BUDGET RESPONSE 2017/2018

Building a Sustainable Economy for a Better Dominica

LENNOX I. LINTONParliamentary Opposition Leader

July 28th, 2017

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INTRODUCTIONMadame Speaker, colleague Parliamentarians, fellow citizens of Dominica, on behalf of the leadership and members of the United Workers Party TEAM Dominica – the Parliamentary Opposition of Dominica – it is my duty to respond to the 2017/2018 Budget Statement of the Dominica Labour Party Government delivered by the Prime Minister of Minister of Finance less than 24 hours ago on July 27th, 2017.

This new normal, this outrageous limitation of the time to respond to a budget statement prepared over a number of months with input from an army of public officers under the watch of the largest Cabinet in the OECS, confirms the hostility to Parliament’s oversight responsibility for public finances that has become the modus operandi of this administration.

In response to its 17 year record of consistently achieving the worst economic performance results in the Eastern Caribbean Currency Union, we stand on our commitment to develop and grow a model green economy that rewards enterprise, puts our people to work for decent wages, gives a fair chance to all and secures our place in the global trade of goods and services.

For 17 long years, through budget after budget, this administration has spent more and more of the people’s money on making people poorer, destroying their quality of life and rendering them more and more incapable of making their own money, being their own people, taking care of their families and living lives of dignity. Its time for change.

In recent years, we have lamented the enduring obsession with the same old failed policies of exclusion, secrecy and petty political partisanship that have made a complete mockery of the parliamentary oversight responsibility for preparation of the national budget and the management of public finances.

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We have asked for the involvement of the parliamentary opposition at stages in the budget preparation cycle where it can meaningfully contribute to the annual revenue and expenditure planning exercise. We have been ignored except for that one occasion when we were disrespectfully invited today for tomorrow to listen to a panel of ruling party supporters in a so-called consultation on funding economic activities. We declined participation in the blatant partisan charade designed by 100 thousand dollar per month US based spin doctors to score political points.

In 2015, in 2016, the budget response of the parliamentary opposition went to great lengths to demonstrate why the budgets of those years and the budgets of the 14 previous years lacked credibility. We made the case that these Labour Party Budgets are not the products of an effectively anchored, bi-partisan parliamentary mechanism to decide on and fund the growth and development priorities of Dominica. We advised against the dangers of driving Dominica Labour Party paramountcy to supersede the authority of our nation’s highest decision making body, for partisan purposes like having parliament routinely rubber stamp approval of budgets that are not designed to (and therefore cannot) serve as a tools to deliver the growth and development fundamentals of the Commonwealth of Dominica.

The 2017/2018 budget presented on a platform of all-time high revenues from the sale of passports falls well short of showing how government will prioritize and achieve its annual and multi-annual objectives in a way that will impact the economy as a whole by placing it on a path of faster, higher growth – the undisputed major national development challenge of the last two decades.

The presenter of the 2017/2018 budget says he is excited about it and we wonder why. Where is the excitement in same old, same old? Where is the excitement in haphazard spending that will only lead to stagnation and

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further decline in the growth engines of agriculture, tourism, light manufacturing, renewable energy and the cultural industries? Where is the excitement in presiding over increased joblessness, in managing the widening and deepening poverty… where is the excitement in using more and more of people’s money on the increasingly empty promises of a better life?

This budget is about protecting the selfish interest of the few who make merry in the Dominica that is doing very well while the rest of us, in the other Dominica they have made critically unwell, endure the sweltering heat of a living hell. This budget is not clear, it is not fair. It is unhinged from the realities of what the people really need, because it is the work of a regime that simply will not take heed. More of the same has not worked, cannot work and will not work. Change is a must.

In the budget formulation process under the United Workers Party Team Dominica:

I. We will present budget outlook and budget strategy papers for better public understanding of the fiscal strategy driving the revenue and expenditure allocations

II. We will enact Fiscal responsibility legislation establishing principles of responsible fiscal management and transparency. We will operate with rules that support fiscal sustainability; anchor the formulation of the annual budget and its execution; and provide a correction mechanism after deviations

III. We will Issue Medium Term Expenditure Framework guidelinesIV. We will use Sector Working Groups and Ministerial Public Expenditure

reviews to bring together input from ministers, parliamentarians, public officials, the private sector, civil society organizations and private citizens

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V. We will engage a Finance Committee of Parliament, the Budget Office and Sector Hearings to consider these contributions and transform them into action-oriented proposals for the betterment of Dominica.

VI. We will engage an Estimates or Finance Committee of Parliament to review and approve the Estimates of Revenue and Expenditure

VII. We will restrict the use of contingency warrants used to authorize unbudgeted spending, and the include in the budget, a contingency reserve for unforeseen or emergency spending

VIII. We will improve the capital budgeting process with the introduction of performance budgeting across government by linking budget allocations to economic and social priorities, and enacting results-based budgeting

IX. We will promote trust among citizens that government, is listening to and acting on their concerns, has a plan for achieving worthwhile objectives, and will use the available resources effectively, efficiently and in a sustainable manner.

