Editorial

Budget 2022 is intended to be people-centred and all-inclusive. Any objective observer or analyst would concur that the Team Unity government is saying all the right things. 

The EC$952.2 million budget, which will provide for the Federation’s services for the coming year, was unveiled to the National Assembly on Tuesday last by Prime Minister Dr. Timothy Harris.

If reactions from members of the gallery and the positive opinions and praise, from near and far, on various social media platforms in particular, are indicative of the budget’s acceptance and potential, Dr. Harris can justifiably feel satisfied that the initiatives proposed by his government are being widely perceived as all-encompassing and what is best for the nation at this critical juncture.

The announcement that double salary will be paid to all civil servants this month, to help ease the burden on workers and to generate economic activity across the Federation, has significantly lifted spirits. The move was undeniably a master stroke. The initiative reportedly did not find favour with Premier Mark Brantley. Fortunately the PM did not allow that second-guessing to derail the highpoint of the budget, and deprive those in need.

 We cannot understand why Brantley opposed such a measure. There is a surplus. The federal government is paying for the expenses of government workers receiving the double salary in Nevis. People’s lives are being made better and the economy benefits.

 The PM duly highlighted the financial prudence of his administration.

“I am honoured to report that the Team Unity Administration maintained its record of being a good steward of the Government’s finances. That fortitude and resilience were demonstrated in the outturn of the Government’s fiscal operations for the 2020 fiscal year when a Recurrent Account Surplus of $40.8 million was achieved.”

Prime Minister Harris also eased concerns with the announcement that a number of measures introduced in the second stimulus package – and that would have expired in a fortnight – will be extended for the first six months of 2022.

The Prime Minister also stated that the proposed allocations in the budget would “not only assist the Government to maintain its heavy investment in our people, but will help to build resilience in our response to the pandemic, and put our country of St Kitts and Nevis back on track to becoming a model small island developing state”.

“Our proposals for capital expenditure will make a significant contribution to our economic recovery by creating jobs, and more jobs, and moving our country closer to full recovery. We are taking a cautiously optimistic outlook for the fiscal year 2022, and therefore with these proposals, we are setting the wheels in motion to advance our plans for putting St Kitts and Nevis back on track.” 

We are cautiously optimistic about the year ahead. 

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By Staff Reporter

While Prime Minister and Minister of Finance Dr Timothy Harris championed the need to pay government workers a double salary for Christmas, to cushion households from the effect of Covid-19 and to stimulate the economy, Premier of Nevis and Foreign Minister Mark Brantley was riled up by the decision during the last cabinet meeting, according to persons familiar with the matter.

A source told The Observer that as soon as Prime Minister Harris was finished placing the double salary issue on the table, Brantley came out swinging.

There is no need for this. How are we going to explain it? The source paraphrased Brantley as expressing his disagreement with the move.

The source said that Harris countered Brantley’s pessimism by detailing that the country experienced a surplus on current accounts, and “we must pass some of the surplus on to people”.

The source also recounted that Harris was forceful and deliberate in his response to Brantley, and that was precisely how he delivered the announcement to the nation in his budget address of Tuesday.

Brantley subsequently praised the double salary announcement on his Facebook page shortly after the Prime Minister delivered his budget address.

In that address, Prime Minister Harris made his compelling case for the extra month’s salary to be approved.

“We understand even as we meet here, thousands of persons are still suffering. Thousands are still not fully engaged in our hotels and our restaurants – we appreciate that, and they need some help.

“We have been unique in protecting the jobs of near 10,000 people – of our civil servants and GAE workers and pensioners – by not letting off persons.”

“Mr. Speaker, we recognise that as a result of the pandemic, some of our Civil Servants are the only providers in their household. Many are forced to now singularly carry the financial burden of providing for their families. We are a compassionate and caring Government that is highly focused on investing in our people. Our decision is therefore consistent with our people-centered policy framework and our twin objectives of investing in our people and putting our economy back on track.

