St. Kitts government reports millions of dollars in lost revenue as a result of COVID

Prime Minister Dr. Timothy Harris says government expects an EC$188 million (One EC dollar=US$0.37 cents) fallout in revenue over the first six months of this year as compared to the same period last year, due to the impact of the Coronavirus (COVID-19) pandemic.

“The Coronavirus pandemic has disrupted our lives, put persons out of work, and undermined the ability of fathers and mothers to care for themselves and their families,” Harris said on his weekly radio and television programme “Leadership Matters’, saying “this health and economic crisis has no precedent and no template to guide us.

“No leader before has faced such a monumental crisis or challenge. I promise to do all in my power with the grace of God to lead our people to the Canaan land.  A brighter day is at hand. Working together, we will succeed,” he said, noting that the twin-island Federation is also preparing to observer its 37^th anniversary of political independence from Britain in September.

“As we approach our 37^th year of independence, we pause to reflect on our strengths and weaknesses as we explore alternative approaches for enhancing our nation’s growth and prosperity, post-COVID-19.”

Harris said that the strategy has been to contain the economic recession, avoid the loss of lives and restore the country to pre-COVID-19 levels of economic activity followed by expanding growth rates.

“We are proud of the discretionary policy actions we employed.  We have not introduced any new taxes over the last five years. We have held the line on value added tax (VAT) and other taxes, allowing households to keep more of what they earned in their pockets.

“We went further and removed VAT on food, medicine and funeral expenses, and to help our citizens and residents deal with COVID-19, we removed VAT on sanitizers and other products to help in the fight against COVID-19. We reduced unsustainably high current account deficits and cumulative outstanding government debt.”

Harris said that his administration, which was recently re-elected to office, has been able to reduce the cost of servicing the public debt, freeing up funds, which are now being used for building roads.

“We exerted the required fiscal discipline for living within our means.  That is why with an unprecedented $120 million stimulus package we did not need to borrow from anywhere.”

He told the nation that apart from the United States and Canada, the per capita income for St. Kitts and Nevis ranks third among sovereign states of the Western Hemisphere and number one in the sub-regional Organisation of Eastern Caribbean States (OECS).

“Only The Bahamas and Trinidad and Tobago are higher. Put differently, St. Kitts and Nevis has demonstrated a greater capacity for providing for the welfare of its people than other states in the Western Hemisphere. Exports per capita for St. Kitts and Nevis are ranked second among the member states of CARICOM. Only The Bahamas is higher.”

He said that several electronic-based companies here have made their contributions to export earnings and the global supply of products, but warned against resting “on our laurels”.

“While St. Kitts and Nevis has a per capita income of US$30,208…which is an impressive statistic among small island states, there is still much more progress to be realized.  We look to the success of Bermuda and Singapore as we search for examples to inspire our nation and people to higher performance.”

Harris said that the high debt burden that strangled the Federation at 186 per cent of gross domestic product (GDP) has been dealt with, adding “our debt-to-GDP ratio is the lowest among all independent countries of the OECS.

“We surpassed the international benchmark of a 60 per cent debt-to-GDP in 2018, ahead of every independent nation in the OECS,” he said, noting however, that the country has an import problem

He said each of the major GDP indicators is moving in the right direction with the single exception of imports.

“As we look to the future, we will increase the contribution of agriculture to food security, foreign exchange earnings, employment and growth.  The significant investments in agriculture and fisheries since March 2020 will bear fruit in the short and medium terms.  We have supplied over five million EC dollars of inputs to farmers and fishers to increase their outputs.

But Harris said that an estimated EC$1.5 billion is leaving the country for purchasing goods and services abroad and that he supports the Buy Local Campaign launched recently by the Chamber of Industry and Commerce.

“Let us buy local food, masks, wine, rum, beer, etc. in preference to imports. We do not have much control over imports of manufactured products.  But we do have control over imports of food products, which account for approximately 30 per cent of all imports.”

Harris said that if the Federation is able to increase its production of domestic food products while reducing its imports of food products, the total GDP will increase, and with it the nation’s per capita GDP.  “Our Independence journey is about our taking control of our health, our lives and our destiny. By supporting local businesses, we reinforce our commitment to our country.

“St. Kitts and Nevis has arrived at the take-off stage of economic development.  Notwithstanding, there are a number of steps that must be taken if we are to arrive at that glorious state of economic bliss in which outstanding performance in meeting individual and national goals are recognized and rewarded.”

Prime Minister Harris said that the introduction of an Incentive-Based Compensation or “Pay for Performance” Plan is critical to meeting the nation’s mission and objectives, noting that for many organizations, this well-trenched private sector practice is now being embraced by the public sector.

He said Ambassador Vance Amory will lead the national effort at reform of the public service.

Harris said that wages and salaries constitute a heavy burden for government in the range of EC$225 million annually.

“For the period January to June 2020, we have spent EC$113.5 million on payroll.  We have to ensure those who are in receipt of wages and salaries are giving value for money.  We have to cut out waste, unnecessary overtime, abuse of government vehicles, and hold persons accountable for damage to government’s property.”

He said incentive-based compensation should serve as a powerful tool that motivates most highly valued employees to enhance their work effort.