.1 0.2 Debt service/exports of goods and tourism 0.9 0.9 1.0 1.3 1.7 2.9 2.7 1.9 Average interest rate b/ 5,5 6.2 5.9 5.2 5.4 5.5 5.8 3.1 Debt outstanding (growth rate) 31.1 30.6 35.6 10.7 19.4 28.1 29.8 0.2 a/ Excludes debt to the Fund and ECCB. b/ Ratio of total interest payments to debt at beginning of period. Source: Ministry of Finance and Planning, and IMF staff estimates. - 80 - Table 5.1: ST. LUCIA - CENTRAL BOVERNNENI OPERATIONS a/ (In millions of East Caribbean dollars) Prel. 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 Total revenue and grants 57.50 63.76 82.81 93.86 104.64 113.08 120.70 135.66 Current revenue 51.65 58.05 72.35 84.91 88.26 106.14 111.30 117.69 Current grants 0.29 0.43 0.13 0.16 0.00 0.25 0.17 0.44 Capital grants 5.56 5.28 10.33 8.79 16.38 6.69 9.23 17.53 Total expend. & net lending b/ 59.90 67.47 90.64 111.06 125.73 138.13 139.80 169.65 Current expenditure 48.72 51.52 73.22 80.49 90.92 114.92 114.49 135.25 Capital expend. & net lending 11.18 15.95 17.42 30.57 34.81 23.31 25.31 34.40 Current surplus/deficit O-) 2.94 6.53 -0.87 4.42 -2.66 -8.68 -3.19 -17.56 (excluding grants) Overall deficit l-) b/ -2.40 -3.71 -7.83 -17.20 -21.09 -25.05 -19.10 -33.99 Change in payment arrears 0.00 0.00 6.25 -6.63 6.36 7.04 8.65 8.19 (increase e +) Overall surplus/deficit l-) -2.40 -3.71 -1.5B -23.83 -14.73 -18.01 -10.45 -25.80 (cash basis) Financing 2.40 3.71 1.58 23.93 14.73 18.01 10.45 25.80 Foreign assets -0.04 0.12 -0.05 -0.48 0.75 -0.52 ... ... Net borrowing from ECCB (including counterpart of purchases from IMF) 0.94 2.85 2.60 11.98 9.91 0.39 -0.59 -0.91 Other net foreign borrowing 2.04 3.87 1.07 0.13 2.43 10.61 -0.80 -0.90 Net domestic bank borrowing -4.00 1.03 -0.10 12.50 -2.60 4.19 1.40 7.80 Other domestic borrowing -0.25 -0.85 0.36 3.33 3.75 4.50 1.60 0.80 Residual 3.71 -3.31 -2.30 -3.53 0.49 -1.16 8.84 19.91 a/ Fiscal year beginning April 1. b/ Expenditure on a voucher issued basis. Sourcess Ministry of Finance and Planning; and staff estimates. 81 - Table 5.2: ST. LUCIA - CENTRAL BOVERNMENT REvENUES AND GRANTS a/ (In sillions of East Caribbean dollars) Est. 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 Total revenue and grants 57.50 63.76 82.81 93.86 104.64 113.08 120.70 135.66 Current grants 0.29 0.43 0.13 0.16 0.00 0.25 0.17 0.44 Capital grants 5.56 5.28 10.33 8.79 16.38 6.69 9.23 17.53 Total revenue (excl. grants) 51.65 58.05 72.35 84.91 89.26 106.14 111.30 117.69 Tax revenue 49.04 52.95 67.62 76.55 79.37 92.96 98.49 107.52 Taxes on income 13.66 15.21 19.72 26.07 27.22 35.24 32.98 35.86 Taxes on property 1.06 0.88 1.26 1.00 0.98 1.07 1.11 1.54 Taxes on goods and services 14.25 15.01 16.60 17.63 19.23 21.15 24.17 25.77 Consumption taxes 8.90 8.46 11.26 12.30 13.39 14.61 15.44 16.84 Excise taxes 0.68 0.63 0.65 0.91 0.73 0.93 0.94 1.00 Hotel occupancy tax 1.27 1.81 2.71 2.23 2.30 2.16 2.52 3.00 Fees and licenses 2.81 3.40 1.11 1.39 1.74 2.04 2.06 2.57 Hess company taxes 0.00 0.00 0.00 0.00 0.00 0.67 2.19 1.42 Airport tax 0.57 0.60 0.76 0.63 0.52 0.00 0.00 0.00 Travel tax 0.00 0.00 0.00 0.00 0.00 0.14 0.38 0.44 Insurance premium tax 0.00 0.00 0.00 0.05 0.44 0.50 0.54 0.48 Other 0.12 0.11 0.11 0.12 0.11 0.10 0.10 0.02 Taxes on international trade and transactions 18.55 20.30 29.45 30.64 30.68 33.96 38.45 42.45 lport duties 13.27 14.08 20.38 19.74 20.49 20.23 21.00 23.43 Export duties 0.20 0.29 0.28 0.15 0.33 0.37 0.24 0.37 Stamp duty on imports 5.08 5.93 8.79 10.75 9.86 11.35 13.11 14.50 Foreign exchange tax 0.00 0.00 0.00 0.00 0.00 2.01 4.10 4.15 Other taxes 1.52 1.55 0.59 1.21 1.26 1.54 1.88 1.90 Stamp duties 1.52 1.55 0.59 1.21 1.26 1.54 1.88 1.90 Nontax revenue 2.61 5.10 4.73 8.36 8.89 13.18 12.81 10.17 Operating surpluses of depart- mental enterprises 0.57 1.56 1.61 2.65 4.32 6.30 3.80 2.84 ECCA profits 0.99 1.48 0.80 3.53 1.10 3.86 3.60 2.50 Interest and rent 0.20 0.03 0.21 0.29 0.49 1.00 0.62 1.02 Fees, fines, non-industrial sales, and other receipts 0.95 2.03 2.11 1.99 2.99 2.02 4.79 3.81 a/ Fiscal Year beginning April 1. Sources: Ministry of Finance and Planning; and mission estimates. - 82 Table 5.3: ST. LUCIA - CENTRAL 6OVERNhENT CURRENT EXPENDITURE a/ (In millions of East Caribbean dollars) Prel. 1977/78 1978/79 1979/80 1980/81 1981/92 1982/83 1983/84 1984/85 Total expenditure 59.90 67.47 90.64 111.06 125.73 138.13 139.80 169.65 Current expenditure 48.72 51.52 73.22 80.49 90.92 114.82 114.49 135.25 Wages and salaries 22.23 23.97 44.72 39.67 45.01 66.90 62.30 75.60 a.m. retroactive cooponent ... ... ... 0.74 0.67 7.26 ... 