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	4.5
  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	-138.6
  Current-account balance (US$ m)	-211.3	-93.6	-68.4	-54.3	-68.4
  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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  December 12, 2012

• 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 2012-13 outlook period, with only Grenada set to hold elections, in July 2013.The recovery in economic activity in 2012-13 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 during the period. 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: Following elections in Saint Lucia in late 2011, only Grenada is set to hold elections in July 2013. Despite the regular bouts of domestic political agitation in the context of a weak economic recovery, OECS members will continue to enjoy broad political stability in the remaining 2012-13. 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 eight OECS countries. However, the pace of economic integration will continue to be hindered by burdensome government bureaucracies and transportation bottlenecks. Dominica's prime minister, Roosevelt Skerrit, in his role as minister of finance, presented the government's 2012/13 (January-December) fiscal budget to parliament in July. The overall deficit is projected at EC$15.9m (US$5.3m), up slightly from the EC$12.5m deficit recorded in 2011/12. As the 2013 general election approaches in Grenada, the main issue likely to weigh on voters minds is the state of the national economy. Although a Fund mission-which visited in May-indicated that economic growth is accelerating (to a forecast 1.5% in 2012 from 1.1% in 2011), the leader of the opposition, Keith Mitchell, called the current economic situation "a disaster of unforeseen proportions" for the business community. Infighting within the ruling National Democratic Congress (NDC) could weaken its position at the 2013 election. Although months of public disagreements appeared to have abated in June, in July the rift was again revealed when the NDC party and the NDC government held separate activities to mark their accession to power. The prime minister, Tillman Thomas, has suffered several embarrassing episodes in the House of Representatives in recent months. Four of the original 11 NDC members who were elected in 2008 have now resigned their cabinet positions (following disagreements with Mr Thomas) and sit in the chamber as backbenchers. In late July, two of them sided with the opposition to defeat a government bill that sought to amend the Insurance Act.

  INTERNATIONAL RELATIONS: Development assistance from traditional donors such as the UK will continue to fall, 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 and, potentially, a change in government by end-2012. 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. In an attempt to resolve differences between Anguilla's chief minister, Hubert Hughes, and the British governor, Alistair Harrison, Caricom will send a high-level delegation to Anguilla. The tenuous relationship has continued to deteriorate in recent months, underscoring Mr Hughes' dissatisfaction with the UK government's administration of the territory. This has fuelled speculation that Mr Hughes might make a move towards independence for Anguilla. The issue was discussed by Caricom heads of government, including Mr Hughes, at the regional organisation's annual summit in July, with Mr Hughes demanding Caricom intervention. Antigua-Barbuda is making an attempt to bring closure to an online gambling dispute with the US by seeking mediation assistance from the director-general of the World Trade Organisation (WTO), Pascal Lamy. In 2004 the WTO ruled that US laws that criminalise remote gambling services offered to American consumers were in violation of US treaty obligations. At one point Antigua-based online gambling operations accounted for 25% of the US market, generating a large portion of Antigua-Barbuda's foreign-currency earnings. As a result, when the US introduced laws to criminalise cross-border gambling-effectively shutting down the industry-Antigua-Barbuda took the US to the WTO and won its case. Nonetheless, to date the country has been unable to secure fair compensation to settle the dispute. In June Dominica was forced to disassociate itself from a controversial decision taken by the Venezuela-led Bolivarian Alliance for the Peoples of the Americas (ALBA), in which it is a member. At its June meeting, the members of ALBA agreed to call for the expulsion of officials of the US Agency for International Development from all member countries. Dominica, which relies heavily on the US for tourists, foreign assistance and trade, denied signing on to the decision.

  POLICY TRENDS: Some tourism-related, public- and private-sector commercial projects, which were delayed by the crisis, will get under way during 2012-13. Investment in airport development in at least two OECS states will continue to boost employment and economic activity. The tourism sector-an important source of employment and foreign exchange-will fare better than the goods-producing sectors in 2012-13, but it will not return to the strong growth of recent years, owing to weaker demand. Dependence on US and European tourism demand growth, which will remain weak, will prevent a more robust rebound, while violent crime will remain a threat to the industry. The sector's relatively modest growth prospects will also continue to delay investment in new hotels and tourism infrastructure. Agricultural output has been negatively affected by extreme weather events (droughts and hurricanes in 2010, and torrential rain in 2011), 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. However, Windward Islands output will suffer as a result of the ravages of plantations disease and by Hurricane Tomas in Saint Lucia, and St Vincent and the Grenadines. The OECS countries will remain vulnerable to hurricanes, droughts, earthquakes and volcanic eruptions. Dominica continues to make progress with plans to develop geothermal energy and aims to be a carbon negative economy by 2020. Feasibility studies funded by the EU recently concluded that Dominica has the largest geothermal potential in the Caribbean. The government has begun negotiations for the construction of a 10 to 15 mw geothermal energy plant within the next two to three years. Montserrat has produced a new brand identity ahead of its plans to create a new capital town and launch a major tourism thrust. The rebranding is the first phase of a new high-end low density tourism strategy that aims to lure private-sector investment to the new capital, Little Bay, and encourage visitors to visit the island. In early August, construction of a new EC$6m government headquarters began in Little Bay. Recently, the new ultra-luxury Hyatt Park St Kitts hotel-to be financed under the St Kitts-Nevis' Citizenship by Investment programme-was launched. The controversial programme-which the government hopes will generate new FDI flows-entitles the investor to citizenship in the country in exchange for US$400,000 worth of investment. A new financial services regulator, the Financial Services Authority will be established by the government of St Vincent and the Grenadines to prevent future domestic financial institution collapses.

  ECONOMIC GROWTH: The recovery in economic activity is set to gather some strength in 2012-13, 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 costly and restrictive, and 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 2012-13. 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. At the regional level, 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 (VAT). Saint Lucia, the only country that has yet to introduce VAT, is set to do so in October 2012. The increasing vulnerability of the OECS's banking sector-which has registered liquidity and capital shortfalls in the wake of the financial crisis-will be a major risk in 2012. A joint regional task-force to determine actions to shore up the banking system, as well as strategies to limit the potential contagion effects, will begin to work by end-2012. St Kitts-Nevis has continued to make progress in restructuring its large public-sector debt burden. However, the overall economic outlook remains poor, with the Fund recently revising down its projection for real GDP growth in 2012 to 0%. Despite a rise in tourist arrivals, economic growth remains well below pre-crisis levels in Antigua and Barbuda.

  EXTERNAL ACCOUNT: The prime minister of St Kitts-Nevis, Denzil Douglas, announced that the US had agreed to restructure its debt (which totals around US$2m), extending the repayment period at favourable interest rates. Total external public-sector debt was estimated at US$360m (51% of GDP) at the end of 2011. Economic recovery remains elusive in Saint Lucia, with the Saint Lucia Labour Party administration-which took office less than a year ago-struggling to boost GDP growth and lower the fiscal deficit. The prime minister, Kenny Anthony, presented the government's 2012/13 (April-March) budget in May. Preliminary data presented by him show that the fiscal deficit more than doubled to EC$254m (US$94m, 7.6% of GDP) in 2011/12 (from EC$167m in 2010/11), more than twice the level recommended by the Eastern Caribbean Central Bank. The rising deficit resulted in a further increase in the total public debt/GDP ratio, (68.5% at end-2011).

  September 25, 2012

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