WASHINGTON, CMC – The World Bank has approved a project to help St. Lucia implement reforms in fiscal policy management, increase climate change resilience, and improve the business environment.
The Washington-based financial institution said that the US$40 million investment will help the country’s sustainable development by generating extra revenue, securing additional financial resources that can be directed towards poverty reduction efforts, as well as helping the country build up its resiliency against future shocks.
It said the COVID-19 pandemic significantly impacted St. Lucia’s economy, leading to a rise in public debt and poverty. In 2020, public debt reached 94.2 percent of the country’s gross domestic product (GDP), up from 62 percent in 2019.
The World Bank said despite recent efforts to implement careful financial policies and strengthen public administration, St. Lucia still faces fiscal challenges.
“Like many small island states, St. Lucia is also at risk of climate impacts, including gradual changes in rising sea levels and coastal erosion, as well as sudden events like hurricanes, floods, and landslides.
“These events can be especially harmful to tourism and agriculture, significantly impacting its economy and finances. The country also faces obstacles to private sector growth, including limited access to credit, regulatory bottlenecks, insufficient public infrastructure, and high electricity costs.”
The World Bank said that to help St. Lucia tackle these challenges, the project will have two main pillars, with the first supporting the island’s reforms toward fiscal sustainability, increasing revenue and transparency, and managing resources more efficiently.
“This includes assistance for implementing new fiscal policies announced by the government, such as introducing a Health and Citizen Security Levy (HCSL) and raising taxes on cigarettes. Additionally, it will support the development and implementation of new regulations for public financial management, rules for public procurement, and the consolidation of the Public Debt Management Act.”
The bank said that the second pillar will support efforts in climate change mitigation and adaptation by helping the government implement the National Energy Policy and Climate Change Bill, which aims to speed up the shift to an economy with lower carbon emissions by promoting the use of renewable energy sources, reducing reliance on imported energy, and cutting costs.
To improve the business environment, the World Bank noted that the project includes measures to help implement the Insolvency Bill and Security Interest in Moveable Property Act, which make it easier for businesses to access funds.
“The proposed operation underscores St. Lucia’s determination to navigate challenges with resilience and innovation. Through the implementation of strategic measures, such as the Health and Citizen Security Levy and progressive fiscal reforms, Saint Lucia is taking active steps to shape a better future for its people.
“Commitment to green and resilient private sector growth reflects a vision where economic prosperity goes hand in hand with environmental sustainability,” said Lilia Burunciuc, World Bank Country Director for the Caribbean.
The World Bank said the resources will be deployed through a Development Policy Credit. This financial instrument supports policy and institutional reforms to help countries achieve sustainable growth and reduce poverty.
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