 

“Our action would serve to reward our Civil Servants who have been diligent in their service and help those who are finding it difficult to cope with their financial obligations,” the Prime Minister told Parliament live on radio and television.

 

He added that government will extend several of the stimulus measures that are slated to expire on 31st December 2021, with the main initiatives to be extended until June 2022 including the following:

 

•       Removal of VAT and Import Duty on additional hygiene items such as hand sanitizers, disinfectant sprays, rubbing alcohol and latex gloves. This is critical support as we continue to take preventative measures against COVID-19.

 

•       Removal of Import Duty and Customs Service Charge on selected items including vegetables, fruits, fruit juices, cough and cold preparations and vitamin supplements. This is both to help our citizens and residents boost their immune system by accessing critical supplies and to reduce the cost of living for everyone – especially the less fortunate.

 

•       Waiver of payments for consumption of water for individuals who have been laid off or experience a reduction in earnings due to COVID-19.

 

•       Waiver of payments for the consumption of water by farmers.

 

•       Reduction of the Corporate Income Tax Rate from 33 percent to 25 percent for businesses that retain at least 75 percent of their employees.

 

•       Reduction of the Unincorporated Tax Rate to 2 percent down from 4 percent.”

And there was more from the Prime Minister in relation to support for those who are not well off.

“We are also proposing that the 2022 Estimates provide the necessary resources to support the Poverty Alleviation Programme and further capitalize the Severance Payment Fund to facilitate the payment of any additional severance claims. In this regard, the amounts of $32.3 million and $5.0 million would be provided for the Poverty Alleviation Programme and the Severance Payment Fund respectively. 

“Once the economy is back on track, we would shift focus to rebuilding fiscal buffers and calibrating other policy measures to safely transition from the COVID-19 policy measures. We will focus on activities to improve the effectiveness of public spending, including cost recovery and cost cutting measures.”

The Prime Minister asserted that despite the uncertainty and volatility faced by the global community in 2020 at the height of the COVID-19 pandemic, the Government embarked on a bold initiative geared towards the regularization of well over two thousand individuals employed under the Skills Training Empowerment Programme (STEP) as Government Auxiliary Employees (GAEs).  He said that individuals enrolled in the STEP were assigned to Public and Private Sector entities on both islands.

“To accomplish the task of regularization of the STEP workers, my Cabinet appointed a Select Committee. The Committee has successfully completed a number of activities to bring us to the point where the first phase would be fully implemented by the end of the first quarter of 2022. The work of the Committee entailed a comprehensive Verification Exercise.

“This was supplemented by an Employee Performance Appraisal and Evaluation Exercise conducted by Government Ministries/Departments including a recommendation by Permanent Secretaries as to whether or not to regularize STEP workers assigned to their Ministries. The regularization of the STEP workers will be done in a phased way and will commence early in 2022.”

He concluded by disclosing that the first phase of the regularization of these workers is estimated to cost $16.4 million, and that the intention is to provide better job security for a relatively large number of citizens and residents who have contributed to the work of the Government and to the development of our Country over the years as STEP workers.

“This is another clear example of our investing in our people as we provide better job security for a relatively large number of our citizens and residents.”

 

 

 

 

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Prime Minister of St Kitts and Nevis and Minister of Finance, Dr Timothy Harris, on Tuesday, delivered a nearly one-billion-dollar budget that he described as “people-centred,” demonstrated by “significant investments in our people’s safety, health, education and a range of social safety nets”.

The highly anticipated presentation was made at a sitting of the National Assembly at the St Kitts Marriott Resort’s ballroom.

The Prime Minister began the Annual Fiscal Statements and Budgetary Proposals for 2022 by disclosing that government proposed the allocation of $952.2M to support recurrent and capital expenditure, as well as to cover net lending and principal payment in the coming year. 