Under the watch of the UWP Government, once parliament approves the budget, allocations will be effectively implemented by the ministries and agencies of government to secure the intended development benefits. Revenue collection and spending as authorized in the budget will be subjected to proper oversight throughout the year by a properly empowered Public Accounts Committee, the Audit Department, the Budget Office and line ministries as appropriate.

We will bring an end to the pigeon-holing of the Public Accounts Committee into a primary concern with audited reports on government finances and ensure that it embraces the discipline of oversight in real time. We will amend the relevant Standing Orders of this House to ensure that the work of this important standing committee of Parliament is no longer exclusively dependent on reports from the Director of Audit which are usually backlogged three to four years. In other words under our watch the PAC will

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no longer be condemned to oversight of history while live revenue and expenditure performance goes unchecked.

A UWP government will discontinue the practice of silence on the implementation of budget allocations after approval by Parliament. Under our watch, there will be periodic budget performance reviews that allow parliament to note the trend of overall collection and spending and prepares Cabinet to reassess budget alignment with fiscal objectives and development priorities. We will have budget execution reports, including in-year and audited year-end reports designed to yield useful improvement messages on performance and value-for-money.

The parliamentary budget oversight focus will be on “Budgetary governance” - the processes, laws, structures and institutions to ensure that the budgeting system effectively meets these requirements. We will give Dominica what this administration has been unable to deliver for more than 17 years - integrated budget formulation systems and monitoring procedures that are coherent and consistent across all levels of governance in the public interest.

After 17 years of ignoring the necessity of good, transparent and accountable governance, it is finally admitted that “our transformation requires a new mode of governance… governance that is more consultative and able to quickly identify challenges and solutions”.

This so called new mode of governance or however else described, in the context of our democratic traditions and aspirations begins with elections with integrity. Free and fair elections that honestly and accurately reflect the free will of the people in the choice of a government of the people, by the people, for the people… a government whose members accept that in democracies, the people elect government, monitor government, question government, criticize government, praise government, counsel government and change government without let or hindrance.

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The fact of unfair elections in Dominica has been confirmed by the Commonwealth Observer Mission following the December 2014 general election. The mission concluded the election was not fair because of

“…the lack of balance, and in some cases lack of professionalism of the media; the absence of campaign finance regulations and the resultant lack of transparency on financing, coupled with the exponentially increased expense associated with campaigning; multiple instances of treating and bribery, including the transportation of electors to the island to vote; and the apparent abuses of incumbency, including a lack of impartiality in the provision of public services”.

Since 2005, the United Workers Party has been advocating for electoral reform, along the lines of improvement recommendations in post election reports from the Chief Elections Officer and Observer Missions from CARICOM and the OAS.

The Electoral Commission, acting in its own deliberate judgment, decided to pursue much needed reform of the electoral process in order to effectively protect it from undue influence, bribery, voter fraud and corrupt election practices.

Since that decision by the Commission, acting independently as mandated by the Constitution, the Commission has conducted two general elections (2009 and 2014) under the same electoral system it determined is in need of reform.

There has been growing public concern over the failure to implement the reforms especially given the abuses and corrupt practices that the ruling Dominica Labour Party has engaged to win the last three general elections in violation of the voter eligibility, bribery and treating provisions of our electoral laws.

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We again request urgent action and adequate funding to complete the process of electoral reform that the Commission decided on in the public interest more than 8 years ago. We remain completely opposed to the reform agenda of the Dominica Labour party Government which seeks to legitimize bribery and treating ad introduce overseas registration of voters

For the avoidance of doubt, key elements of electoral reform for free and fair elections with integrity are as follows:

1) An accurate Register of Voters - a total re-registration of all eligible voters on the basis of which a new register of voters will be issued.

Cleaning the list of electors is a critical component of electoral reform. A bloated list that includes, (despite prohibitions in law to the contrary), the names of dead people and people living outside of Dominica for over five years, is and will continue to be used to corrupt the voting process.

The Opposition believes a total re-registration is the best way to clean the List. This has successfully been done in neighboring Island States over relatively short periods of six months or less.

All re-registrations must be done by the Commission exclusively in Dominica and must be subject to the existing residency criteria for voter registration.

2) Voter Identification Cards - picture ID cards for all eligible voters on the new register of voters who will be obligated to use the cards as identification during elections.

All ID Cards for voting must be issued by the Commission exclusively in Dominica.

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The Rule of Law - enforcement of the provisions in our electoral laws against bribery, treating, personation, illegal voting and election offenses in general.

We urge the Commission to constrain whoever it may concern to honour the rule of our electoral laws and to guard against any attempts to amend specific provisions of these laws for the purpose of legitimizing the bribery, treating and ineligible voting practices that are increasingly corrupting the electoral process.

3) Voting by Electors Living Overseas – lawful facilitation of registered, eligible voters living overseas to vote in general elections in Dominica.

The practice of a political party paying millions of dollars from undisclosed sources to transport thousands of voters from various overseas locations to vote is illegal, corrupt and represents a most dangerous obstacle to free and fair elections.

4) Media Access for the Opposition - fair access for the Opposition to the news and current affairs programs of all state owned, state operated or state controlled media.