3.50 Goods and services 18.53 18.60 15.27 21.36 24.40 26.30 21.32 24.98 Interest payments 1.37 2.71 2.18 3.14 3.94 5.15 9.17 10.80 Subsidies 0.49 1.02 1.97 3.46 3.93 2.56 3.72 4.88 Public sector 0.17 0.44 1.32 2.36 2.32 1.15 1.93 3.06 Other 0.31 0.58 0.65 1.10 1.61 1.41 1.79 1.82 Other current transfers 6.11 5.22 9.08 12.86 13.64 13.91 18.98 18.99 Retiremtent benefits 2.65 1.60 3.08 4.03 3.68 4.18 6.15 5.57 Public sector 1.00 0.93 1.99 3.95 3.16 4.15 4.48 4.50 Other domestic 1.19 0.56 1.16 1.98 2.90 3.30 3.79 4.35 Abroad 1.27 2.13 2.85 2.90 3.90 2.29 4.56 4.57 Capital expend. & net lending 11.18 15.95 17.42 30.57 34.91 23.31 25.31 34.40 a/ Vouchers issued basis; fiscal year beginning April 1. Sourcesi Ministry of Finance and Planningl and staff estieates. - 83 - Table 5.4: ST. LUCIA - CENTRAL SOYERNMENT SUBSIDIES AND OTHER CURRENT TRANSFERS a/ (In millions of East Caribbean dollars) Prel. 1977/78 1978/79 1979/80 1980/81 1981/82 1982/93 1983/84 1984/85 Totil 6.59 6.24 11.05 16.32 17.57 16.47 22.70 23.87 Public sector 1.17 1.37 3.31 6.31 5.49 5.30 6.41 7.56 Subsidies 0.17 0.44 1.32 2.36 2.32 1.15 1.93 3.06 Central Water Authority 0.04 0.04 1.09 1.40 2.14 1.03 1.23 2.60 Electricity Company 0.00 0.15 0.10 0.04 0.09 0.12 0.38 0.20 Banana Growers 0.13 0.25 0.13 0.22 0.10 0.00 0.32 0.26 Operating deficit of supply departeent 0.00 0.00 0.00 0.70 0.00 0.00 0.00 0.00 Other current transfers 1.00 0.93 1.99 3.95 3.16 4.15 4.48 4.50 Castries City Council 0.53 0.45 0.41 0.77 0.50 0.90 0.86 0.76 Funding Scheme 0.00 0.00 0.00 0.00 0.05 0.05 0.14 0.00 Port Authority 0.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Urban Developeent Corporation 0.03 0.03 0.00 0.00 0.00 0.00 0.00 0.00 Town and villages 0.00 0.00 0.26 0.54 0.55 0.81 0.63 0.79 Tourist Board 0.00 0.00 0.66 1.14 1.21 1.58 1.89 2.00 National Development Corp. 0.35 0.45 0.61 1.43 0.85 0.60 0.95 0.60 Narketing Baird 0.00 0.00 0.05 0.07 0.00 0.21 0.01 0.35 Private sector 4.15 2.74 4.89 7.11 9.19 8.99 11.73 11.74 Retirement benefits 2.65 1.60 3.08 4.03 3.69 4.18 6.15 5.57 Subsidies b/ 0.31 0.58 0.65 1.10 1.61 1.41 1.79 1.82 St. Jude's Hospital 0.00 0.00 1.00 1.16 1.65 1.71 1.71 1.72 Other b/ 1.19 0.56 0.16 0.82 1.25 1.59 2.08 2.63 Transfers abroad 1.27 2.13 2.95 2.90 3.90 2.29 4.56 4.57 o.w. Univ. of West Indies ... ... 1.44 1.88 1.94 ... 1.66 2.15 a/ Fiscal year beginning April 1. b/ Due to classification probleiu , subsidies and other private transfers say not be on the same basis in FY1979/00 as in the following years. Sources: hinistry of Finance and Planningj and staff estimates. -84 - TMEL 5.5: IT, LUCIA - POIEt SECTOR IflTIwO POSE, FT 84/85 - FT 871K hmal hninwinto - OgWovn PruinKtn Page 1 of 3 Cmnlatino Prot-(914/15 1914/05 1905/Ba 1906/07 191710 Salarca Post WIN71 FF:nntd s--i-----nv-----n----- ------- ------ -----t-----a-------at---------- - --- - - - - - - - - - - - - - - - - - - Total Extroal Total Extenbal Loca l Ttal Etotnal LKcal Total Extmoral Local Total Etetroal Local Total Etotwaal Local Total External Local Cost financing [COMIC SERICES 25337.9 M010.5 4027,4 33401.7 2929. 9 40104.1 27414 23397.9 4416.1 2206.6 21631.3 4140.3 175347.6 143473.1 Agricnltwne, Fwrnstry, Fiawiss 9901.2 8492.7 1400.5 15O4. 22717.4 270.4 14170.5 10530.2 3332.3 14223.7 11151.4 3072.3 71695.1 63170.0 A*rcultaro [dsk.ti Project 01 324.0 324.0 - 320.0 324.0 - 300.0 300.0 - 24.0 24.0 - - - - - - 972.0 972.0 lanai ingot SWiggy klan 0.0 - - - - - 1277.1 1134.9 142.2 1560.9 1307. 173.90 2030.0 2522.0 Baam Lotasimm I Training B3/14 415.2 415. 2 - 23.0 23.0 - - - - - - - - - - --- 439.0 439.0 lamtin t stun A Traioiog 04/35 0.0 - - 31.1 321.1 - 30.9 so.9 - 380.0 30.0a EalconS Card Syot. tEA 0.0 - - 94.0 94.0 - - - - - - - - - - --- 90.0 94,0 vicoltmn s trctons Sdiontut 121.5 121.5 - 304.0 2970.0 100.0 "M1. 0 75340 2050.0 9091.0494.0 2.0 0M 104i0.5 80000. 2400.0 54932 3449.5 1025.7 33210.0 2540. 0 SmaI Faraws Agricoltmwo mm. 0.0 - - - - - 2144J9 1793.5 371.4 2014.4 1043.0 350.0 1997.5 1525.2 472.3 - - - 11672.0 1652. 0 You Crong Iivnrificatau 0 383.0 313.3 I 117.5 117,5 - 101.7 108.7 - - - - - - - -- 670.0 670.0 Trio Crag Oiowsificatim It 54.6 54.8 - 137.1 137.1 1 52.4 252.4 - 332.9 332.9 - 430.3 430.98 11001.0 1100.0 hOattlsamint 0 livnnnhfacatiu 1 7206. 0 51191.0 1375.0 1597.0 772.0 132. 0 - - - - - - - - - 04.0 4163.0 FfAwils hmonlnat 3700.2 3523.9 234.3 3330.3 300. 9 217.0i 573.0 434,2 139.4 191.4 190.6 - - - - - - 10003.1 9203.0 bONgor LionotKk InV. 2427.0 24123.8 14.0 45.0 45.0 - - - - - - - - - --- 2472.0 2457,0 Lead & Motor Inn lbit 141.0 132.7 1.9 24.0 24.0 - - - . - - - - - - - - 312.0 342.0 80nd-pcmerad Fit bhill han 70.0 71.0 - 51.0 51.0 - - - - - - - - - - - 121.0 121.0 hoaige I LanA Caoannoratinm I 0.0 - - 75. 3 404.3 050.0 1206.4 1045.0 43.44 1040.7 923.9 57.9 1014.9 114.9 - - - - 4075,0 3MI, 0 PiK#ollannn 121334/U 1201.2 - 1201.2 54.9 - 54.9 - - - - - -- - - - - - 1334.1 0.0 Rafinfctorial 1022.2 0072.2 550.0 4107.3 58. 5 423.0 59I. 7 5504.7 37.0 4300.0 4010.0 20.0 20073.0 18449.0 Induotrial Estates 0 2457.0 2179.0 200.2 397.2 397.2 - - - - - - -- - - - - - 2054.0 2548.0 lstastrlal totatno 92 0.0 - 2225.0 075.0 50. 0 0107.3 56*3.3 423.3 5591.7 504.7 37.0 4304.0 4013.0 20.0 - - - 17224.01 501, 0 lawima ~~~~~~~~~~~~1550.2 139.0 1411.2 2075.0 2475.0 0.0 2759.0 2759.0 0,0 2004.0 2000.0 1.0 11994.2 7573.0 Pan loraphlon Tois Cantrs 30404.0 340.0 139,0 139.0 - 2075.0 2075.0 - 2759,0 2759.0 - 2000.0 204. 0 - - - 10573.0 7573.0 Tutrist hors c4atribution 0.0- 1411,2 - 1411.2 - - - - 1 411.2 0.0 Comnlmcatifns 1199.1 20649.3 1340.5 1474.1 1332.5 141.4 91.9 02.1 34.8 0.0 0.0 0.0 2989. 