Organisation of Eastern Caribbean States

Politics:

• Analysis

  Organisation of Eastern Caribbean States politics: Election watch

  Organisation of Eastern Caribbean States politics: Election watch

  FROM THE ECONOMIST INTELLIGENCE UNIT

  Following elections in Saint Lucia in late 2011, only Grenada is set to hold elections in the outlook period (in July 2013). Despite the regular bouts of domestic political agitation in the context of a weak economic recovery, the eight members of the Organisation of Eastern Caribbean States (OECS) will continue to enjoy broad political stability in the remainder of the outlook period. OECS integration, under the Economic Union Treaty signed in late 2009, will be given new momentum following the recent introduction of freedom of movement, which will allow islanders to travel, work and conduct business freely in the eight OECS countries.

  However, the pace of economic integration will continue to be hindered by burdensome government bureaucracies and transportation challenges. Development assistance from traditional donors such as the UK will continue to fall during the outlook period, but this will open doors to new donors from the Middle East and Asia. Controversial political and domestic alliances with Venezuela will weaken, as that country's influence in the region wanes on the back of its economic difficulties. This will reduce the threat to existing political alliances within the Caribbean Community (Caricom) and to the region's push to integrate its economies under the Caricom Single Market and Economy (CSME).

  March 22, 2012

• Background

  Anguilla: Political background

  Anguilla became a British colony in 1650. In 1967 St Kitts, Nevis and Anguilla together became an associated state of the UK; they enjoyed internal independence, but responsibility for external affairs and defence remained with the UK. However, Anguilla was opposed to government by St Kitts and Ronald Webster of the People's Progressive Party (PPP) led a breakaway movement. Negotiations to find a solution collapsed and a British commissioner was installed in 1969, backed by a detachment from the British police force, which remained on the island until 1972. Anguilla formally separated from St Kitts on December 19th 1980, when it became a British Dependent Territory.

  Following a general election in February 1994 a coalition government was formed between the Anguilla Democratic Party (ADP) and the Anguilla United Party (AUP), each of which held two of the seven seats in the House of Assembly. The AUP leader, Hubert Hughes, was appointed chief minister. At that time he suggested that he might seek independence from the UK; he later called instead for a constitution that, like that of Bermuda, would allow for a greater degree of internal self-government.

  In the March 1999 election each party won the same number of seats as in 1994, but after one AUP representative, Victor Banks, resigned from the government, Mr Hughes was left with the support of just three of seven elected representatives. He remained in office as chief minister, but an opposition boycott, initiated in June 1999, prevented the House of Assembly from convening because of lack of quorum. As a consequence, no budget could be passed for 2000. To resolve this impasse, a fresh election was held in March 2000. The same representatives were returned, but a new government was formed by Osbourne Fleming, whose United Front (UF) coalition comprised three Anguilla National Alliance (ANA) members, together with Mr Banks. Mr Hughes's Anguilla National Party (ANP) formed the opposition, along with the remaining AUP member.

  At a general election in February 2005 Mr Fleming's UF won four of the seven seats, with two for the opposition Anguilla Strategic Alliance and one for the Anguilla United Movement. Although party labels have altered since the 2000 election, no seats have changed hands.

  October 03, 2008

Economy:

• Background

  Anguilla: Demographics and resources

  Annual average population growth of 2.8% in 1995-2005 brought the total population to an estimated 13,800 in 2007, the latest year for which data are available. The standard of healthcare and education is high, although tertiary education is only available overseas. The island's warm climate and sandy beaches provide the basis for tourism, the mainstay of Anguilla's economy. A runway extension to Wallblake airport was completed in 2004, enabling it to accommodate larger aircraft, and several major seaport improvements are planned.

  October 03, 2008

• Structure

  Organisation of Eastern Caribbean States: Economic structure

  Anguilla: political and economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (EC$ m)	965.5	798.0	738.8	777.6	793.1
  GDP (US$ m)	357.6	295.6	273.6	288.0	293.7
  Real GDP growth (%)	4.5	-24.4	-5.0b	-2.0b	2.1
  Consumer price inflation (av; %)	6.8	-0.7	1.1	6.1	4.4a
  Population ('000)	15.0	15.0	15.0b	15.2b	15.5
  Exports of goods fob (US$ m)	11.5	23.3	12.7	12.2	12.7
  Imports of goods fob (US$ m)	-239.2	-148.7	-139.1	-140.1	-139.1
  Current-account balance (US$ m)	-211.3	-93.6	-68.4	-54.3	-65.7
  Foreign-exchange reserves excl gold (US$ m)	41.0	37.5	39.9	37.5	42.0
  Exchange rate (av) EC$:US$	2.70	2.70	2.70	2.70	2.70
  a Actual. b Economist Intelligence Unit estimates.
  Source: Eastern Caribbean Central Bank; IMF; US Census Bureau.