5) Campaign Finance Reform - to ensure at the very least declarations of campaign contributions and election campaign spending by any political party of no more than EC$30.00 per registered voter per election.

The fact that two elections have been held since the Commission’s independent decision to pursue electoral reform with no real progress on this extremely important undertaking, gives the impression that the Commission is ensuring that no electoral reform will be completed in time for any election while the Dominica Labour Party remains in office.

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BACKGROUND

Since 2005 the Dominican economy has struggled to maintain a growth rate of less than one percent on average, well below economic performances in the rest of the Region and significantly less than the 5 - 7 percent required to generate sustained employment and to reduce the growing incidence of poverty on the island. Repeated policy action in budget after budget presented by this administration have failed to address economic growth and Dominica’s growing unemployment problems with the resultant social ills, which continues to plague our country.

Indeed the Dominican economy following years of neglect by the Roosevelt Skerrit led administration and a decided lack of economic policy direction continues to drift downwards even threatening to erase the gains that were made under the Dominica Freedom Party and United Workers Party administrations. A direct consequence of this neglect is the growing numbers of our citizens requiring direct government assistance, rapidly rising unemployment, and increasing and persistent poverty island wide. It is clear that attempts at continuing the National Employment Program, which was an election gimmick, has done little to alleviate the anxiety of the hundreds of young people across this country who are unable to find meaningful and long term employment.

Opportunities within the agriculture sector, which for years provided a stable and consistent income to the majority of the rural population have slowly dried up as government mistakenly withdrew its support and failed in its efforts, in spite of repeated promises, to secure markets within the Region. Other opportunities to spur growth such as within the private and tourism sectors have met with a similar fate. It is clear that this Skerrit led

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administration have failed spectacularly in generating growth and taking care of the wellbeing and economic needs of the majority of its citizens.

Government’s insistence of “if not passport revenues then what” demonstrates a reckless disregard for safeguarding and improving traditional revenue streams, which are critical in maintaining the sustainability of government revenue. The average Dominican understands that revenues from the CBI program are at best transitory and will someday come to an end. That’s why it is more than perplexing that this government continues to fail to address revenue generating efforts operating as though the economy is on remote control and it will somehow right itself.

Through its neglect of the economy we have witnessed the persistent decline of VAT revenues. One does not need to understand or even appreciate economics to know that if you fail to promote growth that ultimately your revenue streams will dry up and with it your ability to continue government programs and to take care of public servants and the rest of the citizenry. Not only is VAT on the decline but so too is grant revenue, which have fallen to levels never witnessed before in this country as our traditional friends distance themselves from the reckless spending of this administration and its failure to put in place economic policies to safeguard domestic revenue generation.

On the expenditure side, wages and salaries combined continues to take the lion’s share of current spending reflecting government’s inability to encourage private sector led growth, which could assist in easing the employment situation. Consequently, after paying public servants there is very little revenue left over to take care of critical areas such as health care services. The government’s capital expenditure program continues to be haphazard and lacking focus failing to adequately address the needs

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agriculture sector and other income generating sectors. In the majority of cases spending has been wasteful, lacking in proper oversight, and have raised serious issues of this government’s procurement practices, such as issuing ‘no bid contracts’; basically granting contracts to friends and supporters in breach of procurement laws and best practice.

Let’s be clear that the only sensible approach to rescuing this country, which not surprisingly continues to elude this inept administration is a focus on policies aimed at stimulating economic growth, reducing the level of unemployment and poverty, improving budget performance including regulating procurement practices, and generating non CBI revenue in the near to medium term. This must be complemented with the establishment of key performance indicators such as a targeted growth rate of 5 – 7 percent per annum, annual increases in VAT and other tax and non-tax revenues of at least 15 percent and maintaining a current fiscal surplus of between 2 – 6 percent of GDP on an ongoing basis.

WHAT THE IMF SAYS

This year’s budget, surfaces against the backdrop of some very interesting disclosures in the IMF’s March, 2017 Article IV consultation on Dominica.

“Despite high Citizenship-By-Investment (CBI) revenues, the fiscal outlook has deteriorated largely due to lower projected grant revenues; a downward revision in the projected yields of the fiscal consolidation measures; the increase in social transfers; and the reduction of the corporate income tax rate in January 2017. As a result, the use of government deposits to cover financing needs would be necessary to reach the regional debt target of 60 percent of GDP by 2030 without increasing the fiscal consolidation effort above the commitments in the RCF disbursement.

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“Given the risks to the fiscal outlook, the authorities should also explore contingent fiscal consolidation measures such as developing a formal tax incentives policy for private investment, preparing a revenue enhancing tax reform, and improving spending efficiency through better targeting and means testing of social programs,… enhancing budget preparation and execution processes, further improving the integrity of the CBI program, and considering the adoption of fiscal responsibility legislation.

“Despite ample liquidity, banks’ credit to the private sector remains weak as a result of insufficient bankable projects, persisting low profitability, and high non-performing loans (NPLs). The authorities took steps to increase the capital of the National Bank of Dominica, but persistent actions are needed to improve the soundness of financial institutions and to reduce NPLs, including through the operationalization of the Eastern Caribbean Asset Management Company.