1 25120.1 ProdKctiwn OnfrastriKtora 0t.0. 13450.5 12014.7 JAMS.101320,4 10403.2 Ml1,2 - - - - - - - - - --- 253152.0 23355.0 boear.a hir Cawp Facilitina 0.0 - 35.4 - 135.4 1474.1 1332,5 140.4 91. 42.1t 34. - - - - 10.0 1377.0 lKanptlfol Iqugnt 202.0 202.0 - 90.0 90.0 - - - - - - - - - - - - 352.0 294.0 FawpKy ftwa Snap 0.0 - 270.0 94.1 175.9 - - - - - - - - - - 270.0 94.1I KIINinlaan 02/03-W4/U 1357.9 - 1337,9 108.0 101.0 - - - - - - - - - - 1526L.I 0.0 Pon 31pV 40.0 0.0 40.4 2708. 0 229. 0 403.0 705.0 445.0 300.0 0.0 0.0 0.0 9755.2 7290.0 hKad ?1nW ProjKct 0.0 - - - - 2700.0 22*. 0 445.0 705,0 405.0 500. 0 - 113 720. 0 OVal ElKctriicatilu 12/33-414/U 593.0 593.0 48.6 43.0 - - 42.2 0.0 #atsf gggly 225.9 157.3 081.0 4940.3 4550. 3 312,0 331. 9 3120.9 200.0 5292.9 4481.9 79. 0 25106.0 2(065.0 ltitgatd Motor Dsvslngnt I 755.9 215.0 540.01 0409 78.3 00.6j 109.7 109.7 -f oll 403 Iotnwitnd at bOnBmnlngnt II 0.0 - - - - - 1175.0 1175.0 - 274,0 274.4 - - - - - - 1449 1449 loOny Sapgliu 10 5012.2 4002.3 929.3I 79. 0 79. 0 - . - -- - - - 4725 4101 ftner hgglino IN 0.0 - - - - 2581.0 2209.0 6 312.0 3114.5 2054.5 200.0 520. 9 4400.9 794.0 60000.0 5237.0 703.0 10979 14100 Sctow Syotim lWevomsnato 0.0 - - - - 1102.0 1002.0 - - - - - 002 1002 Page 2 of 3 TABL! 5.5: ST. LUCIA - PUBLIC BICTOl INYSTHEW PIOQAN. FT 84/85 - PT Si/88 (continued) basa Didltwoits - AWrone ProjKcts Icoottl (EC 18002 Cumlotine Pro-I 914/U 291W/U 2963/3 1916/37 1587/1U IleK. Post 1917/U1 riwiomdnotmnts - ----------- ---- ------ ----- ---- ------- ------------------ -- Total Ekotwnal Total Ebloroti Local Total Exteroal Local Total otwna local Total fotoroal Local Total Eotnrail Loca l Ttal Ettornak Local Cast Financing SOCIAL NVNICES 3052.2 657IL1 1470.4 2694.0 2341.0 349.0 1347.0 U13.0 349.0 942.0 593.0 349.0 41274.9 34193,0 - ----- --- ---- - ------ - - ----- ------ ----- ---------- EdKcation 5723.3 4A13.1 1119.5 696.0 695.0 0.0 0,0 0.0 0.0 0.0 0.0 0.0 26211.1 24425.0 konal, Entoon's 0.0 - - - 19.0 158.0 -I" - - - - 9 2I" St. Alnpoone 3o So onl 2613.6 1613.6 - 113.8 213.0 - - - - - - - - 1727 1727 chool Snlaoilitotiu 1755.3 17500.0 56.3 455.1 4560.0 52.7 500.0 500.0 - - - - - - - - - - 2325 22300 Njocolloonoo LKcAl 02/534/IS 15.2 - 1592.2 1036.5 - 1036.1 - - - 036.5 0.0 haItI I Soanag 2069.2 292.0 134,1 1566.0 1237.0 349.0 W4. 0 593.0 349.0 942.0 593.0 349.0 13057.5 1112.0 Footing of Onlnorabl ro pto 536.71M35.0 1563.71564.0 144.0 - - - - - - - 577 4093 Pro-school oAt kchool Footing 0.0 - - - - - 942.0 593.0 349.0 942.0 593.0 349.0 942.0 593.0 349.0 1111.0 i1155. 0 696.0 4707 1114 Improvement of Moolti Contra 0.0 - - - 44.0 644.0 - - - - - - - - - - 644 644 Public Snoth Carn ho. 0.0 - 10292.0 2091.0 - - - - - - - - - --- - 1092 1091 Snncnlloomsn Local 45/0364/IS 094.4 - 64.4 234.1 - 234.2 - - - - - - 9.5 0.0 tousnin I Coinoity lorvicts 229.6 5.0 224.0 W 46 0 40.0 0.0 563.0 U56.0 0.0 0.0 0.0 0.0 2045.6 976, 0 NultiWprp Cootrm 0.0 - - - - - M30. 300.0 - 6. 0 U56.0 - - - - 05 955 hif-hinlp Connnity Projocts 0.0 - - 5.0 5.0 - 15606.0 .0-MA- - Ill Ill Sisolloomso Local 0/103141M 674.7 - 614.7 224.0 - 224.0 - 10 - - - - - 201.6 0,0 IEll PIMIC 91IC0 1954.6 15.7 193.9 294.0 294. 0.0 0.0 0.0 0.0 0.0 0.4 0.0 6353. 3 320.0 Admnisitration A Plsaiog 1415.7 25.7 2468.0 394.0 394.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4390.4 328.0 Purchase .4 Poico lotion 0.0 - - - - 294.0 294.0 - - - - - - - - - - 294 294 L.a TKc Police Training Centre 5.3 6.3 - 15.7 23.7 - - - - - - - - - - - - - 24 24 llecollmoms Local 121S3-64/85 270.6 - 2702.6 1460. 0 - 2460.0 - - - - - - - - - - - 4072.4 200 Public Booty 470.9 0 MtG 0 0 0 0 0 0 0 0 0 2962.9 0 Khocollaoee Local 52113-H/U 1492.0 - 1492.0 470.9 - 470.9 - - - 1962.9 0 5IEILLIEDJO ~~~~~~ ~~~~~ ~ ~~~~543.0 543.0 0 543.0 543.0 0 343.0 543.0 0 543.0 503.0 a 41107 2272 Ninimi Agan. Faids 12/1313715 1222.1 104 136. 543.0 543.0 - 503.0 543.0 - 543.0 543.0 - 43.0 543.0 - 407 2272 m lt nnotunto 4064.5 2091.7 2552.13 244.6 3544.6 0,0 4622.3 4622.3 0.0 2370.0 2370.2 0.0 240550.3 25332.5 ftrt#w Finooco 121 2243.9 264.6 1979.3 1507.6 507.6 200.0 1004.0 1004.0 - 1192.4 2292.4 - - -- - - - 6099 2700 KIm hrongthooing 712.1L 792.1 - 400.0 420.0 - 000.0 10400 - 1795.9 2796.9 - 1400.0 1444.0 - 599.0 - 599.0 5999 540 In6 ltrnngthuing 0.0 - - - 340.0 340.0 - 1040, 2044.0 - 344.0 344.0 - s55.0 554.0 - 2234 2234 Stotnt Lows 12 2066.0 2266.0 - 112. .0 0MA - . - - 1 447 1197 tWt Leoss 112 307.4 307.4 - 407.6 257.6 250. 0 534.6 534.6 - - - - Ism-- - 23 2I00 Sdotet Loss 19 0.0 - - -63.0 630.0 - 470.0 630.0 - 30.0 170.0 -It-- "6, 294 lsout koqioitions 12/13-14/1U 3726.0 - 3711.0 2233.3 631.5 2341.5 - - - 525.3 031.5 Fined Innstiets 3567.7 27643 0244.7 3699.7 32437. 4457.1 29464 25091.9 4345.1 27291. 22794.3 4497.3 22795.5 100056.2 thor loonsteets 4649.5 2097.7 21552.13 04.6 3104.1 0 4622.3 4622.3 0 2370 2370 0 24050.3 2532. IUEA, 0096510951(T7 40037.2 29744.7 10796.5 4054.3 2942.5 4457.3 34153.3 29720.2 4345.2 29662. 