MEDIUM TERM ECONOMIC STRATEGY PAPER, 1998 - ... POLICY MATRIX 1.

MEDIUM TERM ECONOMIC STRATEGY PAPER, 1998 - 2000

POLICY MATRIX

1. INTRODUCTION

1.1 Over the last ten (10) years, monumental changes have occurred in international economic relations and in the global economy as a whole. These recent developments have impacted to a greater degree on small, open, island economies, such as St Vincent and the Grenadines, which have had to undergo internal adjustments and adopt new policies and strategies to respond to the challenges of globalization and international competitiveness.

1.2

The dismantling of preferences for the country’s banana exports under the European

Union (EU) Banana Marketing Regime; the wide ranging implications of the policies of the World

Trade Organisation (WTO); and the various commitments to regional and hemispheric trade and economic arrangements, will, to a large extent, influence the country’s development over the medium to long term.

1.3

As the new millennium approaches, the question of sustained socio-economic development and the correctness of policies to promote such development assume greater significance in the overall development goal of St Vincent and the Grenadines. The Government of St Vincent and the

Grenadines considers a wider, more balanced economic base as being central to its development thrust, hence diversification within the principal economic sector, agriculture and at the level of the macro economy remains the fundamental principle on which development programmes have been hinged.

1.4

The purpose of the Medium Term Economic Strategy Paper (MTESP), is to establish the broad parameters of Government’s socio-economic policies and the implementation framework to promote sustained growth in the economy, in order to improve standards of living and the general welfare of the population. The MTESP sets out the policy agenda; the goals and objectives; the economic prospects and strategy and the financing requirements to take this country on a path of sustained economic growth over the medium term.

2. CURRENT ECONOMIC SITUATION

2.1 During the recent five-year period (1992-1996), St Vincent and the Grenadines achieved moderate economic growth. Real Gross Domestic Product (GDP) grew by 2.9% on average during 1992 -

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1996 fluctuating widely between –0.7% and 9.1%. An analysis of the data shows that in the years that GDP growth rates were high banana output and exports also show significant increases.

Accordingly, high growth rates in 1992 reflect strong performances in Agriculture and

Manufacturing, and in 1995 increases in Agriculture, Tourism and Transportation, as indicated in

Table 1.

Nominal GDP at Factor Cost

GDP Annual Percentage Change

TABLE 1

1992

10.8

1993

1.9

Real GDP at Factor Cost

Agriculture

Manufacturing

Mining & Quarrying

Electricity & Water

Construction

Wholesale & Retail

Hotels & Restaurants

Transportation

Communications

Banks & Insurance

Real Estate & Housing

Government Services

Other Services

Imputed Service Charge

0.5

1.8

3.8

3.9

8.0

1.3

4.0

9.1

21.2

16.0

9.2

7.8

7.1

8.1

6.6

-0.7

2.0

2.7

5.0

6.9

1.3

2.6

-0.7

-19.2

-4.0

19.6

2.1

6.1

9.5

6.3

SOURCE: Statistical Office, Ministry of Finance; (P) – Provisional

1994

0.9

0.5

3.5

4.7

1.8

4.4

1.3

6.2

-3.0

-35.8

-0.5

7.0

5.2

2.9

8.0

-3.0

1995

9.2

8.1

0.9

7.5

1.6

-0.0

1.3

11.0

8.2

46.8

1.0

4.9

8.1

3.3

6.9

10.5

1996 (p)

4.3

5.4

12.4

6.5

1.8

1.5

1.2

5.4

1.4

-9.1

4.3

6.8

4.4

-8.0

2.1

-1.3

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2.2 Central Government’s fiscal operations during the period 1992 – 1996 show a current account surplus averaging 3.7% of GDP. This current account surplus was driven largely by the growth in current revenue which was influenced primarily by higher receipts from taxes due to improved tax administration and increased revenue from import duties. The capital account on the other hand showed fluctuating deficits which led to overall deficits between 1992 – 1995

2.3 During the period under review, the balance of visible trade indicated a persistent deficit, amounting to

EC$249.9 million in 1996. Reflecting the combined effects of a general decline in total export earnings and an increase in imports.

MERCHANDISE TRADE (EC$ MILLIONS)

TABLE 2

Merchandise

Exports (fob)

Merchandise

Imports (CIF)

Trade Balance

1992 1993 1994 1995 1996

210.9

356.6

156.1

362.7

136.0

350.7

115.3

366.7

139.5

389.4

-145.8 -206.6 -214.7 -251.4 -249.9

SOURCE: Statistical Office, Ministry of Finance

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2.4 The growth in the value of imports was partly related to an increase in imports of construction related goods associated with investment activity by the private sector and the implementation of several sizable public sector projects. The decline in export earnings was mainly attributed to the fall in banana production and exports and the decline in exports of other agricultural produce.

3. MEDIUM TERM ECONOMIC PROSPECTS AND STRATEGY

3.1 Medium Term Goals and Objectives

3.1.1 Over the medium term, Government’s main goal will be to attain balanced growth and sustainable development through the implementation of policies designed to facilitate greater economic diversification.

3.1.2 The specific policy objectives are:



To promote balanced and sustained growth in the economy in order to reduce unemployment and poverty and improve the standard of living of the population.



To accelerate economic diversification by promoting diversification within the agricultural sector; expansion of the tourism industry; promoting small enterprise development and facilitating investments in non-tourism services.



To improve the efficiency and effectiveness of the public service and to enhance its ability to manage the process of sustainable development.



To enhance the fiscal and regulatory framework to encourage private sector activity and to achieve greater levels of domestic savings and investments in the economy.



To strengthen public finances in order to increase savings for public sector investments.

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

To prioritize the development of human resources as a tool for poverty reduction and to provide the requisite social infrastructure to match national development needs.



To promote environmental management and the sustainable utilization of the natural resources in ways which reduce degradation and preserve the integrity of the environment.

To achieve these objectives, the Medium Term Economic Strategy emphasizes:



Improvement in fiscal balances to increase public sector savings



Facilitating private sector development



Promoting investments in informatics, off-shore financial and other non-tourism services



Expansion in the tourism industry and creating linkages with other economic sectors



Development of a more competitive banana industry



Sustained human development with all people, men and women sharing equally the benefits of economic growth.



Supporting socio-economic infrastructure through the Public Sector Investment Programme



Improvement in public sector management capabilities



Integration of environmental management concerns into development planning



Expansion of social development programmes

3.2 Medium Term Economic Prospects And Financing Requirements

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3.2.1

Economic growth prospects for St Vincent and the Grenadines over the medium term hinge on the performance of the agricultural sector, particularly bananas; the continued expansion of the tourism industry and other services; the fiscal prudence of

Government and its ability to effectively channel aid financing such as the STABEX transfers, into direct revenue generating projects and into programmes which will stimulate economic activity and promote economic diversification.

3.2.2

With the requisite regulatory and incentive framework in place, moderate inflation rates averaging 3% over the medium term and support through increased efficiency in public sector management, private sector led economic activity is expected to generate real growth averaging

4.5% between 1998 and 2000.

3.2.3

3.2.3 The current banana industry rehabilitation programme which targets yields of up to 20 tonnes per acre of high quality marketable fruits on irrigated farms and the intensification of the pest control programme aimed at eradicating the Pink Mealy Bug in nonbanana agriculture are expected to stimulate growth in agriculture. The full resumption of regional trade in root crops and vegetables will be critical to this projected growth. Tourism expansion will revolve around foreign direct investments in the sector, particularly in Canouan where an additional US$50 million is expected to be invested. Public sector investments in the cruise ship berth, the development of visitor attractions and accelerated overseas promotion are expected to complement private sector activities and generate growth in the tourism sector.

3.2.4 It is expected that the rationalization of the telecommunications sub-sector and the reduction in charge for telecommunication services, together with accessibility to fiscal incentives will attract further investments in informatics, thus providing employment opportunities.

3.3

Macro-Economic Targets

3.3.1 Central Government finances are expected to show a current surplus of 39.1 million dollars

(4.1% of GDP) in the year 2000, from 29.4 million (4.0% of GDP) in 1996. Savings generated

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POLICY MATRIX will largely be as a result of the following:



Expansion in economic activity



Tighter controls on expenditure, including wage restraint



Improvement in tax and other non-tax revenue collection.