“The global tightening of the requirements for correspondent banking relationships (CBRs) confronts Dominica with important challenges. Significant progress has been made to strengthen AML/CFT legislation closer to international standards in recent years, but enforcement remains a challenge given capacity constraints. Lowering the risk of withdrawal of CBRs would require improving information sharing agreements between respondent and correspondent banks, as well as encouraging bank mergers

Let’s go now to a few classic examples of IMF stuck record recommendations for the Dominica economy that you must have heard over and over again during the past 17 years:

“Improving the conditions for private investment, especially for export activities, is the key to accelerating growth. Efforts should therefore

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focus on the removal of costs and barriers that affect investment decisions and profitability. Specifically, the government should enhance labor market legislation and better target education programs in order to improve labor productivity and mobility across sectors; reduce the cost of doing business, especially in terms of resolving insolvency, registering property, paying taxes, and obtaining construction permits; explore the potential for expansion and further diversification of tourism markets; enhance the resilience of public infrastructure to natural disasters; and advance on the development of geothermal generation of electricity”.

These IMF recommendations for an economy managed by a group which according the Prime Minister should be “unafraid to regularly expose itself to independent expert scrutiny” are contained in a press statement issued by the mission chief at the end of the Article 4 consultation in March 2017. But four months later, the full Article 4 report is yet to be published.

Instead the IMF features this June 29, 2017 update on its website:

“On May 12, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the consideration of the Article IV consultation with Dominica, and considered and endorsed the staff appraisal without a meeting. 

“Under Article IV of its Articles of Agreement, the IMF has a mandate to exercise surveillance over the economic, financial and exchange rate policies of its members in order to ensure the effective operation of the international monetary system. The IMF’s appraisal of such policies involves a comprehensive analysis of the general economic situation and policy strategy of each member country. IMF economists visit the member country, usually once a year, to collect and analyze data and hold discussions with government and central bank officials. Upon its

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return, the staff submits a report to the IMF’s Executive Board for discussion. The Board’s views are subsequently summarized and transmitted to the country authorities. 

“Publication of the Staff Report will be done subsequently.

I understand the IMF Executive Board to be saying, the 2017 Article 4 report is in the hands of the Dominica authorities and those authorities have not yet decided to publish it. And I wonder why

KEY BUDGET INDICATORS

The Budget statement confirms that Agriculture sector grew by 9.9% in 2016/2017 following a decline of 15.1% in 2015/2016 which means the sector is still 5.2% behind where it used to be two years ago; tourism nose-dived 12.8% in 2016/2017 following a 10.9% decline in 2015/2016, in other words, the last two years have seen a 23.7% reversal in growth fortunes for this key economic growth engine.

Overall, government’s recurrent revenue increased by 247.0 million - from $635.4 million in 2015/2016 to $882.4 million in 2016/2017. While traditional tax revenues remained flat, revenues from the sale of passports moved year on year from $267.5 million to $506.9 million – an increase of $239.4 million.

The recurrent revenue projection for 2017/2018 is 786.5 million with 400.0 million expected to come from the sale of passports.

SALE OF PASSPORTS – MAIN REVENUE EARNER

Government has now shifted its main revenue focus from taxes to the sale of passports which is forecast to contribute 51% of the recurrent revenue in this financial year.

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Next month, Dominica will celebrate its 26th birthday as a player in the global passport selling industry which has an estimated sales volume of EC$5 billion. 14 of Dominica’s 26 passport selling years have been under the watch of the current Prime Minister and Minister of Finance. The so-called real estate option of CBI is the Grace Tung Layou River Model introduced under the Dominica Freedom Party and the cash option under which revenues from the sale of passports come into the treasury, is the re-engineered economic citizenship model introduced by the United Workers Party. There has been no innovation

The dramatic increase in passport sale volumes over the past two budget cycles is driven mainly by 1) the increased demand for 2nd passports that work better than those of certain countries, particularly in Asia and the Arab world; and 2) the fact that Dominica offers the cheapest passport

Now, is money from passports sales current Revenue or is it capital revenue. Classifying CBI revenue as current revenue is false accounting. Whether we call it investment or Sale of Passports which is what CBI is, the money is Capital Revenue. It is money received for the sale of National Assets-i.e. Passports, national heritage, our people's rights. It's in the same category as money received when Government sells houses, or land or other investments such as shares in NBD. Correcting this classification changes the entire financial picture of the budget. The current revenue surplus is erased and all the other financial ratios are impacted on negatively.

Throughout the 26 year period of passport sales, Dominica has seen a steady growth in the number of citizens but no real investment in economic activity to secure sustainable jobs and national income.

Three years ago, 2014/2015, Dominica picked up $23 million dollars from passport sales – a shortfall of $57 million on the budget of 80 million. One year later, in the official estimates, government reported passport revenues

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of $99 million – 76 million above the prior year and 29 million above budget. But according to the Prime Minister’s 2016 budget statement, the actual amount received from passport sales in 2015/2016 was 279.8 million

What this meant is that the passport revenue of the Commonwealth of Dominica was under reported by 180.8 million in the official estimates that Parliament approved. I made the point in response to the 2016 Budget Statement that government was holding passport revenues outside of the consolidated fund in breach of the Constitution. The pretense on the other side was that they had no idea what I was talking about. Lo and behold, we see in this year’s estimates a 168.5 million dollar correction – from 99 million to 267.5 million - in the actual passport revenue figure for 2015/2016.