23164.3 4497.3 252733.2 2t5411.6 Page 3 of 3 TAhI2A 82 S. LUCIA - PULIC 53C1R DUY21S VMfd. IT 84/85 - ry 87/811 beso Itderuuet - Psyaead PrejKcte 09W/U tEStIS 295/07 ~~~~~~ ~ ~~~~~~~19117/11 hints Post 1987/11 Fixed Osoostmsts To------- -------- .... ------ --- tatl Etaenal Total Elterua LKxI Total Loteroa LKxI Total Esttesu LKcal Intal Eatersal Local Total External Local Coot Financin ECUWC 10DEC10 124.0 0.0 124.0 6463.0 4171.0 M.3, 14414.0 13155.0 1261.0 0921.0 11009.0 2276.0 Agricalttreo, Fsraitry, Fisheries 124.0 0.0 124.0 34911.0 345.0 212.0 469.0 3763.0 39. 0 7675.0 756W. 204.0 Castles Narket IWroet Oil - 0 NattuAl AMttoar 4.0 - -- - - - - - - - - -. 0 3 ruder bain If00 124.0 12406 1770.0 2556.0 2123.0 334.0 2750.0 594.0 3360.0 3076.0 2014.0 3220.0 30. 20.0 100 104 reset meaf Y0.0 - - - - - - - - 1 4047.0 13371.0 1645.0 14047 12379 Afic. besttleeet 22 (bum)a 0.01 - 300.0 0300.0 - 1300.0 0300.0 - 2400.0 2400.0 3000.0 5000.0 0.0 1000 10000 Swit. Resetttement I20 lhseer) 40. - - - - - - . - - - - - - 2200.0 3200.0 0.2 2200 2200 knstag I Lagl Cosirvatiis 20 0.2' - - - - - - - 3500.0 300o.0 0.0 3300 3500 Fornesy Sicaeest I Cesewritlia S. 2.0 42 6 i. 0 - 1703.0 0703.0 2013.0 213.0 - 4400.0 6400.0 0.0 134 10 054IM Feeder kiads 0.2 - - - - - 4230.0 4250.0 0.0 4250 4230 Immifactarioq 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0,0 0.0 0.0 0.0 NUmenwrOeIestrial freo Zom 0,0 - - - - - . - - - - - - - 9625.0 0000.0 615.0 9425 MOO Cal So aK Iedestrial park 0.0 - - -1- . 000.0 2"D0. 0 2400.0 20400 29000 Pentuzla Coe.it PInt 0.0 - 075.0 3300.0 3734.0 4075 3340 Enstries tailS Cestre 0.0 - - - - - - - - - - - - 449.0 409.0 0.0 404 449 Tojrso a,l 0.0 CIO 0.0 0.0 0.0 330.0 330. 0.0 370.0 493.0 73.0 Piles 2.0.4 Ileostpt 0.0 - - - - - - - - 330. 330.0 - 770.0 493.0 77.0 1100.0 157.0 153.0 2200 1990 Cinicitxms ~~~~ ~~~~ ~~~~~~~~~0.0 0.0 0.0 1765.0 01415.0 60,0 4230.0 5405.0 M45M 7002.0 4233.0 905.0 Voii Airwat Epresests 0.0 - - - -1- - - - 2900.0 10404.0 2835.0 IB90 0404 Oit Cosnt 6.5 CntrKctes 047.2 255.0 22.3 - 050.0 2050.0 - 210.0 334.0 415.0 51000.0 0305.0 725.0 24152.7 15305.0 2487.7 27000 24300 Edbwin MMd fAlatitatuis 0.0 - - - 200.0 2020.0 80.0 2042.2 2042.0 200.0 0.0 0.0 0.0 2242 2862 Cistrnis Mrieage I 0.0 - - - 75,0 635.0 60.0 issi.o 0221.0 200.0 - - 0.0 100.0 -200.0 2443 2003 Pue olpyO 0.0 0.0 0.0 10000.0 200.0 0.0 1409.0 0449.0 0.0 330.0 300o.0 0.0 hsthsaao tEwgy Issiapeset 233.4 05.0 226.4 - into 100.0 1409.0 2449.0 - 350.0 330.0 - 20007.4 21036.0 -208.0 27000 27000 kwlater p.9y 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 boss gm Cuotrectis 0.0 - - - - . - . - - - - - - 6080.0 73820.0 13020.0 64130 73102 larial leviIS. 0.0 0,0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 lbalti 0.0 0.0 0.0 0.0 0,0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Mm Sesital - Castries 0.8 - - - - - - - 10000.0 10000.0 0,0 0000 2l0om Imaiing I Cemmeity braless 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Skties] Outwit tepls 0.0 - - - . - . - . - - - - - 4320.2 3470.0 50.2 0320 3470 Lu Cas Nhode 0.0 - _ --- - - - - - 4250.0 3603.0 037.0 4250 3603 Swat Pillo1 leotres 0.0 0.0 0.0 4250.0 8250.0 0.0 5 .0000 5000.0 0.0 Usisastratims S planning-- 0.0 0,0 0.0 0350,0 4250.0 0.0 5000.0 5000,0 0.0 Isorsut Offies "ldgo Ca 00. - . . l04 sOo.0 o!. - 300.0 "M 2000.0 4500.0 450.0 0.0 1low 2000 600 048ic Iirs64. - Ceesa 0.0 . 70275 750.0C - 04, 54408.0 - 9250.0 920. 0.0 2500 0580 71700 PlUt 900 TE 0.0 0.0 LI 024.0 0.0 034.0 84030 40172.0 2292.0 20246.0 17405,0 2760,0 343M,0 23009.0 3274. 0 o This catmoerp isctldee dldewemots a projectte ich so# lvlly locilly flsoced PA disburemaents i astereally fleeced projects OiCh are to is dotersired at a later stage. - 87 - - ~~~~~~~~~~~~~~P age I o f 2 Table 5.6: ST. LUCIA - OPERATIONS OF THE CONSOLIDATED PUBL[C SECTOR (In millions of East Caribbean dollars) Prel. 1977/79 1978/79 1979/90 1980/81 1981182 1992/93 1983/94 1984/85 CONSOLIDATED PUBLIC SECTOR Total revenue & grants 98.36 114.39 156.10 177.65 213.48 218.49 235.07 257.67 Current revenue 91.65 107.40 143.59 163.21 199.25 206.77 222.96 238.93 Current grants 0.29 0.43 0.13 0.16 0.00 0.25 0.17 0.44 Capital grants 6.42 6.55 12.39 14.27 25.23 11.46 11.94 18.30 Total expenditure & net lending 105.63 120.94 165.50 189.08 219.90 235.04 245.25 277.75 Current expenditure 92.91 94.65 136.60 148.10 179.92 205.65 210.91 236.30 Capital expend. & net lending 22.72 26.29 28.91 39.98 39.99 29.39 34.33 41.45 Current account balance 8.75 12.76 6.99 15.11 8.34 1.12 12.05 2.63 (excluding grants) Overall deficit 1-) -7.27 -6.55 -9.40 -10.43 -6.42 -16.56 -10.19 -20.08 Change in payment arrears 0.00 0.00 6.25 -6.63 6.36 7.04 8.65 8.19 Overall deficit on cash basis(-) -7.27 -6.55 -3.15 -17.06 -0.06 -9.52 -1.53 -11.B9 Financing 7.27 6.55 3.15 17.06 0.06 9.52 1.53 11.89 Foreign assets -0.04 0.12 -0.05 -0.48 0.75 -0.52 0.00 0.00 Not borrowing from ECCI (incl. counterpart of purchases from IMF) 0.94 2.85 2.60 11.98 9.91 0.39 -0.59 -0.91 Dther net foreign borrowing 4.13 6.21 8.96 1.47 0.09 10.41 -0.80 -0.90 Net