3.3.2 As a result additional public sector savings will be generated to finance the Public Sector

Investment Programme (PSIP). This is the center piece of Government’s strategy to create an appropriate economic infrastructure to facilitate private sector investments. The PSIP which in

1998 is expected to be 136.8 million dollars (16.8% of GDP) will increase to 204.6 million in

1999 (23.4% of GDP) largely due to proposed investments in airport development. In the year

2000, the PSIP will represent approximately 16.3% of GDP, some 40% of which is expected to be financed through domestic resources. Grant financing primarily through STABEX transfers will account for a significant percentage of the PSIP resources up to the year 2000.

3.3.3 The public debt has been kept at a manageable level over the last few years. The external component is expected to increase from 302.7 million dollars in 1998 to 427.6 million in the year 2000. The ratio of external debt to GDP is projected to move from 37.1% in 1998 to 45.4% in the year 2000. This increase in the external public debt is reflective of Government’s aims to commence development of airport facilities on mainland St. Vincent to accommodate medium haul jets.

3.3.4 Government’s goal to improve efficiency in the operations of all public sector enterprises through the implementation of concrete expenditure control measures and other cost saving mechanisms, is expected to generate increased public sector current savings, which in 1996 stood at 7.4% of GDP. This is projected to increase to 7.9% of GDP in 1998 and to 9.2% of

GDP by the year 2000.

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3.3.5

Government is committed to the use of its fiscal and financial policies to encourage higher levels of domestic savings and creating the mechanisms through which these savings can be converted into productive investments; to increase economic activity, income generation and employment.

SELECTED ECONOMIC INDICATORS (1996 – 2000)

TABLE 3

ACTUAL PROJECTED

1996 1997(p) 1998 1999

(IN MILLIONS OF EC DOLLARS)

2000

Nominal GDP (Market Prices)

Real GDP (1990 Market Prices)

743.2

615.1

758.1 814.9 876.1

624.3 652.4

(IN PERCENT)

681.8

941.7

712.5

Real GDP Growth Rate

Inflation Rate

Central Government Current Savings

Public Sector Savings

PSIP

1.4

3.6

4.0

7.4

5.6

2.5 4.5 4.5

0.8 3.0 3.0

(IN PERCENT OF GDP)

3.8 3.8 4.0

7.1

9.1

External Debt 31.9 31.6

SOURCES: ECCB, Ministry of Finance, Statistical Office

7.9

16.8

37.1

8.7

23.5

45.6

4.5

3.0

4.1

9.2

16.5

45.4

(P) – Provisional

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3.3.6 Over the medium-term, Government is projecting a surplus on the overall Balance of Payments.

In order to achieve this objective, efforts will be made to further stimulate exports and this will be complemented by measures to increase Foreign Direct Investment on the Capital and

Financial Account.

3.3.7 Within recent years, it has been observed that an increase in non-factor service income has brought some stability to the current account notwithstanding the instability in the trade balance. It is therefore Government’s policy to increase export earnings from Banana and

Non-banana agricultural products, and non-factor services. Initially, the Current Account is expected to deteriorate reflecting the anticipated lag in export earnings. This situation is expected to improve towards the end of the period as export earnings gain momentum.

3.3.8 During the period, Government will continue its efforts to attract Foreign Direct

Investments, additionally, a significant inflow of official capital transfers are anticipated as a number of STABEX funded projects are implemented.

4. MEDIUM TERM POLICY AGENDA

4.1 Savings and Investment

4.1.1 Government recognises that in order to achieve a real GDP growth rate of 4.5 % over the medium term, measures must be taken to increase the levels of gross capital formation and national savings. During the period, gross capital formation and national savings are targeted to rise to 35 % of GDP and 26 % of GDP respectively.

4.1.2 Over the medium-term, the accelerated implementation of the PSIP will increase the ratio of investment from 9% to 12 % of GDP. A significant proportion of the PSIP are on-going projects. Private sector investment, inclusive of foreign direct investment, is also expected to remain buoyant as Government’s efforts to stimulate investment, through fiscal and other

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POLICY MATRIX policies, continue.

4.1.3 In light of the projections for the Agricultural, Tourism and other Services Sectors, national savings will increase during the period. Measures will be taken to improve the net savings position of the public sector. These include the introduction of the National Health Insurance

(NHI) and improved efficiency in public finances. The NHI will enhance both social and economic welfare, since it will serve to strengthen the system of social security while mobilising increased savings. Additionally, in conjunction with the ECCB, efforts to develop money and capital markets will intensify.

SAVINGS AND INVESTMENT

( % of GDP)

TABLE 4

ACTUAL PROJECTED

1995 1996 1997 (p) 1998 1999 2000

INVESTMENT

Public

Private

Public

Private

NATIONAL SAVINGS

33.3

5.8

27.4

27.0

1.9

25.1

31.6

6.2

25.4

23.0

1.7

21.3

35.9

9.9

26.0

23.2

1.2

22.0

FOREIGN SAVINGS 6.3 8.6 12.7 11.9

SOURCES: Ministry of Finance, Statistical Office (P) - Provisional

35.4

12.0

23.4

23.5

1.0

22.5

4.2 Fiscal Policy

35.5

12.5

23.0

26.5

2.5

24.0

9.0

33.6

11.5

22.1

27.4

2.9

24.5

6.3

4.2.1

Over the next three years, Government will continue to apply prudent fiscal policy with the aim of increasing public sector savings while creating an environment that stimulates private sector investment. The current savings of the Consolidated Public Sector are targeted to rise to 9 % of

GDP. To achieve this objective Government’s fiscal policy will concentrate on increasing the efficiency of revenue collections, expenditure control and divestment.

4.2.2

During the period, emphasis will be placed on improving the revenue yield from the Customs

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POLICY MATRIX and Excise Department. Attention will be paid to strengthening the administrative capacity of the Department and upgrading the physical infrastructure at Kingstown, Bequia, Canouan, and

Union Island. The efficiency gains realized by the Inland Revenue Department over the last three years, will be further enhanced when the Department becomes fully automated and revised

legislation enacted.

4.2.3

The period will be characterized by stringent financial management as attempts to reduce inefficiencies in public outlays are strengthened. To this end, expenditure control measures will be strengthened through the Financial Management Unit in the Ministry of Finance and

Planning. In addition user fees and other sources of non-tax revenue will be reviewed.

4.2.4

Government is aware that a privatisation strategy properly executed is consistent with its fiscal policy objectives to increase savings, improve public sector efficiency and encourage private sector investment. To this end Government has targeted several parastatals for divestment

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POLICY MATRIX

4.2.5 Over the period, Government will further reduce the corporate tax rate and the top marginal rates of Personal Income tax., as it continues to reform the tax system and remove disincentives to private sector activity. The fiscal incentives framework will also be reviewed and its scope widened to provide incentives for investments in the Service Sector.

4.2.6 A new Customs Control and Management Act will also be enacted in an effort to modernise and improve the efficacy of the Customs procedures. Additionally, the Department will be reorganised along functional lines to create a structure that is more conducive to delivering a high quality service to the public.

4.3

Financial Policy

4.3.1 Policies aimed at developing and modernising the Financial Sector are also part of

Government’s medium-term strategy. In this regard, financial sector policies will be implemented, in collaboration with the ECCB, to strengthen and broaden the scope of financial intermediation in SVG.

4.3.2 During the period, the New Development Bank will commence operations. This institution will meet the demand of the private sector for venture capital as they seek funds to finance investment. New legislation covering the operations of insurance companies and credit unions will be enacted in 1998. In addition, the technical and administrative capacity of the Cooperatives Division will be strengthened to ensure the proper supervision of the rapidly growing credit union movement.

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4.4 Trade Policy

4.4.1 The trade policy takes full cognizance of trade liberalization and globalization trends.

Accordingly the policy will focus on the development of local industries to acceptable levels of international efficiency and competitiveness; thus resulting in increases in exports of goods and services.