The only problem with that is, according to the Prime Minister, the actual receipts from passport sales in 2015/2016 amounted to 279.8 million, NOT 267.5 million. 118 million came in to NBD and 161.8 million came in to RBC – 279.8 million in total. Where is the difference of 12.3 million dollars?

BANK BalanceJun/30/15

BalJun/30/16

Inflows2015/16

Spent

NBD 2.4 19.0 118.0 101.4RBC 13.0 143.1 161.8 31.6TOTAL 15.4 162.1 279.8 133.0

For the budget year 2014/2015, a deficit year, government projected that it received and spent 25 million dollars of passport money. At June 30th, 2015, according to the Finance Minister, government had a passport money bank balance of 15.4 million dollars. Yet, that amount seemed to vanish when the 25 million dollar 2014/2015 passport sales projection became an actual of 23 million in the 2015/2016 estimates.

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How does government account for the passport money bank balance of 15.4 million dollars at June 30th, 2015 which was not used to correct the passport money inflow in the estimates of 2015/2016?

RISKS OF SELLING PASSPORTS – ACCESS TO THE US

Our passport selling successes confront us with grave dangers and severe challenges. We can fool ourselves all we want that everything is honky dory… but the reality is what it is. Dominica is no longer the country contained within the boundaries of this isle of beauty. According to the Prime Minister “in Europe, Asia and the Arab world, there are thousands of individuals who are proud and honored to proclaim their citizenship of this country” – citizenship they have purchased for ease of travel.

How many thousands exactly? What is the rate of our population increase as a result of the sale of passports? Now, in the interest of protecting the access to the United States of America that citizens of Dominica have traditionally enjoyed for a variety of human advancement purposes, we are challenged to ensure on-time and complete compliance with the new US information sharing requirements in support of vetting visa, border and immigration applications, announced earlier this month. In light of government’s enduring practice of placing diplomatic passports in the hands of accused international criminals and it’s increasing reliance on selling Dominican citizenship to buyers in the terrorist hot spots of the world, we are concerned with Dominica’s ability to comply with the new anti-terrorism protocols in general and in particular, those requiring countries to:

1) make available information, including biographic and biometric data, on individuals it knows or has reasonable grounds to believe are terrorists, including foreign terrorist fighters, through appropriate bilateral or multilateral channels; and

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2) take measures to ensure that they are not and do not have the potential to become a terrorist safe haven;

In the circumstances, the citizens of Dominica resident in Dominica have a right to know the names and countries of origin of all citizens by passport purchase who have not lived in Dominica. We expect that a full listing of this category of citizens will be published immediately for better public knowledge and understanding of the emerging global security challenges confronting our nation.

The purchasers of Dominican citizenship resident in distant lands will no doubt be applying for visas seeking entry into the United States. As such, the government of Dominica will be responsible not only for providing criminal record and other information on these applicants but also for the assurance that this nation whose citizens include passport buyers from known terrorist trouble spots, is not and does not have the potential to become a safe haven for terrorists.

We have warned before about the dangers posed by the reckless, mismanagement of your government’s passport selling program for short term financial gain, the severe implications of which are once again staring us in the face.

We warn again about the settled practice of repeatedly granting diplomatic cover to persons engaged in criminal activity which threatens to have the Cabinet of Dominica labelled a “criminal enterprise” within the meaning of the conspiracy and racketeering provisions of United States law.

The continuation of these behaviours that compromise the global security architecture against terrorism will trigger Government’s failure to comply with the new US visa vetting protocols which will mean denial of access to the US for thousands of Dominicans living in their homeland.

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We therefore urge government to come clean with the truth, the whole truth and nothing but the truth in response to these critical public interest questions:

1) Is Dominica now on the US list of countries that do not comply with the new protocols? If not, is Dominica on the US list of countries that are not likely to be in compliance with the new protocols by the expiration of the deadline?

2) If Dominica is on either list as per question 1) above, what is the plan of corrective action?

3) In any event, what is the timeframe for compliance with the new US information sharing requirements in support of vetting visa, border and immigration applications?

The Parliamentary Opposition stands ready to assist in ensuring our country meets its obligations under the new US travel security protocols. Accordingly, we look forward to receiving at the earliest convenience a copy of the correspondence from this administration to the Government of the United States of America on behalf of the people of Dominica confirming our country’s current compliance status.

DE-RISKING

Another hot button issue on our plate as a result of our passport selling program goes by the name of de-risking.

De-risking is the termination of or the restriction of business relationships to avoid risk related to money laundering and terrorist financing, according to a definition by the Financial Action Task Force (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against these threats.

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De-risking has entered global finance affairs because International financial institutions are being subjected to regulatory censure for operational deficiencies in dealing with anti-money laundering (AML) and counter-terrorist financing (CFT) responsibilities. Penalties and fines have increased and, as a result, financial institutions have looked for ways to address these deficiencies. One of these ways is to terminate business relationships with certain businesses and regions considered to be high risk.

