2005年-世界发展银行全球_Saint_Vincent_and_the_Grenadines___OECS_Fiscal_Issues_Policies_to_Achieve_Fiscal_Sustainability_and_Improve_Efficiency_and_Equity_of_Public_Expenditures_154页_12mb

Summary of Report No. 30885-SVG: Fiscal Issues in St. Vincent and the Grenadines

Overview

St. Vincent and the Grenadines is a small island nation in the Eastern Caribbean with a population of 106,000 and a per capita GNI of US$3,300 (2003). It joined the British Commonwealth in 1979 and transitioned from a banana-based economy to a service-based one, particularly tourism, due to the decline in banana exports following the loss of preferential access to the European Union.

Despite relatively high per capita income and good social service provision, poverty remains a persistent issue, with 37% of the population living below the poverty line in 1996. Income insecurity and unemployment are also significant concerns, especially due to the country's vulnerability to external shocks and natural disasters like hurricanes.

The report highlights the need to address fiscal sustainability and improve the efficiency and equity of public expenditures to support economic growth, social development, and resilience against shocks.

Key Challenges

To achieve fiscal sustainability and economic growth, the government must:

• Tighten fiscal policy, primarily through expenditure cuts.
• Improve the efficiency of public investments and service delivery.
• Strengthen regulation and efficiency in public utilities and transport.
• Promote education and skills development to prepare the population, especially the poor, for global opportunities.

Fiscal Performance and Debt

• Fiscal Deficit and Debt: From 1990 to 2003, the Central Government (CG) fiscal deficit fluctuated, with a significant increase in the debt-to-GDP ratio from 44.1% in 1996 to 70.1% in 2003. The main driver of this increase was the assumption of a guaranteed loan of EC$156 million (17.5% of GDP) in 1999 for the Ottley Hall marina and shipyard.
• Debt Target: To meet the ECCU target of a public sector debt-to-GDP ratio below 60% by 2007, the government needs to achieve a primary surplus of 3.0–4.4% of GDP between 2004 and 2007.
• Fiscal Adjustment: The fiscal adjustment will mainly rely on expenditure containment, including freezing new CG hires, prudent salary increases, and reducing capital expenditures. Tax increases are expected to be limited in scope and impact.

Budget Management

• Reforms: Budget management reforms initiated in the late 1990s, along with a simple medium-term fiscal framework and joint preparation of capital and recurrent estimates in 2003, have improved fiscal outcomes.
• Weaknesses: Despite these reforms, weaknesses in budget preparation, execution, and monitoring persist. The budget is comprehensive but lacks functional classification of expenditures. Aid funds are underreported, and recurrent expenditures are categorized by object code, while capital expenditures only reflect total costs for the year and project life.

Public Sector Investment Program (PSIP)

• The PSIP for 2004–2006 is detailed, with capital spending distributed across various sectors.
• The program is financed by a mix of domestic and external sources, including grants and concessional loans.
• The report emphasizes the need for greater efficiency and transparency in the implementation of the PSIP.

Public Sector Employment and Compensation

• Employment Trends: Government employment has increased, with significant changes in the number of established and non-established positions between 1995 and 2003.
• Compensation: Salaries for established positions have risen, and the public sector wage bill has grown relative to GDP.
• Reforms: The report recommends prudent salary increases, freezing of new hires, and improving the efficiency of public sector employment to support fiscal sustainability.

Health Sector

• Health Outcomes: The country has made progress in reducing under-five mortality, with a decline from 26 per 1,000 in 1990 to 21 per 1,000 in 2002, but this is slower than the MDG target of a 4.4% annual reduction.
• Health System: The health system faces challenges in delivery, coverage, and financing, with limited public health spending and reliance on user fees.
• Key Issues: The report highlights the need for regionalization to reduce costs and the importance of HIV/AIDS prevention given the region's high prevalence.

Education Sector

• Education System: Primary education is universal, but completion rates are only 84%. Secondary and tertiary education are also underdeveloped.
• Expenditure Use: Public education spending is used across various subsectors, but there is a need to improve data collection and statistics to better inform policy.
• Equity: There is a concern regarding the equity of funding for secondary schools, and enrollment rates vary by income level.

Social Protection Programs

• Programs: The country has various social protection programs, including the Basic Needs Trust Fund (BNTF) and non-contributory age pension (NCAAP).
• Poverty Incidence: Poverty remains high, with one in four individuals classified as indigent.
• Recommendations: The report suggests targeted and effective social protection to mitigate the impact of fiscal consolidation and external shocks.

Gender Issues

• Institutional Analysis: The Gender Affairs Department (GAD) plays a key role in addressing gender-related issues.
• Equity: There are gender disparities in health and education expenditures, with different benefit incidences for men and women.
• Recommendations: The report calls for gender-sensitive policies and improved data collection to better address the needs of both genders.

Conclusion

The report concludes that while St. Vincent and the Grenadines has made progress in fiscal management and social service provision, it faces significant challenges in achieving fiscal sustainability and improving the efficiency and equity of public expenditures. The recommendations focus on expenditure control, public service reform, education and health improvements, and targeted social protection. A specific matrix (Table E.S.1) outlines the policy recommendations for achieving fiscal sustainability and improving public services. The government has initiated a debt management strategy and a fiscal covenant to address these issues, with a focus on sustainable growth, debt reduction, and social development.