4.4.2 Additionally, Government will provide an enabling environment and collaborate with the private sector to provide greater exposure through the following:

 organizing local trade fairs

 organizing trade and investment missions abroad

 establishment of a standards bureau

 promoting the development of trade in services.

4.4.3 Over the planned period, efforts will be made to collaborate with other regional countries and organisations to develop a strategy to negotiate trade treaties and agreements. These strategies for negotiation must be formulated in a way that they satisfy the needs of international obligations.

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4.4.4

Government will put in place mechanisms to strengthen its institutional capacity to address

World Trade Organisation and CARICOM issues and their implications on the economy. These include:

 formation of inter-ministerial committees to feed information into the OECS/WTO desk and

CARICOM.

 regular attendance at regional and international meetings.

 monitoring of international developments through effective market intelligence and research.



Regular consultations with the private sector and NGO community to solicit input and advice.

4.4.5 St Vincent and the Grenadines’s survival as a small developing State will depend largely on its ability to utilize scarce resources in the most effective ways. To this end, the private sector must speedily adapt to global trends in which preferential and guaranteed market quotas are being eroded.

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4.5

Agriculture

Review

4.5.1

The Government’s policy with respect to agriculture is to create a framework which promotes agricultural diversification. The process will be facilitated through implementation of new strategies and approaches to increase productivity and output of crops and livestock to acceptable levels of efficiency and competitiveness. The root crop, vegetable, livestock, fruit and fisheries sub-sectors will be organised to provide linkages with the tourism sector through the supply of high quality produce year round.

4.5.2 Despite the ongoing programme for agricultural diversification, banana production is still the main contributor to the sector. In 1996, the agriculture sector contributed about 12.6% to GDP compared with 14.1% in 1995. This decrease in the agriculture sector is attributed mainly to a 10% decline in banana output as uncertainty in the Industry and a slower than anticipated rehabilitation programme caused an exit of farmers from the Industry.

The Banana Industry

4.5.3 In 1997 the banana industry earned EC$39.7 million compared with EC$53.1 million in 1996, a decrease of about 25.3%. Export volumes declined by 30.2 % to 31,272 tonnes in 1997 mainly as a result of:



The uncertainty that still hovers around the industry following the WTO ruling.



Extreme winds and rains during the latter part of 1996.



Insufficient rainfall during early 1997.

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POLICY MATRIX



Falling prices relative to increasing costs in the industry.

4.5.4 Notwithstanding, Government will continue to support the implementation of strategies and programmes to reduce operational cost, improve quality of production and improved productivity from 8 tonnes/acre to 20 tonnes, while reducing the overall acreage under banana cultivation. The procurement of high yielding tissue culture plantlets, the establishment of major irrigation infrastructure (about 4000 acres) and provision of technical assistance to improve production practices are among the strategies the industry is implementing to ensure its survival.

Arrowroot Industry

4.5.5 Arrowroot is a traditional crop with great earning potential because of its capacity for vertical integration. Over the planned period attention will be given to the expansion of the industry and the modernization of the production processes. The following activities will be undertaken to achieve this objective:

(i) Technical assistance will be given to farmers to increase the national average yield/acre from an estimated 8,000 to 20,000 lbs/acre.

(ii) Research programme of Plant Multiplication for distribution to farmers will be continued.

(iii) New varieties will be introduced.

(iv) The Validation of new techniques that farmers would have to adopt in order to enhance efficiency and productivity.

(v) Acreage under cultivation from 419 acres to 1,200 acres will be increased.

(vi) Procurement of machinery for land preparation and harvesting.

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(vii) Collaboration with the French Technical Mission to solicit technical assistance to eliminate the existing processing plants and develop proposals to access financing to modernize the factories.

(viii) Implementation of Strategies to improve processes that will significantly increase starch recovery presently at 30%.

(ix) Efforts will be made to restructure and strengthen the administration and management of the Arrowroot Industry Association to ensure efficiency in its operation.

Root crops and Vegetables

4.5.6 Success at diversifying agriculture has been marginal due to the relative attractiveness of banana production. It is attractive to farmers because of the guaranteed markets, the potential high prices offered by British supermarkets, weekly payments and crop insurance. Government is continuing its efforts in providing a framework for agricultural diversification . To maximise the gains from agriculture, measures must be taken to ensure:

(i) Adoption of new production technologies

(ii) Identifying niche markets

(iii) Provision of adequate transportation

(iv) Proper institutional development strategies

(v) Human development strategies.

4.5.7 The Government recognizes the need to encourage the production of root-crops such as eddoes, dasheens, sweet potatoes, tannias and yams as a part of its food security and diversification programme. This sub-sector was severely affected in 1997 by the Pink Mealy Bug. As a result,

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POLICY MATRIX exports of produce have declined. Government has embarked on an eradication programme using biological means to control the pest. The programme has been producing positive results and expectations are that markets will be re-opened over the medium term.

4.5.8 Based on SVG’s comparative advantage in the production of root-crops as indicated by an

ADCU Study, Government will:

(i) identify market opportunities in the United Kingdom, United States and within

CARICOM.

(ii) increase acreage under cultivation.

(iii) collaborate with regional and international agencies to develop treatments and other protection against pests and diseases.

4.5.9 Fruit and vegetable production will be encouraged mainly to facilitate import substitution, food security and nutritional sustenance. The Ministry of Agriculture is expected to work closely with the Taiwanese Mission and CARDI to transfer their vegetable technologies to farmers as a means of increasing productivity.

Livestock

4.5.10 Livestock production activities possess great potential for food security and poverty reduction.

Over the medium term, efforts will be made to continue the integration of livestock into the crop farming system. Small ruminant production will be given special attention, and the multiplication centres will be used to produce pedigree animals for distribution to small farmers.

Forestry

4.5.11. Under the Forestry Development and Conservation Programme the Government will target the following:

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POLICY MATRIX

(i) ensuring that 35% of the total land area remain under natural forest.

(ii) Complete the demarcation and gazetting of forest reserves to prevent further deforestation.

(iii) Embark on a re-afforestation programme to recover depleted forest lands and to prevent indiscriminate farming on steep slopes. iv) The establishment of nurseries to supply trees for research and commercial operations.

Fisheries

4.5.12 The fisheries sub-sector has an important role to play in the agricultural diversification process.

Efforts would be made to increase the fishing sub-sector contribution to GDP for the planned period. Measures to be undertaken include:

(i) Construction of fishing centres in rural areas.

(ii) Conservation and management of in shore species through programmes of education, legislation and surveillance of in shore fishing activities.

Land Use and Land Reform

4.5.13 To ensure optimum utilization of scarce arable land, the Government will utilise the

Geographical Information System (GIS) which would help the determination of land use. An agricultural census will be conducted to ensure that lands identified for agricultural production remain agricultural land.

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4.6

4.5.14

Over the planned period Government will focus on further sub-division of lands at Mt

Wynne/Peters Hope and formalizing lease agreements which will provide farmers throughout St

Vincent and the Grenadines with land security. Farm management extension programmes will be strengthened. Farmers will be given technical assistance in the application of new production technologies.

Manufacturing

4.6.1 St. Vincent and the Grenadines, in preparing for global market competition in the context of non-preferential arrangements, must expedite the adjustment process in order to ensure that the manufacturing sector experience long-run sustainability.

4.6.2 Consequently, the Government of St. Vincent and the Grenadines will, over the medium term period, create the environment to increase output and employment in the manufacturing sector. The objective here, is to develop a dynamic sector, primarily by promoting the development of small manufacturing and agro-based enterprises; revision of the fiscal incentives programme; provision of credit for small businesses; and a more systematic monitoring of policy instruments. Key strategies to be undertaken by the Government of St.

Vincent and the Grenadines regarding the development of the manufacturing sector include:

-

-

- strengthening the capability of local agencies to facilitate small business development collaboration with the private sector in developing and implementing training programmes establishment of a small business development unit to provide technical support to the private sector.

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POLICY MATRIX

improvement of Port facilities and streamlining of operational procedures in order to reduce the cost of business operations. provision of export credit guarantee facilities for businesses. establishment of the National Development Bank to provide easier access to affordable credit.

establishment of a Standards Bureau to enhance product development and internationally accepted standards.