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  March 26, 2013

• Outlook

  Organisation of Eastern Caribbean States: Country outlook

  Organisation of Eastern Caribbean States: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The eight members of the Organisation of Eastern Caribbean States (OECS) will continue to enjoy broad political stability in the remainder of the 2013-14 outlook period. The recovery in economic activity in 2013-14 will begin to gather strength, supported by a moderate, but still fragile, recovery in the US-a major source of tourism demand for the region. Episodes of high volatility in global financial markets will keep access to finance costly and restrictive, weighing on foreign direct investment (FDI) inflows, which account for a large proportion of national income. GDP growth will also be hindered by a heavy public-debt burden, which will continue to crowd out private investment. With some exceptions, public investment will remain generally weak in 2013-14. All OECS governments will continue to pursue fiscal consolidation, some owing to commitments made under IMF programmes and others as a result of commitments made to the UK government. The pace of economic integration will continue to be hindered by burdensome government bureaucracies and transportation challenges.

  DOMESTIC POLITICS: Of the eight OECS countries, two are set to hold elections during 2013-14 (Montserrat and Antigua-Barbuda, both in 2014). Despite the regular bouts of domestic political agitation in the context of a still-weak economic recovery, the eight members of the OECS will continue to enjoy broad political stability in the outlook period. OECS integration, under the Economic Union Treaty signed in late 2009, will be given new momentum following the recent introduction of freedom of movement, which will allow OECS citizens to travel, work and conduct business freely in the OECS member countries. However, the pace of economic integration will continue to be hindered by burdensome government bureaucracies and transportation bottlenecks. Development assistance from traditional donors such as the UK will continue to decline during the outlook period, but this will open doors to new donors from the Middle East and Asia. Controversial political and domestic alliances with Venezuela are likely to weaken, as that country's influence in the region wanes on the back of its economic difficulties and the recent death of its charismatic leader, Hugo Chávez. This will reduce the threat to existing political alliances within the Caribbean Community (Caricom) and to the region's push to integrate under the Caricom Single Market and Economy. Anguilla's 2013 budget, which was approved by parliament on December 18th 2012, had still not been approved by the UK in early March. UK approval of the budget is pending the approval by the Anguillan government of the Framework for Fiscal Responsibility, a policy partnership document introduced by the UK for its overseas territories. Dominica's prime minister, Roosevelt Skerrit, is under investigation by the Integrity in Public Office Commission (IPO) on the strength of allegations made by a journalist, Lennox Linton, that the prime minister used his official influence to secure concessions for a personal business matter. The IPO, which is constituted under the laws of Dominica to combat corruption in public life, was originally scheduled to hear the matter in late December but the hearing was pushed back several times, most recently on February 25th "until further notice" after Mr Skerrit's lawyers sought a court injunction to have the matter quashed. In Grenada the New National Party (NNP), under the leadership of Keith Mitchell, won a landslide victory in a general election on February 19th, winning all 15 seats in the House of Representatives. It was the second time that Mr Mitchell and the NNP had made a clean electoral sweep (the first was in 1999). The National Democratic Congress, which had endured a tumultuous five-year term in office following its 11-4 victory over the NNP in 2008, will now face a long period of reorganisation. The St Kitts-Nevis prime minister, Denzil Douglas, survived a challenge to his leadership in January following an attempted rebellion within his St Kitts Nevis Labour Party government by two members of cabinet-the deputy prime minister, Sam Condor, and a senior minister, Timothy Harris-and a no-confidence motion by the opposition (which had the support of the influential Chamber of Commerce). In late January six members of the cabinet closed ranks behind Mr Douglas after Mr Condor resigned and Mr Harris was fired. The two had publicly criticised Mr Douglas's handing of the economy and the country's deteriorating social situation in the wake of the global economic crisis. They showed their dissent by not participating in cabinet meetings to discuss the national budget, resulting in presentation of the measure to parliament being postponed in December. They also publicly opposed legislation proposed by their government to increase the number of senators in the chamber. The Concerned Citizens Movement was elected to govern Nevis in a general election on January 22nd, when it defeated the Nevis Reformation Party by three seats to two. The new premier, Vance Amory, promptly announced his cabinet's decision to take a 10% pay cut as part of the administration's plans to come to grips with the fiscal challenges facing the tiny island.