The following allocations were recommended:

• Governor-General – $1.78M; 
• Parliament – $1.97M;
• Audit Office – $1.27M;
• Justice and Legal Affairs – $12.3M;
• Office of the Prime Minister – $110.6M; 
• National Security – $80.1M; 
• Ministry of International Trade, Industry, Commerce and Consumer Affairs – $5.4M;
• Ministry of Finance – $300.2M;
• Social Development and Gender Affairs – $42.7M;
• Agriculture, Fisheries and Marine Resources – $20.3M; 
• Tourism and Transport – $32.7M; 
• Public Infrastructure, Post and Urban Development – $59.2M; 
• Education – $104.5M;
• Health – $73.7M; 
• Youth, Sports and Culture – $11.7M; 
• Sustainable Development – $25.4M; 
• Foreign Affairs and Aviation – $25.5M; 
• Office of the Attorney General – $12.3M; 
• Labour – $7M;
• Human Settlement, Ecclesiastical Affairs and National Health Insurance – $11.6M; 
• Environment and Cooperatives – $2.95M;
• Entrepreneurship and Communications – $9.03M;.

 

Dr Harris said the proposed allocations would “assist the government to maintain its heavy investment in our people”.

“When we hear $100-plus million to Education, we know we are talking people investment. When we hear $73M for Healthcare, we are talking people investment.”

He said it will also help to build the resilience in response to the pandemic, and noted they are taking a cautiously optimistic outlook for the fiscal year 2022.

“These proposals are setting the wheels in motion to advance our plans for putting St Kitts and Nevis back on track.”

Dr Harris said that in 2022, the global economic output is expected to increase by 4.9%. The global downside risk, he added, includes supply chain disruptions, ongoing social unrest in parts of the world, geopolitical tensions that have emerged from the cyberattacks on critical infrastructure, and the impact of severe natural disasters.

He said that the economies in the Eastern Caribbean Currency Union recorded a decline in real GDP of 14% in 2020. The decline in economic activity, he said, was attributed to significant contractions in key sectors. Tourism fell by 63.2%; Transport, Storage and Communications 25.7%; Construction 17.1%; and Wholesale and Retail 12.4%.

 

“Across the Currency Union, member states suffered a decline in economic activity ranging from 2.7% to 23.8%.

“The 2022 growth prospects within the Currency Union is now being put at 6.9%, and would be contingent on a number of variables, including the rate of uptake of available vaccines, the occurrence of natural disasters, and the emergence of new variants and waves of the virus across the Currency Union and in the tourism and investment source markets.”

Addressing the domestic economy, Prime Minister Harris said as the pandemic continues to test the fortitude and resilience of citizens and residents, and the economy at large, the Team Unity Administration maintained its record of being a good steward of government’s finances.

“That fortitude and resilience were demonstrated in the outturn of the Government’s fiscal operations for the 2020 fiscal year when a Recurrent Account Surplus of $40.8 million was achieved.

He pointed out that substantial stimulus packages and considerable capital programmes remained that would boost economic activity.

The prime minister also noted that the debt-to-GDP ratio increased from 54.3% at the end of 2019 to 67.9% at the end of 2020.

“The 13.6 percentage point decline in economic activity in 2020 was the primary reason for the increase in the debt ratio. As a result of our stimulus packages, we are already seeing a rebound in economic activity, and this will bring a further positive re-alignment of our debt to GDP ratio.”

Construction

The Prime Minister said that overall, the medium term outlook for the Construction Sector is positive with an expected growth rate in the region of 11.7 percent in 2022. 

“We are working to ensure that the Construction Sector is put back on track and we invite the Private Sector to come on board to ensure that this is achieved not only in 2022 but is sustained over the medium term.”

Agriculture

Dr Harris said the government’s goal “to produce more of what we consume”, continues to align with the commitment to making strides in achieving sustainable development goals #2 – zero hunger and #12 – responsible consumption and production.