4.7 Tourism

4.7.1 Tourism has already surpassed the banana industry as the single largest income generating activity in the economy. In 1993 gross receipts from tourism stood at EC$82.2 million, declining slightly to EC$80.7 million in 1994 but increasing significantly to EC$113.6 million and EC$154.0 million in 1995 and 1996 respectively. Estimates for 1997 show receipts of EC$189.1million, a 23% increase over 1996.

4.7.2 Overall visitor arrivals stood at approximately 218,000 in 1995, declining marginally to just over 215,000 in 1996. The withdrawal of a major cruise line from St Vincent and the

Grenadines has adversely affected overall figures in 1997, however, growth in two important categories of yachting

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(15.9%) and stayovers (12.5%) provided the basis for increased optimism in the sector. The

United States and the United Kingdom continue to be the largest generating markets for St

Vincent and the Grenadines tourism, contributing some 29% and 14% of stayover visitors respectively.

4.7.3 The stay-overs and yachting categories are expected to continue on the positive growth path over the medium term and increased promotional activities targeting major cruise lines is expected to halt the slide in cruise arrivals and reverse the trend from the 1998/99 season onwards. Government has reduced the cruise passenger head tax from US$10.00 to

US$6.00 plus an environmental levy of US$1.50, which is to be implemented by all member states of the Organisation of East Caribbean States (OECS).

4.7.4 Notwithstanding the above, the tourism sector has a critical role to play in the thrust towards economic diversification and ultimately towards the country’s economic development.

Tourism has demonstrated its capacity to earn foreign exchange; to contribute to

Government’s revenue and to generate employment. The potential for linkages with agriculture and other economic sectors to provide a bigger domestic market is substantial.

The tourism industry will be accorded priority attention in the medium term.

4.7.5 The development of the industry continues to be constrained by several factors which

Government will seek to address over the medium term. Among these are:

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POLICY MATRIX



The absence of adequate airport facilities to accommodate medium haul aircrafts. The highest priority will be given to airport development, since limitations in airport facilities are the greatest hindrance to economic development in St. Vincent and the Grenadines.



Limited room capacity on mainland St Vincent for major events such as international cricket.



The fragility of the smaller Grenadine Islands to cruise tourism.



The problems associated with solid and liquid waste management and environmental degradation.



Dysfunctional attitudes of segments of the population to tourism.



Low level of development of recreational sites and attractions.



Concerns about the institutional framework to guide the development process.



The human resource requirements in the sector.

4.7.6 Government’s tourism policy is aimed at the utilization of the natural resources in the country to maximize tourism earnings. It is however mindful of the need to achieve compatibility between tourism and the environment, through rational land use and the integration of environmental considerations into tourism planning.

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POLICY MATRIX

4.7.7 The development of the tourism sector over the medium term will be based on the following broad parameters:



Sustained development of the tourism product and services to enhance visitor satisfaction and to encourage greater flows of middle to upper income visitors.



Pursuance of marketing and promotion activities targeting specific market segments, to take full advantage of the diversity of St Vincent and the Grenadines. Particular attention will be focussed on yachting and sailing and the development of the requisite infrastructure to support these activities.



Enhancement of the technical and institutional capabilities of tourism administration to ensure effective planning and management of the tourism development process.



Intensive internal promotion and public educational activities to create and instill a service oriented culture at all levels of society and to increase public awareness of tourism and its benefits.



Establishment of a training regime to target public and private sector workers in the tourism industry in order to consistently improve on the delivery of service.

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POLICY MATRIX

4.7.8

Tourism development hinges on Government’s ability to mobilize resources around the following:



Development of a high quality tourism product



Selective marketing of that tourism product



Securing the support of the local population through public awareness programmes and training

4.7.9 The development of the natural tourism attractions and the increased investments in accommodation, airport rehabilitation and other ancillary tourist facilities, are generating more interest in St Vincent and the Grenadines as a tourist destination.

4.7.10 The redevelopment of the Canouan Airport will be completed by the end of 1998 at a cost of

EC$40 million. This development will complement and support private sector activities in that island, where an additional two hundred and fifty (250) hotel rooms are at various stages of completion. This project will increase the national hotel room stock by 20%. The developers expect to invest another US$50 million in the construction of additional facilities including a marina.

4.7.11 The cruise ship and ferry berth at Port Kingstown will be completed at a cost of $40 million, thus providing facilities for the cruise industry and creating opportunities for ground tour operators, taxi drivers and tour guides to benefit from cruise tourism. The development of the cruise industry is expected to facilitate a greater spread of the tourist dollar, particularly on mainland, St Vincent.

4.7.12 Government has also commenced work on the preparation of a Strategic Plan for tourism development. This plan will include a Medium Term Action Plan, detailing concrete projects to be implemented to develop the tourism product and practical steps to improve tourism administration, promotion and human resource development. Implementation of the Action

25


POLICY MATRIX

Plan is expected to commence in 1999.

4.7.13

The marketing strategy targets specific segments of the market with a special thrust towards the middle to upper income travelers, to allow for the highest average level of expenditure per visitor. Cooperation between the public and private sector in overseas marketing is being strengthened, since the private sector is expected to play an even more active role in destination marketing in the medium to long term.

4.7.14 Public support for tourism is a prerequisite for harmonious development of the industry.

Government places emphasis on public education and awareness programmes to sensitize the population about the importance of the industry to economic development and to provide the social environment for this development to take place. A broad based task force has been established to address these concerns and prepare the population for the opportunities offered by the tourism industry.

4.7.15 One of the corner stones of Government’s tourism policy is the critical aspect of human development . Training of public and private sector personnel, the development of the social infrastructure and the strengthening of the institutions will be prioritized over the medium term to enable the country to consciously and deliberately manage tourism development.

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POLICY MATRIX

4.8 Non-Tourism Se

rvices

4.8.1 Throughout the medium-term, Government will continue to advance policies that will facilitate the broadening of the economic base of St. Vincent and the Grenadines. To this end, the efforts being made in the dominant sectors will be complemented by measures that will encourage growth and development in the new and emerging sectors. In this regard, special attention will be paid to Non-tourism Services, particularly, Informatics and Offshore Financial Services.

Informatics

4.8.2 Government recognises the tremendous benefits that a vibrant Informatics sub-sector can bring to the Vincentian economy, hence, during the period, several measures, designed to remove the impediments and constraints to the development of this activity, will be undertaken. These include the OECS/World Bank Telecommunications Project which aims, inter alia to encourage the development of informatics activities in a liberalised environment with lower tariffs.

4.8.3 During the period, the Information Services Investment Facilitating Act which will govern the operations of informatics enterprises will be enacted. Government is cognisant of the fact that expansion in Informatics will require a ready supply of labour with the requisite skills. To this end, one thousand (1,000) persons will be trained over the next three years to meet the anticipated rise in demand for labour.

27


POLICY MATRIX

Off-Shore Financial Services

4.8.4 St. Vincent and the Grenadines has been involved in the provision of these services since 1976 when the St. Vincent Trust Authority was formed. T he establishment of the new Offshore

Finance Authority (OFA) in January 1997 and its accompanying modern legislation signal led

Government's commitment to increase the relative importance of these activities in the economy.

4.8.5 Over the medium-term, efforts will focus on measures that will stimulate further growth in this area. Emphasis will continue to be placed on "due diligence" in the conduct of the business of the OFA, in an effort to ensure that the integrity of the Vincentian offshore jurisdiction is not compromised. Government will also intensify promotional activities to further expose St. Vincent and the Grenadines as an ideal location for offshore businesses.

4.9 Supporting Infrastructure

Communications

4.9.1 Growth in the tourism sector and the export market for agriculture has been severely hampered by the lack of adequate air service. A new study has been commissioned by the Government with technical assistance from the CDB and the Government of Canada to further look at airport development on the main island St Vincent. During the plan period, it is proposed to commence development of airport facilities to accommodate mid-size jets. This is the single most important project to advance the development of SVG. It will lead to the development of a hotel resort at Mt Wynne/Peters Hope, expansion in agricultural exports, assist in the further development in financial services, reduce unemployment and alleviate poverty.