  INTERNATIONAL RELATIONS: Antigua-Barbuda won another victory against the US in its decade-long online gaming dispute on January 28th when-in a ruling that was widely interpreted as sanctioning illegality-the dispute settlement body of the World Trade Organisation (WTO) gave Antigua-Barbuda the right to suspend concessions and other obligations it has to the US under international law with respect to intellectual property rights. As a result, the government of Antigua-Barbuda will be able to authorise the sale of products of innocent holders of copyrights, trademarks and other important intellectual property, free of legal protection. Following the WTO ruling, the prime minister, Baldwin Spencer, announced that his government would be prepared to abolish Antigua's gaming sector in exchange for "a realistic compensation package" from the US, but insisted that Antigua-Barbuda was not prepared to abandon crossborder gaming "at all costs", nor would his government be intimidated by US threats. His government's plan, he underscored, was to continue to push ahead and end the dispute once and for all. In the meantime, the EU has paid the first EC$18.2m (US$6.7m) instalment of an EC$55.2m aid package to Montserrat aimed at helping the territory to boost economic growth and development. The money will mainly support the implementation of Montserrat's Sustainable Development Plan. The EU has been co-operating with Montserrat since 1976, in a partnership that has seen the island receive grant resources for water, roads, seaport, airport, housing and tourism infrastructure. Montserrat is also receiving another EC$114m in EU financial assistance under the ongoing ninth and tenth European Development Funds in the form of budgetary support. The Saint Lucia prime minister, Kenny Anthony, has raised the possibility that Saint Lucia may seek assistance from the Fund to sustain the floundering economy. The warning was made amid public sector wage negotiations; the Fund has warned the government to rein in the public sector wage bill as it seeks to stabilise the public finances. In its latest Article IV consultation the Fund reported that while the island had come through the recent economic crisis to become the largest economy in the OECS, external factors had dampened economic activity in 2012, resulting in a contraction of 0.4% in real GDP. Saint Lucia's prospects for joining PetroCaribe-under which Venezuela supplies crude oil and petroleum products to a number of Caribbean economies on concessionary financing terms-are unclear following Chávez's death on March 5th. The Saint Lucian government had announced on March 1st that it would become the latest country to join the initiative, which is unpopular amongst the Venezuelan opposition. The future of PetroCaribe is uncertain given Venezuela's worsening economic woes; moreover the opposition there has vowed to eliminate the programme if it wins the presidential election scheduled for April 14th (not the Economist Intelligence Unit's baseline scenario).

  POLICY TRENDS: Attempts to improve fiscal policymaking will make only slow and piecemeal progress. A major element of fiscal reform is the widening of the tax base, in part via the introduction of value-added tax, which all OECS countries have now implemented. Several governments have committed themselves in principle to reduced discretionary tax concessions. However, the temptation to make new concessions will be strong, particularly as governments seek to attract new tourism investments. Such reforms will only partly help to reverse deteriorating fiscal balances. Two recently announced hotel developments will help to boost Anguilla's stock of hotel rooms. The government has signed a memorandum of understanding with AJ Capital Partners of Chicago for a US$80m redevelopment of the Malliouhana Hotel and Spa, located in Meads Bay, which closed in May 2011. The project will include restoration of the existing 55 rooms and the construction of 45 additional rooms. The administration also signed an agreement for a 34-room US$20m hotel to be constructed in Shoal Bay. Dominica could begin producing geothermal energy by 2015, according to the minister of energy, Rayburn Blackmoore. Residents of the Roseau Valley, where the exploratory work is under way, have expressed health and environmental concerns about the project, but have been assured that once strict environmental controls are in place, the plant can exist safely in populated areas. Mr Blackmoore claims that Dominica's resource can commercially generate up to 120 mw of power for both domestic use and for export. Construction of a small power plant of between 15- and 20-mw capacity is due to commence in June of this year. Investigations conducted by a US-based company have concluded that there is an 80% chance of geothermal energy being found on Montserrat The UK, via its Department for International Development, has provided the equivalent of US$12.7m to finance the project and site preparation is already under way. Actual exploration will be undertaken by the Iceland Development Company and, if successful, would fuel a 5-mw plant that would produce enough energy to supply Montserrat's present and future needs. The St Vincent and the Grenadines prime minister, Ralph Gonsalves, also announced that his government is pressing ahead to develop alternative sources of energy including the exploitation of geothermal resources on St Vincent. Two international companies, Emera (Canada) and Reykjavik Geothermal (Iceland), are participating in ongoing geothermal exploration. According to Mr Gonsalves, both companies are confident about the existence of a quality geothermal energy source on the island and believe a project can be successfully integrated into the sustainable operation and long-term planning of the country's lone electrical power company.