“The injection of approximately $10M to boost the production of the agricultural sector and ensure greater food security has helped in this regard. Month after month we have had strong, positive returns in crops, in livestock, and in the fisheries sector.

“We are happy that the stimulus package has aided our fisherfolks and farmers in making progress and earning better livelihoods.”

Tourism

Dr Harris said this sector has borne the full brunt of the economic fallout of the pandemic.

He noted experts in the travel industry are hopeful for a return to pre-pandemic global travel levels by 2023.

“My government has initiated a strategy for putting the tourism sector back on track. Our strategy is designed to allow the sector to act as a catalyst for substantial economic growth and development through the creation of employment, spurring entrepreneurship and infrastructure development.”

CBI Programme

Dr Harris noted the ability of the Federation to weather the economic storm caused by the pandemic was significantly influenced by the continued success of the CBI programme.

He added that the CBI programme has maintained its ranking as one of the best in the industry.

The program, he said, received the highest score in the citizenship timeline pillar as a result of its accelerated application process.

“We have transformed our CBI. We have come a long way from the difficult period in 2014. 

“The robust procedures that are embedded in the programme have enabled us to maintain our platinum brand, and have ensured we take a significant share in the major markets around the world.”

National Security

The Prime Minister said that National Security continues to be a top priority of the Team Unity administration.

“We have put forward $80.1M to assist that particular Ministry.”

He expressed hope that the national security heads will use the investment well.

“We will continue our efforts to keep the country safe, and none can deny that St Kitts and Nevis in 2021 is far more at peace, and far safer than it was up to 2014.

“The primary responsibility of the state must be to protect the people from harm. When it comes to national security, preserving the peace, we make no apology for investing.”

Healthcare

The Finance Minister said the money provided for healthcare will help to provide necessary resources to fund additional medical professionals “and we need them”.

“A general surgeon, urologist, oncologist, orthopaedic surgeon, ear nose and throat specialist will all be recruited for the health institutions.

 “We will provide you with diagnostic services with the introduction of a new MRI machine to be installed at the JNF General Hospital for the first time.”

 He said support for health centres will continue, including renovation work at the health centre in Basseterre.

 “The future for our health systems look promising, and we can take comfort that our investments which have been proposed will lead to 2022.”

Cannabis

The prime minister said St. Kitts and Nevis is working hard to seize all opportunities within the cannabis industry.

“Our federation will seek to collaborate with neighbouring islands in the sub-region and wider Caribbean, as well as to establish relationships with global cannabis professionals and entities, to build a thriving cannabis industry here.”

Positive about 2022

Dr Harris said assuredly that they are positive about 2022.

“Positive in the context of the predictions of the IMF and our statistics department, that the country will grow in double-digit terms.”

He noted that “total revenues and grants will be comprised of just over $430M, and from taxes, we will generate about $468M, and $15.5M is being expected via development aid. In other words, all activities taking place in St Kitts and Nevis will be funded from our own governmental resources, and we are not anticipating that we will have to take on debt”.

On the expenditure side, it will be $910 million by the end of 2022 – $728.6M for recurrent expenditure and $180.9M for capital expenditure and net lending.

“If all things remain the same, we anticipate that we will realise an overall surplus of $4M – a primary surplus of $21.8M for the fiscal year 2022.”

He anticipated that they will eliminate the need to borrow, and will allow the government to attain the goal of a 60% debt to GDP ratio by 2023.

The Prime Minister said that so far they are reasonably projecting that for 2021 there will be a strong surplus.

“Over the period 2022 to 2024, it is projected that the fiscal operations of the government would on average result in an overall surplus of about $900,000.”

Recurrent revenue, he said, is projected at around $853.1M per annum and recurrent expenditure is projected at $733.5M.

He said they are on target to realize a comeback in the economy, and it will be in a better place. 

Photo caption: Prime Minister Harris delivering the budget address

 

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