By Everson W. Hull, Ph.D., ECON
This year’s 33rd Independence Anniversary theme focuses on the Nation’s Prosperity Agenda. A series of Town Hall meetings carried live on ZIZ television has brought this national mission objective to packed audiences in the communities of Molineux, New Town, Sandy Point, St. Peters, Dieppe Bay and McKnight. On September 12, the focus appropriately shifts to Nevis when the very distinguished Larry Quinlan, Chief Information Officer for the prestigious management consulting firm of DeLoitte Touche, will deliver the keynote address.
The incumbent government is to be commended for taking deliberate steps in making operational a prosperity agenda that goes beyond rendering lip service to this most important objective. The several Town Hall Meetings held around the country confronting the issue of prosperity represent an important departure from the past. The decision to re-engineer the PEP program to focus on “real training” that would prepare workers for higher income-earning occupations is a most important step that begins to address the twin challenges of low productivity and, in turn, the Nation’s prosperity.
That the Nation has turned the corner and now stands close to the head of the Western Hemispheric Class in a selected number of important economic performance rankings provides cause for celebration. To illustrate, the April 2016 IMF World Economic Outlook reported a vibrant economic growth rate of 6.6 percent for St.Kitts and Nevis. This was second only to the Dominican Republic which stood at the head of the class of all 34 members of the Organization of American States (OAS) with a growth rate of 7.0 percent. This impressive performance comes on the heels of a number of past episodes of lethargic rates of economic growth at near recession levels.
The heavy burden of a cumulative outstanding public debt which imposed a severe drag on the economy has been reduced from an unconscionably high rate of 186 percent of GDP in 2002 to 159 percent of GDP in 2010. In its most recent review, the IMF projects that the Nation’s debt burden will reach the Eastern Caribbean Currency Union’s (ECCU) 60 percent debt-to-GDP target in 2017, well ahead of our peers in the region. The IMF has lauded this impressive turnaround that has been achieved under new fiscal management.
The protracted interval of massive current account deficits and cumulative public debt stood in the way of expansion of the St. Kitts and Nevis economy. The mandatory financing of the interest payments on servicing the public debt soaked up revenues that were critically needed for meeting the full array of basic human needs. Ridding the Nation of its heavy debt burden frees up the Nation for expanding on several fronts expanding the overall size of the economic pie.
Unencumbered by its heavy debt load, the most recent data from the World Bank shows that in 2015 St.Kitts and Nevis recorded its highest ever per capita income level. Excluding the USA and Canada, its per capita income of (U.S.) $16,589 was the third highest level of the 34-member states of the OAS region. Only the Bahamas with a per capita income of (U.S.) $22,897 and Trinidad and Tobago with a per capita income of (U.S.) $20,444 were higher. Impressive gains are also recorded in per capita exports which are shown to be third highest in the OAS region, outside of the USA and Canada.
As our young Nation approaches its 33rd anniversary, these performance levels provide cause for celebration. Notwithstanding, we must neither rest on our laurels nor become complacent. The reality is that the Nation has a number of serious productivity issues which will not be addressed merely by wishing them away. The Nation’s average annual per capita income level of (U.S.) $16,589, although higher than that of most of our peers in the region imposes an artificial constraint that stands in the way of achieving our full productive potential.
To illustrate, the per capita income of Singapore is (U.S.) $52,889. The success of the Nation’s Prosperity Agenda will yield several benefits. It will enhance our economic independence and by so doing reduce dependence on the flow of personal remittances from abroad. A more prosperous Nation will narrow income differentials between Kittitians and Nevisians who are on protracted working assignments abroad and those working at home. Enhanced prosperity at home will serve as an important retention tool, dampening the impulse for out-migration of our top talent while motivating our highly-trained and experienced citizens now working abroad to return home. These retention issues which have the potential for enhancing the human capital stock of the Nation’s top talent are of great national importance. It is the enhanced quality of the human capital stock that offers the greatest prospect for thrusting the Nation to next higher performance plateau on the way to reaching its full productive potential.
Consistent with the Nation’s Prosperity Agenda, the decision to re-engineer PEP to boost worker productivity is a bold and important step in the right direction. The PM’s announced plans to introduce an Incentive-driven Compensation Plan is another bold move that would recognize and reward employees who demonstrate sustained levels of on-the-job productivity and outstanding performance that surpasses that of their peers. These initiatives can play an important role in helping to improve the productivity and efficiency of both our public and private sectors, and by so doing contribute to a more Prosperous Nation. In combination, these favorable developments reinforce the significance of the Nation’s Prosperity Agenda.