dooestic bank borrowing -0.90 -0.95 -2.46 6.12 -11.48 1.76 -6.49 9.05 Other dosestic borrowing 3.13 -1.69 -5.90 -1.92 0.79 -2.52 9.41 5.55 (includes residual) -- -- -- - -- -- - -- -- -- - -- -- - -- -- -- - -- -- - -- -- - -- -- -- - -- -- - -- -- -- - -- -- - -- -- - - 88 - Page 2 of 2 Table 5.6: ST. LUCIA - OPERATIONS OF THE CONSOLIDATED PUDLIC SECTOR (In sillions of East Caribbean dollars) Prel. 1977178 197e/79 1979/80 1980/81 1981/82 1982/83 1983194 1994185 1. General Government Total revenue t grants 62.04 68.50 91.36 105.69 115.57 124.30 134.71 147.78 Current revenue 56.19 62.79 80.90 96.74 99.19 117.36 125.31 129.81 Current grants 0.29 0.43 0.13 0.16 0.00 0.25 0.17 0.44 Capital grants 5.56 5.28 10.33 8.79 16.38 6.69 9.23 17.53 Expenditure 60.93 68.79 93.45 116.27 130.29 144.07 146.44 174.91 Current expenditure 49.75 52.83 75.70 84.03 94.95 119.57 120.72 140.33 Capital expenditure 11.18 15.95 17.75 32.25 35.45 24.49 25.72 34.59 Current surplus 6.44 9.96 5.20 12.72 4.34 -2.22 4.59 -10.52 (excluding grants) Overall balance (deficit -) 1.11 -0.28 -2.10 -10.58 -14.73 -19.77 -11.74 -27.13 Change in payment arrears 0.00 0.00 6.25 -6.63 6.36 7.04 8.65 8.19 (increase - Overall balance (deficit x -) 1.11 -0.20 4.15 -17.21 -9.37 -12.73 -3.09 -18.94 (cash basis) Financing -1.11 0.28 -4.15 17.21 8.37 12.73 3.09 18.94 Foreign assets -0.04 0.12 -0.05 -0.49 0.75 -0.52 0.00 0.00 Net borrowing froe ECCB (including counterpart of purchases from IhF) 0.94 2.85 2.60 11.98 9.91 0.39 -0.59 -0.91 Other net foreign borrowing 2.04 3.67 1.07 0.13 2.43 10.61 -0.90 -0.80 Not domestic bank borrowing -3.30 -0.53 -1.99 7.10 -10.05 0.33 -6.53 7.80 Other domestic borrowing -0.25 -0.95 0.36 3.33 3.75 4.50 1.60 0.90 Residual -0.75 -6.03 -5.79 -1.42 5.33 1.92 11.01 12.85 _-- -- -- ---_-- -- -_-- -- -_ --_-_ - --- - -- --__- -__ - -___ -_- -- - -- --- - - -- --- -- - 89 - Table 6.li ST. LUCIA - EASTERN CARIBBEAN CENTRAL DAMI (In millions of East Caribbean dollars) Decmober 31 1979 1980 1981 1932 1993 19B4 Not international reservns 167.4 145.2 148.8 133.8 134.8 208.7 Assets 210.6 212.3 191.4 133.9 136.1 212.0 Current assets & eoney at call 139.3 93.9 91.5 15.9 12.1 107.9 Regional notes I coins in process of redemption 5.7 6.2 2.8 3.2 0.6 1.4 Other securities a/ 65.6 112.2 97.1 114.7 123.4 102.7 Liabilitin -43.2 -67.1 -32.6 0.0 -1.3 -3.3 Balance due to banks abroad c/ -43.2 -67.1 -32.6 0.0 -1.3 -3.3 Not position with banks in ECCI -89.2 -61.6 -55.6 -46.3 -50.6 -197.4 Assets 9.7 6.S 7.2 11.2 9.3 11.3 Blnkors balances 6.5 4.2 4.9 9.6 5.4 9.1 Balances with banks in area 2.2 2.3 2.4 2.6 2.9 2.2 Liabilities -97.9 -69.1 -62.9 -57.5 -58.9 -199.7 Currincys notes and coins -24.0 -26.5 -23.5 -29.4 -29.3 -40.9 Dominica 3.0 2.4 2.4 3.3 3.1 Other 21.0 24.1 21.1 25.1 26.2 Deposits -73.9 -41.6 -39.3 -29.1 -29.6 -92.8 Desnd 7.9 12.9 13.1 17.8 22.9 31.3 Fixed 66.0 29.7 26.2 11.3 6.7 50.5 Statutory reserve requireent - - - - - -49.7 Statutory deposits - - - - - -27.4 Net domestic assets 13.3 13.9 19.4 24.3 31.0 110.4 Central government (net) 33.5 40.3 45.9 53.2 56.0 142.1 St. Lucia treasury bills 2.5 7.2 9.2 8.7 10.0 10.0 Other treasury bills .15.9 16.1 18.3 25.9 27.5 27.9 St. Lucia debentures 1.9 4.2 4.2 3.7 3.3 3.3 Other dobentures 13.2 12.8 15.2 14.9 15.2 15.3 St. Lucia temporary advaces ... ... ... ... 2.6 Other temporary advances ... .., ... 7.4 Statutory requirements . 75,7 Liabilities to noneonotary international organizations -0.4 -7.7 -2.5 -1.4 -1.2 -0.2 Nit unclassified assets -19.9 -19.7 -25.0 -27.5 -23.8 -31.5 Assets 1.9 4.0 3.7 9.5 9.9 Liabilities -21.7 -22.7 -28.7 -36.0 -33.7 Currency in circulation 91.5 97.5 111.6 111.8 115.2 131.7 In St. Lucia 24.6 27.7 28.0 30.2 Estimated notes L coins issued - 29.3 313 33.9 35.4 Ninust commercial bank holdings - 4.7 4.1 5.9 5.2 In other ECCI area countries 88.9 70.3 91.3 91.2 92.4 Estioated notes I coins issued 112.9 92.1 100.7 103.7 106. 5 Ninusi comercial bank holdlngs 24.0 21.8 19.4 22.5 24.1 Coins in former member countries IBCCB coins) c/ 2.6 2.6 2.6 2.6 2.6 / 1993 includes credit balance with CARICON Multilateral Clearing Facility IC1CF). b/ ABROAD meaning outside ECCI area. Includes debit balances with CMCF. c/ DCC8 refers to the British Caribbean Currency Board. Sourcet Eastern Caribbenn Central Bank. - 90 - Table 6.2: ST. LUCIA - CERCIAL BANK OPERATIONS (In sillions of East Caribbean dollars) December 31 1979 1980 1981 1992 1983 1994 Net foreign assets -12.2 -21.1 -17.0 -13.3 1.7 18.4 Assets 27.4 30.3 22.9 28.9 42.0 60.9 Foreign currency holdings 2.7 3.7 4.1 2.9 2.3 3.3 Claims on ECC8 9.0 8.9 4.5 6.9 6.5 29.2 D.W. currency holdings 4.6 4.7 4.1 5.9 5.2 7.5 Claims on ECCB area banks 2.1 10.7 0.5 3.5 9.7 4.8 Claims Dn banks abroad 9.5 3.5 11.2 13.3 21.0 20.5 Other 4.1 3.5 2.6 2.5 2.5 3.0 Liabilities 39.6 51.4 39.9 42.2 40.3 42.4 Balance due to ECCB 0.6 0.8 0.0 0.4 0.0 1.5 Balance due to ECCB area banks 7.9 9.0 3.7 5.7 0.9 2.4 Balance due to banks abroad 11.3 19.0 12.3 10.7 13.5 12.9 Non-resident deposits 19.8 22.6 23.9 25.4 25.9 25.6 Demand 4.7 5.3 5.6 