Here in Dominica, a government passport money account de-risked from the fold of the Royal Bank of Canada. The Prime Minister and Finance Minister confirmed the account was closed, but he told parliament, the local branch of the international chain that operates under the jurisdiction of the Ministry of Finance did not say why the account was closed:

“The Royal Bank of Canada chose not to maintain a Government account for the CBI as at 28th February, 2017. The Royal Bank of Canada did not state a specific reason for not being able to maintain the account. The balance of funds as at 28th February 2017 was EC$258,067,000.74, and the funds have been lodged at the National Bank of Dominica”.

For the avoidance of doubt RBC closed government’s passport money account because it no longer wished to take the risk of handling suspect funds from questionable sources that could compromise its anti money laundering and anti terrorism financing compliance responsibilities.

In Dominica in 2017, certain lawyers have had their banking activities restricted with the closure of their client accounts at local branches of certain international banks. There have also been disturbing public disclosures that certain high profile lawyers may have used their client accounts to facilitate corrupt international finance transactions.

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De-risking is serious business. Dominica, like most Caribbean countries, is import dependent. Globalization and technology allow countries to conduct business, despite the distances between them. International correspondent banks facilitate international transactions by providing access to the global payment and financial systems. These transactions—including remittances through Money Gram and Western Union, credit card payments, foreign direct investments, and international trade in goods and services—contribute significantly to Dominica’s growth and development. Therefore, the loss of these relationships will create huge problems for the region’s banking sector, as local respondent banks would no longer be able to conduct international transactions on behalf of their customers.

Furthermore, trade facilitation will be severely affected since we would be unable to import essential basic goods such as food and medicine, which could ultimately destabilize the economy.

De-risking has already affected certain classes of business, customers, and jurisdictions throughout the Caribbean. One correspondent bank has ceased to conduct business with currency exchange businesses and businesses that handle money transfers.

De-risking has generated much discussion among international and regional financial institutions, including Caribbean central banks, the Financial Stability Board (FSB), World Bank, International Monetary Fund, as well as CARICOM, to reach an understanding of the complexity and multidimensional nature of de-risking. Notwithstanding, the behaviour of certain governments have dampened the urgency expressed by the abovementioned stakeholders. The FSB has proposed the following four-point plan:

»a further examination of the issue;

»clarification of regulatory expectations;

»capacity building in jurisdictions where respondent banks are affected; and22

»the strengthening of tools for correspondent banks to perform due-diligence checks.

Although CARICOM is fully committed to international financial reforms and has embraced the FSB’s four-point plan for addressing de-risking, local governments of Caricom have been selective in allowing respondent banks and correspondent banks to performing due-diligence checks in keeping with the said four-point plan. At its most recent meeting in July 2016, the CARICOM heads of government agreed on a new approach for addressing the problem: the CARICOM Committee of Finance Ministers proposed the establishment of a global forum in the Caribbean to bring the various stakeholders together, including correspondent banks, respondent banks, regulators, policymakers, and non-government organizations that have been adversely affected by de-risking. This plan will only receive the attention needed if Governments and stakeholders actually alter their behaviour to fit the new dispensation. Otherwise Correspondent banks will not relent on de-risking.

Regional regulators have participated in high-level discussions with international financial institutions, as well as with international regulators. Caribbean regulators have also implemented strategies that are specific to their respective jurisdictions, such as allowing local banks that are cut off from international transactions to reroute transactions through a regional financial institution that still has access to correspondent banks. However, these are band-aid solutions to a systemic problem that requires full accountability and transparency at a national and regional level in respect of all processes and programs that the international community has highlighted with an above average risk.

A CARICOM central bank governors’ technical working group was established to document and analyze the impact of de-risking strategies on regional financial systems. The group prepared a background paper on the issue of

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de-risking, which was recently published by the Caribbean Centre for Money and Finance.

In the meantime, some regional banks have already received official notification of the imminent termination of their relationships with correspondent banks, most of the affected banks have already begun establishing new relationships with other international banks. However, more international banks may eventually choose to de-risk rather than expose themselves to the possibility of being fined or otherwise penalized.

It is therefore incumbent at the national level, for Government and other stakeholders to understand that FDI flows, irrespective of source, cannot bolster a budget or provide the injection to national development if the funds will not be accommodated through the formal financial system.

We cannot wish de-risking away and it is not going to disappear because we refuse to accept that question marks in the global banking industry about sources of funds for the purchase of our main revenue earner are real and can only be successfully addressed with enlightened, honest governance conduct

Dominica is up against a severe crisis of confidence because of the actions and associations of this administration with international racketeers, money launderers and fugitives from justice who pose continuing threats to global peace and security.