28


POLICY MATRIX

4.9.2 Improvement of the road network is expected to continue throughout the 1998 - 2000 period.

Some major projects to be completed during the period include the Central Leeward Highway,

National Road Improvement, Labour Intensive Road Maintenance Programme.

4.9.3 The continued implementation of the Port Master Plan would see the completion and operation of the Ferry and Cruise Ship Berth which is aimed at eliminating congestion currently being experienced at the Ferry Berth while at the same time separating the cargo ships from the passenger ships.

Water and Sewerage

4.9.4 About 90% of the population has access to pipe-borne water supplied by Central Water and

Sewerage Authority (CWSA). It is now the policy of CWSA to provide metres to all new consumers. This has greatly reduced the need for extensive conservation drives to be undertaken by CWSA even during the dry season.

4.9.5 A feasibility study to look at extending the sewerage system in Kingstown and its environs has now been completed. The findings indicate that there is need to upgrade the grossly underutilized Central Kingstown Sewerage System, while at the same time to extend the system to the suburbs. The Government is currently negotiating funding for this project

29


POLICY MATRIX

Electricity

4.2.1

On mainland St Vincent 90% of the population is supplied with electricity. Investments in the sector are expected to continue especially in the Grenadines where the demand for electricity is occasioned by major private sector investments in Canouan. The electrification of Mayreau is expected to be completed during the period. During the period, investments in the energy sector will represent approximately 10% of the total PSIP. Major projects include:

 the construction of a new power generating plant;

 improvements and expansion to existing plants at Canouan, Cane End and Union Island;

 improvements in the transmission and distribution systems.

Telecommunications

4.9.7 St Vincent and the Grenadines along with the other OECS countries will be accessing technical assistance from the World Bank to develop strategies to negotiate with the telecommunications companies. The overall objective of this assistance is to support Governments improvements in the telecommunications regulatory framework, where it is intended to promote lower costs and increase the range of services offered. This is to ensure that the countries achieve a competitive edge in this sector.

30


POLICY MATRIX

4.9.8 The specific objectives include:

 encouraging pro-competition reforms in the telecommunication sector

 opening up segments which are subjected to monopoly.

 establishing an independent regulatory authority

 negotiating competitive prices for critical bandwidth and data sensitive telecom services.

During the period it is hoped that telecommunications charges will be lowered to encourage growth in the informatics sector.

4.10

Human Development

4.10.1 Human development is central to the medium term development strategy. In the medium term, programs will continue to focus on on-the-job training, formally organized education at the primary, secondary and higher levels; on adult education and technical and vocational training.

These programs are essential in creating a more skilled labour force.

4.10.2

With the coming on stream of a variety of complex technologies in informatics, and given

Government’s focus on the development of this sector, access has been, and will continue to be, provided to basic computer training.

31


POLICY MATRIX

4.10.3

Accordingly approximately one thousand (1000) young persons will benefit from such training, preparing them for employment in the information industry. Public sector inservice training will focus on financial management, human development, strategic planning and quality management.

4.10.4

Government will continue to be pro-active in seeking training and development opportunities; and will continue to grant scholarships, study leave and financial assistance, enabling persons to take advantage of training opportunities.

4.10.5 Government will continue to collaborate with the financial institutions to facilitate access to university level education through the NIS Student Loan Programme. Between 1995-1997, 201 loans were approved at an estimated value of EC$8.4m. During the planned period more persons are expected to take advantage of this programme.

The Training Committee has already prioritised the national training requirements for the period 1998 – 2000 and is in the process of securing funding to execute this programme.

4.10.6 The University of the West Indies will continue to expand its Distance Education Programme giving persons in non-campus territories the opportunity to complete first degrees at home.

External agencies and Governments continue to provide training opportunities. During the period 1997 – 2000 the Government of Cuba has offered 100 university places, while the EU has provided $2.1m for long term training. Training for teachers is also high on the

Government’s agenda.

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POLICY MATRIX

Education

4.10.7

Government’s policy with respect to education is to provide the population with learning opportunities and a quality of education appropriate to the development needs of the country.

Approximately 20% of the recurrent and 12% of the capital budget will be expended on

Education. Four (4) major areas will be targeted:



Expand Access to Education



Improve Curriculum Development



Strengthen Administration and Management



Increase Teacher Training

4.10.8 The implementation of the Basic Education Project which focuses on the above areas will continue throughout the medium term.

4.10.9 Current data indicate that 20% (23,000) of the population is in the primary and just about 7%

(7,700) in the secondary school system. During the medium term, efforts will be concentrated on the construction of three (3) primary schools, which, despite being replacement units, will nonetheless provide more than 200 additional places at this level. With respect to secondary education, the number of place will also be increased during the medium term with the completion of one new school. Regarding tertiary education the number of places will also be increased following the completion of Phase II of the Post-Secondary Facility.

4.10.10 To improve the delivery and quality of education the curriculum development unit in the Ministry of Education has been strengthened and a programme put in place for measurement, testing and evaluation at the primary level. Measures will be taken to review the administration and management of the education system in an effort to increase its efficiency and effectiveness. A management information system will be adopted in this period

33


POLICY MATRIX and there will be increased supervision of all schools. Government’s policy is to increase the number of trained teachers at all levels. During this period an increased number of scholarships and other assistance will be provided for teachers.

Health

4.10.11 Government’s policy with respect to health, is to ensure that the population achieve its maximum level of health. The primary health care system which focusses on health promotion and health care – is the vehicle through which this is to be accomplished. During the medium term, the emphasis will be on HIV/AIDS and the life style diseases which have become the major causes of morbidity and mortality. Immunisation coverage will be maintained at

100% in the 0 – 5 age group. In addition, work will continue to reduce infant and maternal mortality rates and efforts increased to reduce adolescent pregnancy. A National Health

Insurance Plan will be implemented during the medium term.

4.10.12 A comprehensive evaluation of all district health centres will be undertaken to facilitate and improve the delivery of health services at the community level.

During the period, the redevelopment of the main hospital in Kingstown will be completed with and upgraded accident and emergency department. A new building to house the medical stores will also be completed.

34


POLICY MATRIX

Housing

4.10.13 Government’s policy with respect to housing is to facilitate and support the development of the country’s housing stock. Incentives will be provided to the private sector to encourage development in housing.

Government will also strengthen the management of the sector; extend the planning and regulatory framework to cover all segments of the sector and target interventions to maximise their effectiveness in enabling those least able to do so to obtain adequate and safe shelter.

4.10.14 Concessionary mortgage financing is available for low-income earners through the National Commercial Bank (NCB) and with support from NIS. Self-employed persons can benefit from this special concessionary financing arrangement.

4.10.15 During the medium term, the Housing and Land Development Corporation will develop the basic infrastructure in at least two (2) squatter settlements. In addition, the

Corporation will, during the period, provide serviced lots at affordable prices to low income earners.

Community Development

4.10.16 Government’s policy is to promote greater community participation in the process of development. Accordingly, the Community Development Division will continue to implement programmes aimed at enhancing the quality of life in the communities with emphasis on aided self-help, income generation and training. Priority will be given to the implementation of programmes which focus on:



Reducing the level of poverty



Increasing educational and skills level to enable young people to obtain employment

35


POLICY MATRIX



Raising the capacity of communities to play a central role in their own development.



Improving the provision of primary health care services



Increasing collaboration between Government and NGO’s



Facilitating the delivery of services to drug users and other highly vulnerable groups.

Social Welfare

4.10.17 Government’s policy in the area of social welfare is to enhance community life by ensuring at least the minimum standard of living for the aged, poor and under-privileged.

This takes on added importance particularly as not all banana farmers are expected to remain in the Industry following the WTO ruling on the banana regime. Adequate safety nets will be put in place and training and re-training programmes will be implemented. Government’s programme in this area will focus on counselling, public assistance and the provision of building materials for indigents. In recognition of the social problems associated with poverty,

Government will continue to collaborate with the European Union and other donor agencies in eradicating poverty.

