Gonsalves Announces EC $70m Economic Stimulus Package

by: - March 26, 2020
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(iWNSVG) The St. Vincent and the Grenadines government has announced plans for an EC$70 million economic stimulus programme as the nation implements various measures to deal with the impact of the coronavirus — COVID-19.

Prime Minister Ralph Gonsalves, in a national address on Wednesday night, said that the “appropriate recovery plan” is being put in place and is being acted upon urgently.

He said the plan contains strategic and targeted measures for economic support and recovery and provides help for the helpless, support for the disadvantaged, and for those who face urgent, though temporary, difficulties.

“Overall, this economic recovery plan is designed to lift up our people, our nation; it will enable us to rise stronger from the feverish ashes of COVID-19.  Every single one of us in our small country has an uplifting role to play; each of us has to put his or her mind, heart and hands to it.  Together we are at war against the COVID-19 disease and are enjoined as one to meet unflinchingly the challenges connected thereto,” Gonsalves said.

He told citizens that the Cabinet and senior public servants have been engaged in consultations with stakeholders in tourism, banking, credit unions, industry, trade, commerce, and the trade unions, on the core elements of the economic recovery and stimulus package.

“Our government will shortly be taking this package to Parliament in the form of Supplementary Estimates and a Supplementary Appropriation Bill.  The total package of fiscal stimulus and tax relief will amount to more than EC $70 million or in excess of 3% of Gross Domestic Product (GDP), a significant stimulus in all the circumstances.”

Gonsalves said he intends to brief opposition legislators on Thursday on the economic recovery and stimulus package, but said that the bulk of the revenue for the package will come from six sources, including the World Bank, the International Monetary Fund (IMF), the United Arab Emirates (UAE), the Bank of St. Vincent and the Grenadines, the Contingency Fund of the Government of St. Vincent and the Grenadines as well as other financial institutions, and bondholders.

He said that the monies from these sources are either in hand or at hand and that support will also come from the Eastern Caribbean Central Bank (ECCB), the National Insurance Services (NIS) and the Eastern Caribbean Group of Companies as well as other locally-based financial and other companies.

“We are hopeful, too, that our many international friends and allies will assist us in one way or another as we expand and consolidate our socio-economic recovery in the post-COVID-19 period,” Gonsalves said, noting that the expenditure of the revenue garnered for the economic recovery and stimulus plan will focus on health initiatives including the construction of Isolation Unit and associated facilities; equipment, supplies, materials, drugs; hiring of additional nurses and medical interns; accommodation, food transportation and associated expenses for 12 Cuban nurses and four doctors, specialists in handling infectious diseases.

He said funds would also go towards the immediate generation of jobs in public works and direct support in the areas of farming, animal husbandry and fishing.

Gonsalves said also that funds would be used to support vulnerable and affected persons including displaced workers in the hotel and tourism sector, cruise buses and taxis, through a Displacement Supplementary Income for three months in the first instance.

“The aggregate of this expenditure amounts to $64.05 million. Additional are the tax relief and other measures which are estimated to cost the revenue approximately $10 million.  In total, therefore the fiscal stimulus amounts to $74.05 million or 3.4 per cent of GDP. “

Gonsalves said that additional items of tax relief and supportive measures will include the distribution of 500,000 pounds of arrowroot starch to the school feeding programmes, hospitals, prisons, and others, as well as a regime for duty-free barrels which will be instituted from May 1 to Aug. 31 in the first instance.

He said there would also be a waiver of duty and value added tax (VAT) on a number of items, including electricity for domestic, hotels and guest houses’ consumers, for the period from March 20up to June 30, in the first instance:

Gonsalves said that relief would also be granted to airlines, including LIAT and local carriers, which operate in or out of St. Vincent and the Grenadines, in respect of certain taxes, fees and airport charges.

“The socio-economic recovery and stimulus package is being lodged within the framework of the public policies of the ECCB, OECS, and CARICOM.  In this regard, from May 1, 2020, the departure tax for all holders of CARICOM passports will be reduced from US $40 to US $20 to facilitate intra-regional travel.”

Gonsalves said that banks, credit unions, and other financial institutions have agreed to provide a six-month moratorium on the payment of principal and interest on home mortgages, business loans, personal and consumer loans, and credit cards.

He said workers and their unions have agreed to refrain from making demands for increases in wages, salaries, or related benefits for a one-year period in the first instance, save and except a few cases of current negotiations by unions and private sector entities.

“The unions have also agreed to an extension of the lay-off period in Section 27(1) of the Protection of Employment Act up to Dec.31, 2020 — an amendment with a sunset provision. I want to thank the workers and their unions for their support and cooperation.”

Gonsalves said that the overall stimulus and socio-economic recovery package is significant.

“As the global economy recovers, the economy of St. Vincent and the Grenadines, and the rest of the region, must be in position to lift off and expand.  Still, we are mindful that even before the expiration of the threat of COVID-19 and its hubris, the 2020 hurricane season would be upon us.

“This makes the overall situation even more challenging, awash with downside risks.  Our region’s premier financial institution, the Caribbean Development Bank (CDB), is currently preparing a package of financial support for its member-countries.  I await expectantly the CDB’s offered package,” Gonsalves said, adding that he has already been in conversation with the CDB President.

In his broadcast, Gonsalves said that he was thankful that the island has to date only recorded one imported case of the virus, but urged citizens to follow the necessary hygiene guidelines to improve health overall in the country.

“Our government’s approach has been to follow the science; act prudently on the medical advice of the professionals in the Ministry of Health and Wellness; be guided by the sage advice of the World Health Organisation (WHO), the Pan-American Health Organisation (PAHO), and the Caribbean Public Health Agency (CARPHA),” he said.

“The central fact is that COVID-19 is a serious disease to be addressed seriously and scientifically, not complacently but also not hysterically. Proportionate responses are demanded always with urgency; and the changing level of risks is required to be managed sensibly and cautiously, avoiding both over-reaction and under-reaction.  It is a balance not always easily achieved.”

Gonsalves said that there were no plans at the moment to close down the island’s borders.