This administration has persisted with the practice of placing diplomatic passports and diplomatic immunity in the hands of international rogues and vagabonds, in flagrant violation of the 1961 United Nations Vienna Convention on Diplomatic Relations. The list includes but is not limited to:

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Alison Madueke - facing the courts in Nigeria, England and the United stated for bribery, money laundering and misappropriation of public money

Francesco Corallo - facing the court in Italy on fraud, bribery and racketeering charges

Alireza Monfared – facing the court in Iran in connection with the biggest embezzlement scandal in Iranian history

NG Lapseng – convicted this week in the United States for bribery of United Nations Officials

Government’s association with these characters gives rise to a clear and present danger that rogues, bandits and those hiding from the law elsewhere in the international community could find safe haven in our region. And the apologists can jump high or low, the decent leaders of the civilized world do not find this behavior amusing, and the consequences – de-risking, de-banking, denial of access to the US and all - will be severe

MINISTRY SPEND REMARKS

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Justice, Immigration & National Security 5.4M High court Back log. JudgesTrade, Energy & Employment 36.5M NEP- 8M, Geo Plant 23MOffice of the Prime Minister 5.0M 2016/17 Rev Est 11.5MFinance 0.8M 1.6M IA consultancy. DCPAgriculture & Fisheries 22.7M Banana/Plant. 3.2M

Sigatoka 0Education & HR Development 4.8M Tablets for all?Housing, Lands & Water Resource Mgt 65.7M Housing market?Social Services, Gender & Family Aff. 4.4MHealth & the Environment 53.0M Late Shift NursesTourism & Urban Renewal 4.6M Yachting 0.55Info., Science, Telecoms & Tech 0.8MKalinago Affairs 0.8MYouth, Sp, Cult & Const. Empowerment 19.2M CE 10M. 19.5M last yearComm., Ent. & Small Bus. Development 24.4M Entrep 5M. Manu 15MPlanning, Econ Dev & Investment 3.2MEstablishment, Personnel & Training 1.0M Ext Pub Training CentrePublic Works & Ports 130.3M Public Works Jobs?Foreign Affairs & CARICOM Affairs 0.135M TOTAL: 350 MILLION

Growth Enhancing Policies

In order to make Dominica the best place to live, the best place to work and the best place to enjoy life we have committed ourselves to ensure:

Economic Growth of 5 – 7% per annum 10,000 new jobs in five years A top 25 global ranking for ease of doing business within 3 years Renewable Self Sufficiency within 3 years An International Airport within 7 years A high speed ferry service within 2 years Modernized Garbage Management System within 6 months

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National Health Insurance for all within 3 years Housing solutions for all within 2 years

The continuing inadequate economic growth performance in Dominica within is due largely to: (i) this government’s neglect of the agriculture sector; (ii) failure to support the tourism sector with the necessary infrastructure; (iii) lack of focus on private sector led growth; (iv) the absence of structural reforms; (v) a steady decline in foreign direct investment (FDI) inflows; and (vi) sheer incompetence on the part of this 17 year old administration.

Based on this analysis it is equally clear that any meaningful attempt at changing direction and spurring growth must include a budget that focuses on: (i) increased investment in the agriculture sector with a focus on higher production levels, adding value through agro processing and securing markets; (ii) improved and increased air and sea access to Dominica including the construction of an international airport; (iii) developing private sector friendly policies to spur growth; (iv) implementation of structural reforms aimed at increasing tax and non-tax revenues while widening the productive base; and (v) reengaging our international partners in pursuit of increased grant revenues.

An overarching theme for the sustainability of these policies is a carefully thought out energy policy which harnesses solar, wind and hydro to substantially reduce operating costs and seriously drive investments by the private sector within the agriculture, tourism and other business sectors. We would suspend all geothermal development activities at this time and transfer the funding secured so far to solar, wind and hydro projects in order to make Dominica renewable energy self sufficient within three years at a much lower cost with higher levels of energy sector employment.

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Our agriculture plan is tightly focused on food security, organic and fair trade production, increased export volumes, increased farm incomes/profits, higher levels of employment, protecting land and water resources and mentorship for young agripreneurs.

With regards to increased investments in agriculture the 2017/2018 capital spend should be at least 50 million on irrigation systems, green houses, making more land available, and a comprehensive feeder road network. In addition, tax and fiscal incentives extended to the private sector to invest in agro processing plants and other agriculture based projects such as a chocolate factory and coffee processing plant. We will expand the sector to include the crucial essential oils industry, livestock and dairy, and poultry industries. We will also commit more resources to the fishing sector to secure better equipment for the fishermen and to add value through canning and drying operations.

Growth within the tourism sector continues to suffer at the expense of a lack of proper air and sea access, high accommodation and related costs, and reduced competitiveness compared to regional countries. We will build an international airport to bring long term relief to that sector. In the short to medium term there must be dedicated efforts to assist the hotel and other accommodation operators to address issues of access to financing and high operating costs.

It is not enough to simply set CBI funds aside at the AID Bank and tell hoteliers to come and borrow. This approach has clearly failed. Instead under a UWP administration these funds will be part of a larger incentive package made available to hoteliers without increasing their debt and operating burdens. These efforts will coincide with more resources being made available for marketing the destination and to improve the appeal of activities like the World Creole Music Festival, Dive Fest and the Reggae Jazz festival. Initiatives in

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sports and health tourism will also be undertaken as part of this overall effort, engineered to yield increase occupancy, increased profitability and increased employment

With the exception of a few consultations in recent years, this government has largely ignored the country’s private sector. The United Workers Party firmly believes that in order to break the cycle of joblessness and poverty which we have grown accustomed to under the Skerrit led administration. We will build a vibrant private sector. Already we have mentioned new opportunities within the agriculture and fishing sectors. In addition there will be an emphasis on creating jobs linked to the green economy and climate change issues.

