Home' Trinidad and Tobago Guardian : November 6th 2014 Contents NOVEMBER 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
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In the last Sunday Express, the esteemed retired uni-
versity professor, Selwyn Ryan, wrote a column that
was headlined "The Caribbean in a fast-changing
world," in which he referred to a meeting that some
"older academicians" held in early October in Mona,
the location of the Jamaica branch of the University
of the West Indies.
The meeting aimed to do an audit of sorts of where the
English-speaking Caribbean was "after 50 years of effort" and
the mood of the meeting, Ryan reported, "was neither buoyant
Professor Ryan noted the impact on the region of drug-
related crime and murders, the fall in global oil prices and the
possible impact on PetroCaribe and the Ebola threat, before
adding: "Whatever investment there existed in the pipelines
to and from the region will more than likely remain sticky and
lacking in confidence. To be brutal, almost all Caribbean
economies and political systems are in a state of incipient
political and economic collapse. Dare we be optimistic?"
Later in the column, Ryan stated: "Of interest is the fact
that some countries, St Kitts and Nevis in particular, have
sought to sell State-owned lands, mainly to the Chinese, to
pay off their debts. These "Citizenship-by-Investment" are
(sic) said to be a new "El Dorado," but are not sustainable.
One can however expect attempts to close those back doors
and also to change land use patterns to the disadvantage of
Now, since I described St Kitts and Nevis as the "Caribbean s
new El Dorado" in the headline of an article that I sent from
the International Monetary Fund forum on the region, which
was held in Montego Bay, Jamaica late last month, one assumes
that Professor Ryan was referring to my contribution, which
was published in the Sunday BG on October 26.
If he was referencing the contribution, one is, of course,
honoured that someone as distinguished and relevant as the
professor would do so.
Ryan raises some important issues:
The first is whether what St Kitts and Nevis is attempting
to do with respect to the Citizenship by Invitation initiative
and the debt-for-land swap (which, as far as one is aware, are
separate programmes) is sustainable.
As far as I am concerned, it is not. But I am in the camp
of those who believe that no economic system is sustainable.
In my own lifetime, we have witnessed the Japanese economy
being referred to as a miracle and Ireland being described as
the Celtic Tiger.
Neither Japan nor Ireland has been able to sustain their
miraculous growth rates, with Japan suffering for two decades
from stagnant growth and Ireland being forced to implement
a programme of financial support that was funded by the Euro-
pean Union (EU) and the International Monetary Fund (IMF).
It is the nature of economic systems that they rise and fall:
the Roman and British empires are good examples. And while
there are some who two decades ago referred to the 20th
century as the American century, the power and dominance
of the United States is not what it used to be (although there
is no telling how shale oil and gas is going to change that
The Chinese economy has grown by leaps and bounds in
the last 20 years, but the live issue is if the air can be released
from the Chinese bubble slowly or whether that process will
be "nasty, brutish and short."
Even a country like Singapore---which some may argue comes
closest to having a "sustainable" economy---has experienced
four periods of economic downturn during which employment
saw a sustained decline, according to a report from that country s
Ministry of Trade and Industry: "These were the 1984/1985
recession, the 1998 recession arising from the Asian Financial
Crisis, the 2001 recession due to the dot.com bust, as well as
the recent recession in 2008/2009 caused by the Global Financial
Given the extraordinary and growing linkages of the global
economy, and my suspicion that booms and busts are an
inherent part of capitalism, it would appear that economic
sustainability is a myth.
The question is whether what is being done in St Kitts
and Nevis is sustainable.
Before answering that, it is necessary to recap the nation s
achievements as in 2010 it had a debt-to-GDP ratio and a
fiscal deficit of 159 per cent and 7.6 per cent respectively. In
July this year, the twin-island nation s statistics include a debt-
to-GDP ratio of 103 per cent and a fiscal surplus of 12.3 per
St Kitts and Nevis was able to achieve this feat because of
its Citizenship-by-Investment initiative and by swapping its
debt for land. As a result, it exited the IMF structural adjustment
loan after the stipulated three-year period.
If the country continues the debt-for-land swap, it will be
able to further reduce its indebtedness, according to the IMF s
review of the structural adjustment loan in July: "St. Kitts
transferred 27 percent of GDP in lands to a domestic creditor,
extinguishing a corresponding amount of debt, contributing
to a reduction in the debt-to-GDP ratio from 137.3 per cent
at end-2012 to 103.1 per cent at end-2013.
"Additional land transfers in 2014, by both the Nevis Island
Administration and the Federal Government, up to the equivalent
of 11 per cent of GDP, is expected to lower the debt ratio to
86.2 per cent by year-end."
The issue of sustainability was raised by Judith Gold, who
is the IMF s representative to St Kitts and Nevis, in an interview
when she said: "Like T&T s oil and gas funds, the inflows from
the Citizenship-by Invitation provide more fiscal space and
comfort, but they also represent the risk that some industries
could become uncompetitive, which was the case with Trinidad s
agriculture sector, for example.
"There is also a question of sustainability, because right now
these programmes are very popular and the advanced economies
are happy to tolerate them, but we don t know what the future
holds and the advanced countries may clamp down on these
So, the likelihood is that a sovereign country cannot continue
indefinitely selling its citizenship (passports) to foreigners.
But the point must be made it was a brilliant move by the
St Kitts and Nevis government to revamp its Citizenship-by-
Invitation initiative to make it a source of windfall revenue, to
the point where senior IMF official Alejandro Werner used the
phrase Dutch Disease and St Kitts and Nevis in the same sen-
And the fact that Dr Denzil Douglas, who was in Trinidad
on Tuesday for the Ebola meeting of Caricom heads of gov-
ernment, had the foresight to swap land acquired from the
unsustainable sugar industry for the nation s debt was also a
Those in St Kitts and Nevis who are making the argument
about the country selling out its birthright to foreigners (I am
sure that argument is being made) need to consider the quality
of their birthright if they were living in a country with a debt-
to-GDP ratio of 160 per cent and a fiscal deficit of 7.6 per
Statistics like those generally mean higher taxes and reduced
spending by governments in the future---both of which tend
to have extremely negative impacts on quality of life in these
parts---as anyone who has lived in Jamaica for the last decade
Would the people of St Kitts and Nevis rather live with their
State owning former sugar lands and maintaining high debt
and high taxes or would they prefer to trade some of the land
to lower their debt with the prospect of reduced taxes and an
improved quality of life in the future?
The St Kitts and Nevis experiment proves what countries
in this region can achieve if they have innovative and strong
leaders who are willing to take controversial and unpopular
decisions for the good of the citizens of their countries.
The real question for St Kitts and Nevis is whether, facing
an election, the government there will save the windfall for a
rainy day...or spend it.
Is Selwyn Ryan right to be gloomy?
University professor, Selwyn Ryan
ST. Kitts Nevis Prime Minister, Denzil Douglas
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