  ECONOMIC GROWTH: The ongoing recovery in economic activity is set to gather some strength in 2013-14, supported by a moderate, but still fragile, recovery in the US-the main source of tourism demand for the region. Remittance income from workers abroad will improve mildly, partly supporting growth in private consumption, but this will be offset by still-high unemployment levels. The risks of a renewed global recession have receded, but new episodes of volatility in global financial markets are to be expected as the euro zone works through its debt problems. This will keep access to finance in the region relatively costly and restrictive, and continue to weigh on FDI inflows, which account for a large proportion of national income. Growth in OECS economies will also be hindered by a heavy public-debt burden, which-although reduced in several countries following debt restructuring exercises-will continue to crowd out domestic private investment. With some exceptions owing to reconstruction works, public investment will remain generally weak in the outlook period. All OECS governments will continue to pursue fiscal consolidation, some owing to commitments made under Fund programmes and, in the case of the two UK Overseas Territories, Anguilla and Montserrat, as a result of commitments made to the British government. Barring any new natural disasters, the OECS members are set to post positive growth rates in 2013-14, following several years of recession or minimal growth. Since 2009 a mild recovery in tourism has not been able to offset a sharp decline in construction and in income from banana exports, pointing to deep structural issues related to reliance on tourism, and, in some islands, agriculture. As a result, growth rates in OECS economies are likely to remain below pre-crisis levels for an extended period. Owing to below-potential FDI inflows, activity in the construction sector, which was a significant driver of growth prior to 2009, will remain sluggish in many countries, although reconstruction following natural disasters will provide a boost to the sector in some states. Some tourism-related, public- and private-sector commercial projects will get under way in the outlook period. Investment in airport development in at least two OECS states will continue to boost employment and economic activity during the outlook period. The tourism sector-an important source of employment and foreign exchange-will fare better than the goods-producing sectors, but it will not return to the strong growth of the pre-crisis years, owing to weaker demand. Dependence on US and European tourism demand, which will rise but remain relatively weak, will prevent a more robust rebound, while violent crime will remain a threat to the industry. Agricultural output has been negatively affected by extreme weather events, the effects of which have been compounded by widespread outbreaks of disease in banana crops. The lingering effects will be detrimental to agricultural earnings and employment on many islands. Competition from Latin American banana growers will erode Caribbean producers' market shares, while the end of the EU's quota system will remove an additional source of revenue for Windward Islands agricultural producers. However, the Fair Trade scheme, which guarantees a relatively stable price to producers, has allowed the Windward Islands to carve a significant niche market in the UK, and the industry there is expected to survive in the medium term. Drug-trafficking will remain a serious problem and continue to fuel violent crime. Although total murders will remain low in absolute terms, the per-head murder rates of several countries will remain among the highest in the world. High rates of violent crime will continue to damage the region's international reputation as a tourist destination, although there are signs that a tougher stance by the authorities in several islands is beginning to bring crime levels down.

  EXTERNAL ACCOUNT: In a context of large fiscal spending commitments, the debts of independent OECS jurisdictions are extremely burdensome to service, even when economic growth is set to gather pace. Although additional OECS countries may opt to restructure their debt, others will face rising indebtedness as they turn to the Fund to deal with the lasting impact of the 2008-09 global economic crisis.

  March 28, 2013

Country Briefing

POPULATION:

554,100 (1995)

MAIN ISLANDS:

Population (mid-1995; capital in brackets)

Anguilla (The Valley) 10,600

Antigua and Barbuda (St John's-Antigua) 64,300

Dominica (Roseau) 74,200

Grenada (St George's) 97,400

Montserrat (Plymouth) 10,400

St Kitts-Nevis (Basseterre) 42,000

St Lucia (Castries) 145,300

St Vincent ((Kingstown) 109,900

CLIMATE:

Subtropical

LANGUAGES:

English

MEASURES:

UK (imperial) system

TIME:

4 hours behind GMT

FISCAL YEAR:

Calendar year

CURRENCY:

1 East Caribbean dollar=100 cents. The exchange rate has been fixed at EC$2.70:US$1 since July 1976

PUBLIC HOLIDAYS:

January 1, Good Friday, Easter Monday, May 5, May 19 (except St Lucia), August 4, December 25-26

ADDITIONAL PUBLIC HOLIDAYS:

May 30, June 14, August 1, August 7, December 19 (Anguilla); June 14, July 7, August 5, November 1 (Antigua and Barbuda); February 10-11, November 3-4 (Dominica); February 7, May 29, August 5, October 27 (Grenada); March 17, June 9, November 24, December 31 (Montserrat); June 16, September 19, November 14 (St Kitts- Nevis); January 2, February 10-11, 24, June 14, October 2, December 15 (St Lucia); January 22, July 7-8, October 27 (St Vincent)

October 25, 2006