Youth and Sports

4.10.18 Government is cognizant that problems related to unemployment and poverty significantly affect the youth population. Accordingly, the economic and social programmes outlined in the MTESP are geared specifically towards addressing the needs of young people.

The environment will be created to encourage the participation of young people in the national development process. The National Youth Commission will be strengthened to implement the

National Youth Policy.

4.10.19 Government is committed to providing the necessary infrastructure and

36


POLICY MATRIX services to support and facilitate the development of youths and sports and to promote healthy lifestyles. Efforts will be made to create an enabling environment for the development of sports.

In particular, Government will exploit the potential of sports tourism for national development .

4.10.20 In collaboration with other agencies, Government will continue to establish and upgrade sporting facilities and provide training/coaching. The phased development of sporting facilities particularly in rural communities; and the introduction of physical education in schools’ curriculum are some of the strategies envisioned

.

4.10.21 The Government of St Vincent and the Grenadines proposes over the medium term to develop a programme to address the social problems of drugs, crime and delinquency and to create greater opportunities for young people in the service and other economic sectors.

Culture

4.10.22 In the medium term, the cultural policy will be updated. Government will continue to collaborate with other agencies to create and encourage the establishment of appropriate institutions for enhancing cultural development. During 1998 a National Cultural

Foundation will be established to facilitate the process. All aspects of cultural expressions including drama, dance, music craft and festivals will be addressed.

4.1

1

Public Administration

4.11.1 The successful transition to a diversified economy will depend on the capacity of the public sector to analyze, formulate, and implement the necessary reforms. To this end, Government will continue to strengthen the administrative capacity of the Public Service to implement policies and programmes. The measures will ensure greater responsiveness, improved quality of service, the elimination of wastage, and greater accountability.

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POLICY MATRIX

4.11.2 Over the medium term Government’s programme will emphasize improved management, budgeting and accounting systems. The Civil Service Orders will be reviewed and updated to improve regulatory environment to increase efficiency and effectiveness in the delivery of service; a new Financial Management Act and Regulations will be introduced to take account of the rapid advances taking place in commerce, accounting and technology in transacting ordinary business. These changes in the regulations are also necessary to promote transparency and accountability in the management of public funds and in the conduct of public officials.

4.11.3

In an effort to further strengthen expenditure planning and management in the Public Sector the government would be updating its Treasury Accounting system including Implementation of a

Standard Government Integrated Financed Information System (SIGFIS), with assistance from the CIDA funded Eastern Caribbean Economic Management Project (ECEMP).

4.11.4 A large proportion of Government’s recurrent expenditure goes to cover labour cost, which restricts the funds available to upgrade the delivery of goods and services to the public.

Accordingly, government will be making efforts to keep personnel cost to within fifty percent

(50%) of recurrent expenditure. The solution is not simply one of reducing personnel or reducing salary across the board. It is necessary to link the salary and incentives structure,

Government would institute a Performance Evaluation system and link incremental salary increase to this system.

4.11.5 Performance will also be emphasised through the introduction of Performance Planning and

Budgeting System during the plan period and strengthening of the Budget cycle, including improvement in the procedures in the preparation of the PSIP and Capital Budget. The Central

Planning Division will be stengthened to improve its capacity for project cycle management.

4.12

The Environment

4.12.1

Government recognises that preserving the integrity of the environment is critical to sustainable

38


POLICY MATRIX development. Accordingly, Government will continue to promote sustainable environmental management as an integral part of its economic and social development strategy.

4.12.2

Over the last five years attention was focussed on enhancing capacity in environmental management, particularly in the areas of Forestry Management and Land Use Planning with the preparation of a National Forestry Conservation Plan, a Draft National Physical Development

Plan and a National Environmental Action Plan. During the period, special attention will be paid to strengthening the National Environmental Advisory Board (NEAB) with a view towards its transformation into a sustainable development council. The Environmental Unit in the

Ministry of Health and the Environment will be strengthened to ensure greater coordination among the public sector, private sector and NGO’s and to coordinate the activities of the sustainable development council.

4.12.3 Emphasis will be placed on strengthening the existing laws on the environment and enacting new legislation which will widen the scope for environmental management, enhance coordination of environmental matters and improve the monitoring and enforcement functions of environmental agencies.

4.12.4 During the period the National Physical Development Plan will be finalised and will form the basis for the determination of land use in the State. During the period attention will be paid to reviewing and updating the NEAP to address the new challenges that have arisen since its adoption in 1994.

4.12.5

Government will ensure the integration of environmental management into development planning and environmental impact assessment will be required for major public and private sector projects. Government will focus attention on watershed management, waste management, coastal resource management and protection of fragile areas. In this respect,

Government will collaborate with other OECS countries and work closely with the OECS

National Resource Management Unit (NRMU) in the development and execution of projects aimed at environmental sustainability. Major projects to be executed include, the OECS/World

39


POLICY MATRIX

Bank Solid Waste Management Project, the Southern Grenadines Solid Waste Management

Project, the Tobago Cays Marine Park Project, the Coastal Resources Mapping Project, and the

Community Based Watershed Management Project.

4.1

3

Public Sector Investment Programme (PSIP) & Financing Plan

4.13.1 Traditionally, the PSIP has followed a five-year rolling format with the emphasis on economic diversification, infrastructure and human resource development. For the period 1998 - 2000 the

PSIP reflects the Government’s priorities in its development strategy. Planned expenditure for the period is estimated at EC$495.2 million. Infrastructural development is projected at about

62.7% of the total PSIP. Major infrastructural projects include construction of roads, airports improvement, port development project, electricity and water projects.

4.13.2 The agricultural sector represents about 9% of total PSIP. The major projects are:



The National Irrigation Project, the continuation of the Banana Rehabilitation Programme, the Fisheries Development Programme and the continuation of the Land Reform

Programme.



The social sector represents approximately 22.6% of the PSIP. Major projects include the

Kingstown General Hospital Redevelopment, the Basic Education Project, Phase II of the

Post Secondary Facility, the Solid Waste Management Project and the Kingstown Sewerage

System.



Other economic activities which include manufacturing, tourism and other services represent approximately 5% of the PSIP. The major projects under this category are the

Tourism Development Projects, Small Business Credit Assistance and the Central Market

Development.

Implementation Issues

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POLICY MATRIX

4.13.3 Government will accelerate the implementation rate of the PSIP by:



Improving the capability of staff members in project cycle management.



Improving the monitoring and evaluation procedures



Linking project identification and selection to the PSIP.



Strengthening the link between the investment programming, capital and recurrent budgeting process and debt monitoring.

Financing Requirements

4.13.4 An amount of 495.2 million dollars is required for the implementation of the PSIP during the period, 68% of which has been identified. External financing is estimated at EC$228.6 million with EC$172.2 million from domestic sources and a financing gap of 94.4 million dollars.

Domestic financing is expected to be generated from local revenue, loans and development bonds. External financing will be generated from loans and grants with a large percentage of these grants being Stabex transfers.

41


POLICY MATRIX

Local

Development Bonds

Loans

Revenue

External

Loans

Grants

Financing Gap

TOTAL

FINANCING STRUCTURE PSIP – 1998 – 2000 (EC$’000)

TABLE 5

1998

51,905

3,430

11,117

37,358

1999

68,675

2,270

11,820

54,585

2000

51,624

1,483

5,791

44,350

TOTAL

172,204

7,183

28,728

136,293

84,929

54,300

30,629

-

136,834

93,890

44,850

49,040

42,100

204,665

49,785

13,750

36,035

52,330

153,739

228,604

112,900

115,704

94,430

495,238

SOURCE: Ministry of Finance and Planning

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POLICY MATRIX

POLICY AREAS AND ISSUES

(1) FISCAL POLICY

(a) Public Finances

Improve fiscal balances.

(b) Tax Reform

Widening the tax net and stimulating economic activity.

OBJECTIVES

 To achieve current account public sector savings of 9-10% of GDP.

 Maintain public debt and debt servicing to manageable limits.

 To improve efficiency in the operations of all public enterprises.

 To finance at least 40% of PSIP from domestic resources.

 To increase the level of tax compliance

 To create and maintain a wider tax collection base.

