What will the Budget hold for local businesses?

18.DEC.09

The recently released Barbados and OECS Corporate Performance and Outlook report has confirmed what we have all suspected.

The majority of businesses in St. Vincent and the Grenadines have been feeling the pinch and most of them are not optimistic that their finances will get better soon.{{more}}

The study, which is published on page 48 of this week’s Searchlight, was conducted by the University of the West Indies in September this year. It also shows that what is being experienced in St. Vincent and the Grenadines is also happening in the rest of the sub-region, with some countries being more affected than others.

Hopefully, the crowds reported to be shopping in Kingstown last Sunday and earlier this week is an indicator that local retailers are getting a much needed end of year boost.

This is left to be seen, however.

Prime Minister Gonsalves announced on Thursday that Christmas bonuses for public servants will not be forthcoming this year, and many private sector companies will also be hard pressed to give in the manner they have been accustomed.

To add to our list of woes, we got news last week that the EU and the Latin American countries had struck a deal and agreed to lower, yet again, the tariffs placed on Latin bananas.

And this week, news of the Black Sigatoka disease affecting our bananas broke.

Can it get any worse?

Prime Minister Gonsalves and his team in the Ministry of Finance are presently engaged in the preparation of what will be the election budget of 2010. This is arguably the most difficult budget on which he has ever had to work.

It is hoped, however, that the final package will place emphasis on stimulating the private sector, which is key to this country emerging from this economic challenge.

The UWI study also showed, to local businesses’ credit, that businesses in St. Vincent and the Grenadines are among the most optimistic in the sub-region about increasing their employment levels in the next 12 months.

Our businesses, therefore, have expressed the intent; Government now needs to continue improving the business environment to allow them to do so.

Increased incentives for the manufacturing, agricultural, agro-processing, entertainment, creative and tourism sectors; continued downward movement of corporate tax levels; continued improvements in the efficiency at the Customs and Port; support for small and medium enterprises to bring them to the state of export readiness; training of our young school leavers in key technical areas, and a reduction in the bureaucracy and inefficiency involved in conducting business with many of our state agencies, are areas which should be looked at.

Undoubtedly too, the Prime Minister will pay some attention in the budget to making the transition to alternative economic activity easier for those who will be forced out of the banana business by the recent developments.

The international airport under construction is key to boosting our competitiveness and is a project that should be given priority. But how do we balance expenditure on this costly project without increasing our national debt to unsustainable levels or starving other essential services or projects?

We look forward with interest to the 2010 Budget.