9.2 7.7 6.1 Savings 7.7 9.9 10.1 8.9 8.6 10.3 Time 7.4 7.4 8.2 7.3 9.6 9.2 Net domestic assets 131.6 151.4 163.7 170.2 160.8 171.5 Net credit to Central government 22.4 22.4 18.9 25.1 22.7 21.2 Treasury bills 2.6 2.5 0.2 0.9 0.8 1.1 Debentures 1.2 2.4 2.6 4.4 1.4 0.4 Loans & advances incl.overdraft 15.5 11.7 9.8 12.1 17,1 19.1 Special deposit requirement 0.0 7.7 13.4 14.7 16.2 - Government deposits (-I -3.1 -5.9 -6.3 -7.7 -3.4 -0.6 Net credit to rest of public sector -6.1 -10.5 -4.0 -11.1 -19.2 -23.4 Credit 5.2 2.0 5.9 4.8 2.4 3.4 Deposit H) 11.3 12.5 11.9 15.9 21.6 26.8 Net credit to non-bank financial institutions -2.3 -3.0 -8.7 -13.5 -20.7 -26.4 Credit 0.9 0.2 0.7 0.9 1.3 1.6 Deposit (-) 3.1 3.2 9.4 14.4 22.0 28.0 Credit to privite sector 130.1 164.4 195.2 197.2 209.4 238.2 o.w. comsercial bills discounted 2.7 1.8 0.6 1.1 1.5 1.6 Interbank float -0.9 -5.0 -2.4 -2.5 -2.0 -1.9 Claims 19.7 20.6 23.8 20.4 16.4 14.9 Liabilities 20.6 25.6 26.2 22.9 18.4 16.8 Net unclassified assets -11.6 -16.9 -23.3 -25.0 -28.4 -36.2 Assets 12.7 14.6 10.6 13.0 13.8 14.1 Liabilities 24.3 31,5 33.9 38.0 42.2 50.3 Liabilities to private sector 113.2 126.4 147.5 156.2 171.9 189.1 Demand deposits 24.1 24.1 24.7 26.9 25.8 29.0 lise deposiits 59.4 63.0 73.7 74.8 79.4 81.0 Savings deposit 29.7 39.3 49.1 54.5 66.7 79.1 a/ Effective March 15, 1984, ECCB assumed ECtl6.2 million of the government's liability to commercial banks represented by special deposits, EC$10.1 million was used by the commercial banks to satisfy their S% reserve requirneent and EC$6.1 million is held in the Central Bank in a special deposit account'. Sourcesi Ministry of Finance; Eastern Caribbean Central Bank; comeercial bank.; and non-bank financial institutions, - 91 - Table 6.3: ST. LUCIA - COMNERCIAL BANK LOANS AND DVANCES TO THE PRIVATE SECTOR a/ 1976 1977 1978 1979 1980 1981 1982 1983 1994 (In millions of East Caribbean dollars) Total 87.8 98.3 109.9 137.8 169.1 192.4 200.9 206.0 241.3 Agriculture 5.0 5.3 8.0 4.3 8.6 10.6 9.6 7.8 9.6 Manufacturing 12.7 14.9 19.7 22.3 23.3 24.1 18.9 16.7 23.9 Tourism 5.4 9.0 9.6 9.5 12.8 14.0 23.3 24.0 34.8 Transport 5.6 8.7 10.0 i2.0 12.2 13.9 11.5 7.8 28.9 Construction 6.9 8.6 9.8 9.8 9.9 7.9 6.2 6.2 11.0 Distributive trade 23.6 19.3 16.6 29.3 26.9 24.3 36.4 41.2 6.6 Public utilities 2.0 1.9 2.1 1.0 2.4 1.7 1.6 2.7 2.5 Personal and other advances 26.6 30.6 33.1 50.6 73.0 95.9 94.3 99.6 123.8 (In percent of total) Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Agriculture 5.7 5.4 7.3 3.1 5.1 5.5 4.3 3.8 4.0 Manufacturing 14.5 15.2 18.1 16.2 13.8 12.5 9.4 9.1 9.9 Touriss 6.2 9.2 8.8 6.9 7.6 7.3 11.6 11.7 14.4 Transport 6.4 8.9 9.2 8.7 7.2 7.2 5.7 3.8 12.0 Construction 7.9 8.7 9.0 ,7.1 5.9 4.1 3.1 3.0 4.6 Distributive trade 26.9 19.6 15.2 20.5 15.9 12.6 19.1 20.0 2.8 Public utilities 2.3 1.9 1.9 0.7 1.4 0.9 0.8 1.3 1.0 Personal and other advances 30.3 31.1 30.4 36.7 43.2 49.8 47.0 48.3 51.3 al Includes loans and advances to some of the statatory bodies and public enterprises. Sources: Eastern Caribbean Central Dank; and Ministry of Finance and Planning. - 92 - Table 6.4: ST. LUCIA - INTEREST RATES STRUCTURE (In percent per annue) December 31 1979 1980 1981 1982 19B3 1984 Deposits Savings a/ 2.50-3.00 2.50-4.50 3.00-7.50 3.00-7.00 3.00-7.50 3.00-6.33 Time 3 months 5.00 5.00-6.00 6.00-8.00 6.00-8.00 6.00-8.00 7.00-8.00 6 lonths 5.50 5.50-6.50 6.50-8.00 7.50-8.50 7.00-9.50 7.00-8.00 12 lonths 6.00 6.00-8.00 7.50-9.00 8.00-10.00 7.00-11.00 7.50-10.00 Lending Priae rate 7.50-8.00 9.00 8.50-13.00 13.00 12.00-13.00 13.00 Treasury bill rate 9.00-12.00 11.00-12.50 12.00-14.00 9.50-12.00 9.50-15.50 11.50-22.00 a/ Includes savings plans subject to a ainisue balance and/or minieus eonthly deposits. Sources: Ministry of Finance and Planning; and local commercial banks. - 93 - Table 6.S ST. LUCIA - COMNERCIAL BANKS LIQUIDITY POSITION December 31 1979 1980 1981 1982 1983 1984 (In millions of East Caribbean dollarsI Special deposit requirement a/ 0.0 7.7 13.4 14.7 16.2 16.7 Other liquid assets Inet) bl 10.2 4.0 7.1 13.0 28.4 28.7 Deposits of private sector 133.0 149.0 171.4 181.6 197.8 214.6 Residents 113.2 126.4 147.5 156.2 171.9 189.1 Non-residents 19.8 22.6 23.9 25.4 25.9 25.5 (As percent of total deposits) Total liquid assets (net) 7.7 7.9 12.0 15.3 22.5 21.2 Special deposit a/ 0.0 5.2 7.8 8.1 8.2 7.8 Other liquid assets (net) 7.7 2.7 4.1 7.2 14.4 13.4 a/ As of Narch,15 1984, the Governeent's liability to the commercial banks represented by special deposits were assused by ECC8. b/ Consist of comuercial banks net foreign assets (excluding non-resident deposits from foreign liabilities) and Treasury bills. Sources Ministry of Finance and Planning. - 94 - Tabli 7.1: ST. LUCIA - RETAIL PRICE INDEI Alcoholic Houcshold Drink& Fuel and Mis- Clothing All and dnd cellancous and Itns Food Tobacco Housing Light Items Footwoar Services (April 1964 * 100) kights 1000.0 565.6 69.8 101.0 55.9 50.3 61.1 77.3 Period average 1976 305.5 330.1 249.9 329.0 250.8 267.5 225.2 292.1 1977 332.6 356.7 267.9 339.7 