ACTION PLANS

 Expenditure control measures including wage restraint.

 Divestment of Diamond Dairy, GESCO,

Campdem Park Container Port and the

Government Printery.

 Reduction of external public debt to 45% of GDP.

 Improve reporting system for public enterprises.

 Review and update charges and fees for

Government service.

 Continue reduction of discretionary exemptions on import duty and consumption tax to public and private institutions.

 Strengthen Customs administration.



 Further reduce Income Tax rates.

 Conduct study into the introduction of a

Value Added Tax.

TIMING

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POLICY MATRIX


(2) FINANCIAL POLICY

The modernization and development of a sound Financial Sector.

OBJECTIVES

 To update the legal and regulatory framework of all institutions in the sector.

 To promote the development of money and capital markets in conjunction with the ECCB.

 To promote the integrity and soundness of the financial system.

ACTION PLANS

 To introduce a modern Insurance Act.

 Develop Government securities market in conjunction with the ECCB

 Intensify the public education efforts of the National Steering Committee on the development of Money and Capital

Markets in the state.

TIMING

44


POLICY MATRIX


(3) PRIVATE SECTOR

DEVELOPMENT

Support the development of the private sector with emphasis on small and medium enterprises.

OBJECTIVES

 To facilitate greater levels of investment in all sectors.

 To eliminate barriers to private sector expansion.

 To enhance public/private sector cooperation in the development process.

 To improve legal and regulatory environment for domestic and foreign investment.

ACTION PLANS

 Continue tax reform, reduce tax rates and eliminate tax distortions.

 Provide fiscal incentives for the service sector.

 Establish a new Development Bank

 Provision of venture capital, export credit guarantees and training for the private sector.

 Enact new Alien Land Holding License to remove impediments to investment.

 Increase consultations with the private sector on development matters.

 Actively solicit private sector input in major strategy papers, development plans, etc.

 Establish small business development unit to provide technical support to the private sector.

 Development of money markets in conjunction with the ECCB.

TIMING

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POLICY MATRIX


(4) TRADE POLICY

Increase the level of exports in a competitive international environment.

OBJECTIVES

 To respond effectively to the requirements of international and regional trading arrangements.

 To develop a strategy to negotiate trade treaties and agreements.

 To improve access to export markets.

ACTION PLANS

 Collaborate with the OECS to develop a joint negotiating strategy.

 Provide assistance to prepare local industries for the CARICOM Single Market.

 Strengthening of institutional capacity to address World Trade Organisation issues.

 Collaborate with the private sector in mounting trade and investment missions abroad.

 Provide direct assistance to manufacturers and agro-processors to attend trade exhibitions.

 Placement of a Trade and Investment officer in each overseas mission.

 Establishment of a Standards Bureau.

 To improve the external competitiveness of local industries.

TIMING

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POLICY MATRIX


(5) SECTORAL POLICY

i. AGRICULTURE

Facilitate agricultural diversification .

OBJECTIVES

 To increase productivity, efficiency and competitiveness.

 To promote and strengthen sectoral linkages.

 To ensure food security.

ACTION PLANS

 Implementation of Banana Industry

Development Programme.

- Certified Farmer Programme

- Irrigation programme

- High yielding planting material

 Modernization of the production and processing in the Arrowroot Industry.

 Continue the income tax exemption regime for farmers.

 Facilitation of small farmer production through credit, extension and other support services.

 Establish and strengthen links with regional and international agencies for necessary financial and technical support.

 Encourage and strengthen linkages between farmers and the agro-processing and tourism industries.

Maintenance of the Pest Control Programme.

TIMING

47


POLICY MATRIX


(b) Land Use and Land Reform

Make arable lands available to landless farmers and introduce land management policy.

OBJECTIVES

 To enhance the foreign exchange earning capacity of the sector.

 To promote the sustainable use of forestry and marine resources.

 To provide security of tenure.

 To ensure optimum utilization of available land.

ACTION PLANS

 Continue the programme of fiscal incentives for activities in non-traditional agriculture.

 Establish a market intelligence system to support exports.

 Continue the implementation of the

Forestry Development and Conservation

Plan.

 Increased surveillance of in shore fishing.

 Privatization of fisheries vessels.

 Institute a system for leasing the fishing centres to fisherfolks.

 Further subdivision of lands at Mt

Wynne/Peters Hope.

 Finalize lease agreements and encourage land purchase.

 Continue the mapping of agricultural lands through the Geographic Information

System to determine land use.

 Develop s system of zoning for land use management.

TIMING

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POLICY MATRIX

POLICY AREAS AND ISSUES ii. MANUFACTURING

Maximize output and create self employment opportunities.

OBJECTIVES

 To promote and develop small manufacturing and agro-based enterprises.

 To facilitate the development of entrepreneurial skills.

 To promote efficiency and competitiveness within the sector.

ACTION PLANS

 Revise fiscal incentives programme, to provide benefits to target enterprises.

 Provision of credit for small businesses through NDF and the Development Bank.

 Strengthening the capability of local agencies to facilitate small business development.

 Collaboration with private sector in developing and implementing training programmes.

 Establishment of Small Business

Development Unit to provide technical support to the private sector.

 Establishment of a Standards Bureau.

TIMING

49


POLICY MATRIX

POLICY AREAS AND ISSUES iii. TOURISM

Promote the sustainable utilization of natural resources to maximize tourism earnings.

OBJECTIVES

 To attract investment in high quality plant and facilities.

 To increase visitor arrivals

 To develop a supporting public attitude to tourism.

ACTION PLANS

 Revision of the Hotels Aid Act to include incentives for non-hotel tourism activities.

 Continued improvement in air access.

 Acceleration of promotional efforts in overseas markets by targeting the middle and upper end of the market.

 Production of new promotional brochures and other collateral material.

 Conduct a review into the location and operations of the tourism offices.

 Joint promotional activities with the

Offshore Finance Authority and DEVCO.

 Creation of a National Tourism Board.

 Intensification of the Tourism Public

Awareness Programme.

TIMING

50


POLICY MATRIX

POLICY AREAS AND ISSUES OBJECTIVES

 To increase average levels of visitor expenditure.

 To create and develop a diversified tourism product.

 To integrate and development. environmental considerations into tourism planning

ACTION PLANS

 Improve public/private education and public awareness. sector collaboration in tourism promotion,

 Preparation of strategic plan for tourism development.

 Enact legislation to facilitate duty free shopping.

 Development of National Parks System.

 Development of Sites and activities.

 Continue implementation of Heritage

Tourism Project.

 Enact legislation for National Parks

Commission.

TIMING

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POLICY MATRIX


(Iv) OTHER SERVICES

Development of the service sector with emphasis on informatics and offshore financial services.

OBJECTIVES

 To promote the development of a competitive informatics and other service industries.

 To equip people with skills to prepare them for employment opportunities.

 To accommodate technology transfer.

 To assist in the economic diversification thrust.

ACTION PLANS

 Strengthen regulatory framework for offshore financial services.

 Provision of fiscal incentives for the service sub-sector.

 Rationalization of the telecommunication sub-sector in collaboration with the

OECS/World Bank.

 Review of telecommunication charges.

 Undertake an impact assessment of the

Off-shore Finance and Informatics Service

Sector.

 Computer training of 1000 persons to equip them with the necessary skills.

 Continue promotion of the off-shore financial services in overseas markets.

TIMING

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POLICY MATRIX


(5) SOCIAL POLICY

Improve efficiency in the delivery of social services.

(a) Human Resource development

Develop human resources to respond effective to national development needs.

OBJECTIVES

 To improve access to all levels of education.

 To improve the quality and delivery of education at all levels.

ACTION PLANS

 Construction of Primary School at

Peruvian Vale, Troumaca, Edinboro and

Sandy Bay

 Construction of Public Library.

 Continued provision of financial assistance for tertiary training.

 Construct Multi-Purpose Centre in Union

Island

 Expand technical-vocational training.

 Review and upgrade Primary and

Secondary Schools ’Curricula.

 Construction of additional facilities at the

Community College.

 Restructuring of the Ministry of Education along functional lines.

