In the last article, we began to discuss the necessary conditions that a Dominica Freedom Party (DFP) government will work towards to set Dominica on a path to prosperity and shared growth. In that regard we started discussion on the necessity to create a stable macro-economic environment. Let us continue with this discussion in this article. This discussion falls within the overall dialogue that we will be having over the next several months about the kinds of sustainable development policies and strategies that a DFP government will pursue should we get the nod to govern this country once again.
In the last article, we recognized that over the last 25 years Dominica’s economy has been plagued by macro-economic imbalance – characterised by high unemployment, unsustainably high fiscal deficits and a shaky financial sector. Moreover, we noted that the economy’s lack of resilience has magnified the imbalances.
It is important to reiterate that to attract authentic investors to our shores, it will be important to create a stable macro-economic environment and key elements in that regard are: maintaining sound fiscal operations, encouraging the stable and sound operation of the financial sector, and building resilience in the face of economic and environmental vulnerabilities.
In the last article, we listed a number of fiscal strategies that will be pursued by a DFP government to create the fiscal space needed to steer the country in the direction of prosperity and we expounded on the area in relation to measures to improve the yield and efficiency of the tax system. Let us now expound a bit on another of the areas – better planning and budgeting including using performance monitoring systems to improve results. This entails determining the constraints that hinder the country from reaching its full potential and based on a sound understanding of that, planning appropriate solutions – policies, strategies and actions. But the entire planning process must be tied to good budgeting. Good budgeting must be about allocating funding towards arriving at desired sustainable development outcomes that are reflected in good planning documents such as vision plans, medium-term development strategies and sector plans. But for planning and budgeting to be effective it must be imbued with performance information and there much be an entrenched culture of monitoring and evaluation with strong accountability to the nation. When the whole cycle of planning, budgeting and the monitoring and evaluation of budget implementation is done well, then public resources are used more effectively. At the moment, our country is failing miserable at effective planning and budgeting, and the major reason for this is the current administration is so bent on being corrupt that it does not desire to have effective and well-functioning planning and budgeting and implementation systems in place as this would contribute to restricting their efforts to be corrupt.
With respect to the financial sector, there are risks within that sector than needs to be addressed and a DFP government move swiftly to do so. An element of the risks introduced during the last decade, relates to the deteriorations in the soundness of banks as a result of weaknesses in the economy and disruptions in economic activity such as the departure of ROSS University. But beyond such matters, bad management of the CBI programme along with suspected public facilitation of other illicit activities, has led to greater scrutiny of Dominica’s banking operations and this is already affecting the ability of citizens, businesses and government to send and receive money abroad. The situation could get much worst and affect the country’s foundation for building prosperity.
With respect to addressing economic resilience, much of the response of a DFP government will be pursued through economic diversification where feasible, together with clear direct strategies to mitigate the impact of climate change and natural disasters. These strategies will be discussed in more detail in future articles.
However, much of the DFP’s approach to improving resilience will be a fiscal response. An important strategy in that regard will be the setting aside of reserves into a resilience fund. The fund will be made to accumulate over time to a level of at least 200% GDP. Building up to such a significant level of reserves will require improving the efficiency of generating revenue and the efficiency of expenditure, as well as prioritizing the building up of reserves which could result in some budget reallocations. The DFP government will not simply rely on CBI sources to build reserves, however, any windfall opportunity will be capitalized on in order to quickly progress towards the reserve target. Reserves would be drawn-down for emergencies under transparent rules, thus reducing economic instability. Given the intent to build fiscal reserves, the DFP will also play great attention to optimising the growth of the economy since a thriving economy provides the best environment for building fiscal reserves. Measures to do so are those in relation to the other necessary conditions for building prosperity. We will discuss those over the next two to three months.
Kent Vital
Political Leader
Dominica Freedom Party.
Since the early 2000s dominica has experienced difficulty after difficulty, and still people wake and smile and keep pushing. I applaud the dominican people for this however we could reach for higher had we had examples to follow, had we had great leaders. Truly great leaders none of that partisan bickering…. no more back and forth but actions!
Kent Vital, there’s a situation. Where is the Christmas Message to the supporters? Everybody else has one but you?
Let us not do this again – we are one year into the DLP’s term and DFP is already dropping the ball – the media use it wisely.
Mr Vital, to be taken seriously you have to clearly explain how you would develop the productive capacity of Dominica to permit it to increase exports, decrease imports and provide employment opportunities for Dominicans. To get a good picture of Dominica’s position, take a look at the earnings growth of critical areas such as manufacturing, tourism, agriculture and and balance that against the consumption areas of imports costs and government expenditures. If you explain what you would do, how you are going to do it, complete with the associated costs and benefits, then Dominicans can examine your position and decide whether or not to give you a chance to deliver.
Great ideas. You are on the right tract.