271.9 340.9 263.7 314.9 1978 368.7 395.2 293.1 400.4 301.3 385.7 284.9 329.1 1979 403.5 432.0 328.9 412.6 3a9.3 429.8 315.2 339.3 19B0 492.4 507.0 423.S 450.9 594.2 469.5 395.4 390,1 1981 554.0 603.4 439.6 506.9 642.4 578.1 410.9 436.9 1992 580.4 621.5 480.4 550.5 658.9 699.4 422.9 439.3 1993 53990 625.4 526.1 549.6 656.0 729.0 443.5 441.4 1994 596.1 624,7 577.3 546.0 663.5 765.7 457.7 493.4 End of period 1976 320.0 345.2 254.6 335.8 264.4 304.1 238.8 309., 1977 348.0 374.0 282.4 340.3 304.8 376.3 274.5 316.6 1979 378.0 403.5 306.7 406.7 307.2 405.9 299.5 332.1 1979 436.2 464.1 405.1 413.3 491.5 470.6 326.4 342.4 1980 528.4 565.5 443.9 494.3 646.0 507.5 406.3 433.3 1991 578.4 625.5 471.9 550.5 644.7 659.0 413.6 438.2 1992 561.6 616.9 496.0 550.5 666.8 725.5 431.7 442.6 1983 589,3 624.0 528.2 546.6 657.6 743.7 451.9 440.8 1984 596.5 620.5 552.4 541.6 681.2 770.7 457.8 493.1 (Percentage change) Period average 1976 9.7 10.0 8.4 9.7 14.4 15.2 6.9 414 1977 9.9 9l. 7.2 3.3 8.4 27.4 17.1 7.8 2970 10.9 10.8 9.4 17.9 10. 13.1 8.0 4.5 1979 9.4 9.3 12.2 3.0 29.2 11.2 10.7 3.1 1990 19.6 17.4 28.9 9.3 52.6 13.9 25.4 15.0 1981 15.0 19.0 3.7 12.4 8,1 18,3 3.9 12,0 1982 4.6 3.0 9.3 9.6 2,6 21.0 2.9 0.5 1983 1.5 0.6 9,5 -0.2 -0,4 4.2 4.9 0.5 1994 1.2 -0.2 9,7 -0.7 1.2 5.0 3.2 11.8 End of period 1976 10.3 10,6 5.3 4.5 18.4 23.6 10,9 9.0 1977 9.8 893 10.9 1.3 15.3 23.7 14.9 2.5 1979 9.6 7.9 8.6 19.5 0.8 7.9 9.1 4.9 1979 15.4 15.0 32.1 1.6 60.0 15.9 9.0 3.1 1980 21.1 21.8 9.6 19.6 31.4 7.9 24.5 26.5 1981 9.5 10.6 6.3 11.14 -0.2 29.9 1.9 1.1 2992 0.6 -1.4 5.1 0.0 3.4 10.1 4.4 1.0 1983 1.3 1.2 6.5 -0.7 -1.4 2.5 4.7 -0.4 1984 1.2 -0.6 4.6 0.5 3.6 3.6 1.3 11.9 Source, 6aurnsent Statistical Office. - 95 - Table 7.2: ST. LUCIA - OUTPUT OF SELECTED COMMODITIES (In thousands of indicated units) Prel. 1977 1978 1979 1980 1911 1982 1983 1984 Agricultural Production Bananas (tons) 44.1 40.3 51.0 59.0 35.6 56.7 42.3 54.3 Cocoa (pounds) 224 179 240 224 150 92 34 110 Industrial Production Raw coconut oil (gallons) 820 868 911 845 399 615 732 614 Refined coconut oil (gallons) 391 454 349 408 242 390 535 457 Laundry soap (pounds) 1058 839 753 982 905 1075 1218 411 Coconut teal (pounds) 3735 3971 4043 4171 1911 2828 3343 2797 Copra Itons) 5.2 5.7 6.0 6.4 2.4 3.7 4.7 4.0 Rue (gallons) 203 206 181 187 155 132 I55 146 Anisal feed (tons) - 645 1948 - - - - - Paper/cardboard (cartons) 9202 10869 5989 6660 9752 10677 11791 12671 Clothing (dozens) 1S2 194 190 261 389 556 539 *d. Souces - na- rer'As Coconut_Growers ---s.- a o- Staistca f . - . - ---------- Sources: Banana Brewers' Ass.1 Coconut Growers' Ass., and 60verneent Statistical Office. - 96 Table.7.3: ST. LUCIA - ENERGY: CONSUMPTION AND RETAIL PRICES a/ ------------.-----------..-----------------------------------------------__--__---------------------------- Prel. 1977 1978 1979 1980 1981 1982 1983 1984 Gasoline Consueptiont'000 iaperial gals.) 2997 3181 3294 3256 3170 3516 3588 4146 Retail price (ECS/imperial gal.) 2.50 2.75 3.68 4.83 5.10 5.10 5.00 5.00 Diesel Consumption('000 imperial gals.) 4735 5127 5571 5997 5164 321q 5127 4996 Retail price (ECU/imperial gal.) 2.15 2.40 3.48 4.53 4.90 4.84 4.75 5.00 Kerosene Consumption('000 iaperial gals.) 327 324 210 262 229 242 244 273 Retail price (EC$/imperial gal.) 1.77 2.00 3.21 4.04 4.39 4.36 4.25 4.39 LPG (gas) Consumption('000 pounds) 2838 3175 3186 3313 3757 3982 4206 4249 Retail price (ECS/ib.) 0.48 0.48 0.70 0.90 0.99 1.06 1.12 1.26 Electricity consumption(kwh eln) 49.9 56.7 60.8 58.4 62.0 63.9 68.1 69.7 of which: Donestic 9.6 11.3 12.9 .12.1 13.5 14.3 16.0 17.7 Comoercial 21.8 24.2 27.8 25.8 23.8 24.4 26.6 28.1 Industrial 6.7 7.7 8.0 7.2 7.6 6.1 6.8 7.5 Other and losses 11.8 13.5 12.1 13.3 17.1 1q.1 18.7 16.4 a/R etail prices as of December 31. Sources: government Statistical Office; ESSO, Texaco and Shell agents; and St. Lucia Electricity Services. - 97 - Table 7.4: ST. LUCIA - INDEX OF MANUFACTURING PRODUCTION Weights 1977 1978 1979 15980 1981 1982 1983 (Index 1975 a 100) Overall index 100.0 135.7 154.1 136.1 160.1 158.9 179.4 180.4 _ - ---- ---- ---- _ _ --- ---- __-____ Food 41.8 87.0 97.7 93.7 96.2 45.4 69.4 87.2 Beverages 13.1 266.9 307.0 327.4 334.9 308.6 228.7 236.1 Tobacco 5.4 112.0 114.2 122.4 111.2 106.5 103.6 96.5 Textile goods 0.5 141.0 70.4 211.2 234.0 250.4 .. ... Wearing apparel 4.7 221.9 282.7 276.1 611.8 837.4 1228.0 901.7 Timber and lusber 0.4 408.0 180.7 42.7 ... ... Furniture 1.4 66.9 103.3 97.5 99.9 146.4 160.4 177.1 Cardboard boxes 27.8 138.1 163.2 89.9 110.0 146.7 ... ... Industrial chemicals 2.4 72.4 63.1 56.6 ... Tire & tube retreading 0.7 264.3 233.3 206.5 ... Plastic products 0.8 182.4 100.2 297.5 ... Fabricated metal products 0.1 38.2 42.9 39.3 ... Electrical products 0.8 122.7 111.0 132.4 224.1 244.5 316.7 322.7 Other eanufactured items 0.1 201.0 147.4 621.3 204.5 204.0 159.6 263.1 (Percentage change) Overall index 7.4 13.6 -11.7 17.6 -0.7 12.9 0.6 Food 3.5 12.3 -4.1 2.7 -52.8 50.7 27.5 Beverages 41.1 15.0 6.6 2.3 -7.9 -25.9 3.2 Tobacco 8.1 2.0 7.2 -9.2 -4.2 -2.7 -6.9 Textile goods 103.5 -50.1 200.0 10.8 7.0 ... ... Wearing apparel 27.1 27.4 -2.3 121.6 36.9 46.6 -26.6 Timber and lumber 221.0 -55.7 -76.4 ... Furniture -31.3 54.4 -5.6 2.5 46.5 9.6 10.4 Cardboard boxes -13.3 18.2 -44.9 22.4 33.4 ... Industrial chemicals 1.4 -12.8 -10.3 ... ... ... ... Tire I tube retreading 81.4 -11.7 -11.5 ... . Plastic products 14.1 -45.1 196.9 ... Fabricated metal products -59.5 12.3 -8.4 ... Electrical products 36.2 -9.5 19.3 69.3 9.1 29.5 1.9 Other manufactured items 21.4 -26.7 321.5 -67.1 -0.2 -21.8 64.8 Sources: Government Statistical Office; and staff estimates. - 98 - Table 7.5: ST. LUCIA - SELECTED TOURISM STATISTICS Prnl. 1977 1978 1979 1O I9I 1982 1983 19?4 (Number of visitors) Totil visitors 149000 145700 140500 140261 89608 106073 112897 127996 Cruises *i 84300 76400 64000 59042 18934 33812 33260 38732 Other 64700 69300 76500 81219 70674 72261 79637 89264 Stayover ... ... ... 78414 69559 70218 77764 85331 Excursion b/ ... ... ... 2905 2115 2043 1873 3933 By air 61900 66S00 73700 79694 70254 71535 77811 87619 By sea 2800 2800 2800 1525 420 726 1826 1645 United States 17100 16200 17500 13019 11196 12020 20319 21895 United Kingdoo 10700 13000 15000 15158 14337 13867 17156 17582 Canada 13200 15000 17500 14111 12077 14101 10502 12849 6ermany 0 0 0 9054 6987 6079 5469 S833 Caribbeon countries 14200 14600 15000 12406 11819 12541 13769 14796 South Aserica 2000 2000 2000 1215 1675 1195 643 1937 All others 7500 8500 9500 16257 12583 12458 11779 14372 (In sillions of U.S. dollars) Total expenditure c/ 19.0 24.3 33.4 32.9 29.4 32.4 39.7 42.4 Cruise visitors 0.9 1.0 1.2 1.1 0.4 0.7 0.9 1.2 Other visitors 18.2 23.3 32.2 31.8 29.0 31.7 38.8 41.2 (Annual percentage change) Total visitors 18.7 -2.2 -3.6 -0.2 -36.1 18.4 6.4 13.4 Cruise visitors 22.0 -9.4 -16.2 -7.7 -67.9 78.6 -1.6 16.5 Other visitors 14.7 7.1 10.4 6.2 -13.0 2.2 10.2 12.1 Total expenditure 42.4 27.9 37.4 -1.5 -10.6 10.2 22.5 6.8 lmorandum itemss Average expenditure per stayover visitor (in USP1 ... ... 53.2 SO 52.5 S5 60.9 58.1 Average lenght of stay of non- cruise visitors (days) 8.0 8.5 8.6 8.5 8.5 8.7 8.7 8.7 Hotel occupancy rate (O ... ... 63.5 63.9 52.3 52.5 56.2 66.8 lumber of beds ... ... 3103 3103 3191 3421 3421 3421 &/ Includes 12,800 yacht pasungers.from 1978. b/ Excursion visitors are those who do not spend a night in the country. cl Expenditure for stopover visitors * numbor of visitors x average stay x 0.92 (i guest nights) x daily sjending (estimated at US$48.00 for 1978). It is assund that 9 percent of stopover visitors stay woith relatives or friends, thus only S2 percent stay in hotels or guest houses. Average daily txpenditurt, as derived from a survey in 1979, his benM extrapolated with the change in hotel prices and retail prices. Cruise-ship visitors' average stay is three hours and average spending of US$22.00 in 1978. Yacht visitors' average stay it three days and daily spending of US$6.00 in 1978. Sources: Statistical Officel Tourist foard, Economic Consultants Lisited; and staff estimates. - 99 - Table 7.6: ST. LUCIA - TOTAL QUANTITY OF LOCAL AND IMPORTED FOODSTUFFS CONSUMED BY HOTELS IN 1983 SURVEY Seasonal Annual Hlgh Season Low Season Local Imported Quantity .Quanti ty Quanti ty Quantity Value Category (lbs.) S (lbs.) S (lbs.) 3 (lbs.) S Total (EC$) Meats 241,787 65 199,432 45 63,373 14 377,846 86 441,219 3,063,432 Sea-food 104,661 56 80,963 44 151,226 81 34,398 19 185,624 1,627,061 Dairy 204,988* 54 174,941* 46 4,693* 1 375,236* 99 379,929* 2,712,096 Staples 244,438 52 221,940 48 328,084 70 138,294 30 466,378 648,480 Vegetables 301,767 61 197,466 39 326,340 65 172,893 35 499,233 1,119,983 Fruits 591,809 56 458,623 44 972,049 93 78,383 7 1,050,432 1,236,129 Other 142,655 52 131,385 48 7,399 3 266,641 97 274,040 519,522 Total 1,832,105* 56 1,464,750* 44 1,853,164* 56 1,443,691* 44 3,296,855* 10,926,703 * Excluding eggs. Source: CTRC: Study of LInkages between Tourism and Local Agriculture In Grenada, St. Vincent, St. Lucia and the Bahamas. C X ~~~-2 ---X -; - eo -: .-... -IA-0- .1 -. . = --r - - 3 ) ~~~ - --~ ~ 14*I5 A~~~~~~~~~~~~~~~~~' CA405 8.o is eA PI'AG f f A r - 5 R -~~~~~~~~~~~~~~~~~~~~~~~1 L 4 T~tt SW? ' SOUTH AMERICA i~~~~~~~6 - -05i0 DAU PH I . ,X 5-4'05' 0 C cf A ,_ -- R S _ :L E T,- Maj,- e R.as . d moi-s Tow 4p-.-sdp :. POSE A49S N ST E - ~ ~ ~ ~ >__ - Posi iodeiw "_ b S D A P H H I N 1-00' - ,42, 35'' ' AJ'y - C A~~~~~~~~~~~45 ScAnse . Ry-, , R ' S L .f'psps%Y1 I 0 U '' R I E R E ' A.- do, FL -~3d p5*45'~~~~~~~~~~~~~~~~~~~~~~~ v ~ ~ A I N ! ____________________ O a C F A N -~~~~~~~~~~~cl SEPTEMBER 1985 The World Bank Headquarters European Office Tokyo Office U 18I8 H Street, N.W. 66, avenue d'Ina Kokusai Building Washington, D.C. 20433, U.S.A. 75116 Paris, France 1-1 Marunouchi 3-chome Telephone: (202) 477-1234 Telephone: (I) Chiyoda-ku, Tokyo 100, Japan Telex: WUI 64145 WORLDBANK 723-54.21 Telephone: (03) 214-5001 RCA 248423 WORLDBK Telex: 842-620628 Telex: 781-26838 Cable Address: INTBAFRAD WASHINGTONDC ISSN 0253-2123/ISBN 0-8213-0624-3