 Merger of Technical College, Teachers

College, School of Nursing with the A-

Level College.

 Increase the ratio of trained teachers to student population.

 Enhancement of regulations for preschool services.

 Computerization of schools.

 Continuation of the Book Loan Scheme.

TIMING

53


POLICY MATRIX

POLICY AREAS AND ISSUES OBJECTIVES

 To develop an adequately trained work force.

 To prepare population to adapt to new technologies and new development opportunities.

 To increase the level of literacy.

ACTION PLANS

 Continue implementation of the basic skills training programme.

 Expansion of technical/vocational education.

 Assisting the private sector in sourcing technical assistance for training workers.

 Collaborate with the social partners in the expansion of early childhood and adult education.

 Undertake a diagnostic study of the stae of literacy in the country.

TIMING

54


POLICY MATRIX


(b) Health

Promote health and general well being of the population.

(c) Housing

Facilitate the development of the housing stocks.

OBJECTIVES

 To upgrade the quality of health care facilities.

 To improve the delivery and quality of health care.

 To assist low and middle income earners in obtaining housing.

ACTION PLANS

 Construct Clinics in Greggs, New Grounds,

Canouan, Biabou and Richland Park.

 Maintain 100% of immunization coverage of the 0 - 5 age group.

 Continue programme of Primary Health

Care.

 Continue public education on Drug

Abuse, AIDS and other public health issues.

 Continue to decentralize the delivery of health services.

 Implementation of National Health

Insurance Scheme.

 Upgrade and equip rural health centres and clinics.

 Develop basic infrastructure in existing squatter settlements.

 Provide concessionary mortgage financing for low and middle income earners.

 Provision of incentives to private sector for housing development.

TIMING

55


POLICY MATRIX


(d) Community Development

(e) Culture

Cultural heritage as a means of promoting national development.

OBJECTIVES

 To improve social safety nets for vulnerable groups.

 To encourage greater community participation in promoting national development.

 To promote and preserve the nation’s cultural heritage.

 To facilitate the integration of culture into economic development.

ACTION PLANS

 Expand poverty reduction initiatives in selected communities.

 Support farmers displaced by banana restructuring programme.

 Assisting in the rebuilding of Marion

House.

 Construct community centre in Fancy.

 Establishment of a National Cultural

Foundation.

 Continue the development and promotion of all national festivals.

- Carnival

- Nine Mornings

- Regattas

- Drama and Dance Festivals

 Refurbishment of the Peace Memorial

Hall as a centre for cultural performances.

TIMING

56


POLICY MATRIX


(6) YOUTH AND SPORTS

Prepare young people for their rightful place in nation building.

 To promote the general welfare of youths

OBJECTIVES

 To ensure the complete integration of youth into the National Development

Programmes.

 To provide a framework for the integration of sports into national development.

ACTION PLANS

 Ratification of the National Youth Policy.

 Construction of one additional stand at the Arnos Vale Playing Field.

 Redevelopment of Victoria Park and other sporting facilities.

 Actively pursue sports tourism.

 Continue the implementation of the

National Sports Policy.

 Construction and lighting of hard courts in rural communities.

 Introduce physical education in the curriculum for all educational institutions.

 Commence preliminary work on a National

Indoor Sporting Facility.

TIMING

57


POLICY MATRIX


(7) PUBLIC ADMINISTRATION

Strengthening administrative capacity to implement policies and programmes more efficiently.

OBJECTIVES

 To be more efficient in the delivery of public service.

 To enhance policy formulation.

 To implement programmes in support of economic growth and development.

ACTION PLANS

 Implement the Performance Evaluation

System for public officers and link this to salary increases.

 Continue training workshops/seminars for all levels of the Civil Service.

 Finalisation of the New Civil Service

Orders.

 Continue the implementation of

Performance Budgeting in the Ministries.

TIMING

58


POLICY MATRIX


(8) ENVIRONMENT

Preserving the integrity of the environment as a basis for sustainable development.

OBJECTIVES

 To manage and utilize natural resources in a way that reduces degradation preservation. and promotes

ACTION PLANS

 Implementation of the National Physical

Development Plan.

 Preparation of an inventory and economic valuation of the natural resources.

 Implement the OECS/World Bank Solid

Waste Management Project.

 Implementation of recommendations of the National Environment Action Plan.

 Preparation of Environmental Impact

Studies for large scale public/private sector development.

 Provision of a Solid Waste Disposal Facility for the Southern Grenadines.

 Enactment of legislation to establish national parks and protected areas.

 Provision of regulations for the various

Acts which relate to environmental management.

 Develop and sustain public awareness and education environment. programmes on the

TIMING

59


POLICY MATRIX


(9) PHYSICAL INFRASTRUCTURE

AND UTILITIES

Develop infrastructure to facilitate private sector-led economic activities and to ensure adequate access to public utilities.

OBJECTIVES

 To provide support infrastructure for economic development.

 To enhance air and seaport facilities to improve access to St Vincent and the

Grenadines and to facilitate exports.

 To improve quality and access to social amenities.

 To improve the road network.

ACTION PLANS

 Commence the redevelopment and extension of the E.T. Joshua Airport.

 Continue the implementation of the Port

Master Plan.

 Undertake new investments in generation capacity in Bequia and St Vincent to meet growing electricity demands.

 Continue expansion of national electricity supply to Mayreau and new settlements.

 Continue improvement in CWSA’s capacity to provide water services.

 Establishment of a Public Utilities

Commission.

 Upgrade and extend the Kingstown

Sewerage System.

 Expand the road/highway rehabilitation and maintenance programme.

 Construction of Kingstown by-pass road.

 Rehabilitation of the Windward Highway.

TIMING

60


POLICY MATRIX


(10) POVERTY ERRADICATION

Sustainable human development and of socio-economic reduction vulnerablility.

OBJECTIVES

 To develop capacity to facilitate the poverty eradication initiatives.

To empower communities to identify and implement revenue generating projects.

(11) PUBLIC SECTOR

INVESTMENT PROGRAMME

Develop a Public Sector Investment

Programme which is consistent with the country’s economic and social goals.

 To provide the stimulus for private sector investment and overall economic development.

ACTION PLANS

 Strengthen social planning capacity in the

Central Planning Division through technical assistance.

 Strengthen institutional capacity of the

Community Development Division.

 Expand UNDP funded Poverty Reduction

Project to other communities.

 Strengthen implementation capacity in agencies and ministries.

 Establish a Project Management Unit within the Central Planning Division with support from other such units in line ministries.

 Link project identification and selection process to PSIP.

 Review of the Project monitoring and evaluation procedures.

TIMING

61


POLICY MATRIX


(12) DISASTER MANAGEMENT

Strengthen capacity for disaster preparedness and management.

OBJECTIVES

 To mitigate against the effects of natural and manmade disasters.

ACTION PLANS

 Construction of a proper drainage system for Kingstown.

 Strengthening river defences.

 Strengthening of the Office for Disaster

Preparedness.

 Establishment of Physical Planning

Building Standards.

 Development of Integrated Communication

System for the Public Service Emergency

Operations.

 Retrofitting of emergency shelters.

TIMING

62


POLICY MATRIX

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MEDIUM TERM ECONOMIC STRATEGY PAPER, 1998 - ... POLICY MATRIX 1.

3. MEDIUM TERM ECONOMIC PROSPECTS AND STRATEGY

4. MEDIUM TERM POLICY AGENDA

4.3

Agriculture

Manufacturing

4.7 Tourism

rvices

4.9 Supporting Infrastructure

4.10

4.1

Public Administration

The Environment

4.1

Public Sector Investment Programme (PSIP) & Financing Plan

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MEDIUM TERM ECONOMIC STRATEGY PAPER, 1998 - ... POLICY MATRIX 1.

3. MEDIUM TERM ECONOMIC PROSPECTS AND STRATEGY

4. MEDIUM TERM POLICY AGENDA

4.3

Agriculture

Manufacturing

4.7 Tourism

rvices

4.9 Supporting Infrastructure

4.10

4.1

Public Administration

The Environment

4.1

Public Sector Investment Programme (PSIP) & Financing Plan

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