We will pursue a tax policy that does not seek to punish entrepreneurs but rather encourage innovation and investment. Also carefully focused action will make funds available to serious entrepreneurs rather than what is currently in place where funds for supposedly small businesses end up financing travel and consumer items for friends of the government. For instance businesses which can demonstrate their ability to create at least two new jobs should be targeted with that type of assistance. Efforts to stimulate growth and create new jobs within the private sector will also encourage foreign investors in order to attract FDI flows. To this end, we are committed to creating the enabling environment, fast tracking structural reforms and improving the ease of doing business in our country through which prospective investors will play their role in helping to move our country forward.

Fiscal Policy and Sustainability

This administration has misguidedly placed all of its eggs in the passport money basket to the exclusion of tax and non-tax generating measures. The country’s revenue base continues to languish at roughly 30 percent of GDP. Enlightened economic policies through the budget process will move this level closer to 50 percent of GDP. Measures such as streamlining import and other

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custom duties, reviewing the efficacy of the current 17 percent rate of VAT, removal of duties on construction materials, and increasing efficiency in government spending will all be engaged to wean the country from its unsustainable dependence on passport money inflows. Simply put with passport revenues set to decline in the not too distant future fiscal policy has to be focused immediately on generating new and sustainable domestic revenue flows.

The time is now to undertake a substantive review of the country’s tax regime through improving its efficiency and reducing the burden on the employed, consumers and business people. Importantly the reviewed tax regime will be geared towards encouraging growth within the hotel, manufacturing and other sectors of the economy. It is a fact that Dominica’s income tax and other custom rates and duties are among the highest in the Caribbean Region. For instance while income tax rates in Antigua are at zero percent ours averages 25 percent. We believe that there is room to streamline those rates and make available to the employed additional disposable income and to the businesses more revenue for investment purposes. Indeed, it is a well-known fact that where workers have more income available this normally translates to increased spending, which can then have a positive impact on growth and eventually on higher government revenue streams

Over the years there has been a consistent decline in grant financing underlying the DLP’s administration inability to secure crucial funding from friendly governments and institutions. Interestingly enough there are now more funds available to a country like our compared to any other time in the past. Unfortunately, this government has not been able to develop the kind of projects and initiatives which are critical in grabbing hold of these funds. Consequently, it is important to reverse this trend by developing fundable projects built around preserving our pristine environment, reducing the impact

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of climate change, development of alternative renewable energy sources, poverty alleviation, and job creation, which can secure the backing and support of governments and institutions across the globe. To further strengthen the case for this level of support there must exist clean, accountable and transparent governance.

Government’s record of procurement practices and project execution is dismal. Spending within the Public Sector Investment Program (PSIP) requires strict monitoring through the setting up of a Special Projects Team that will be charged with overseeing project tendering, implementation, and evaluation. Priority within this spending envelope must be given to investment projects that support growth and revenue generation and in particular the development of alternative energy sources including solar, wind and hydro. Successful implementation of these investment projects will lead to reductions in the cost of energy, which is one of the major impediments to the growth of buoyant manufacturing and tourism sectors. Incentive programs for investors wishing to invest in the identified priority areas of agriculture and tourism should also be encouraged.

The external sector and export promotion

Dominica continues to record massive imbalances in its balance of trade with imports 25 – 30 times the level of exports. Under this current leadership exports of agriculture and manufactured goods have continued their decline as the government presided over the demise of the banana industry, the Dominica Coconut Products and other small manufacturers. Sadly trend seems set to continue unless it is addressed with immediate effect. Incentives will be provided to the private sector to invest in the processing of fruits, tubers, coffee, cocoa, essential oils, poultry, livestock, and the vital tourism sector. A serious boost to our exports will translate to increased jobs and higher

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government revenue. Our goal is to double annual export volumes to reach more than $100 million while at the same time reducing food imports which can easily be grown locally.

Structural Reforms

In order to accelerate growth in the local economy bold new initiatives must be undertaken in order to improve local competitiveness and spur private sector investment from its current low levels. These efforts should concentrate on improving the enabling environment for business growth, easing access to financing, infrastructure development, and comprehensive land and property reform. Indeed the ‘cost of doing business’ in Dominica is still relatively high compared to other neighboring countries and have been identified as a key impediment to private sector led growth initiates.

Among these approaches should be to improve on the ease of doing business by streamlining the administrative process for the registration and setting up of potential new businesses. This will apply to both local and foreign owned concerns operating within the identified priority areas for the economy. For easier access to financing the AID Bank will be reoriented to better identify and make financing available for the priority areas.

DOING THINGS THAT NEED TO BE DONE

We will bring an immediate end to the worsening failure of the Dominica Labour Party government to manage garbage disposal. In the words of Dr. Irving Pascal, “this rubbish, rubbish everywhere even filling bus stops is not only unsightly but poses serious risks to our health and well being. I wish to suggest we change our approach to garbage disposal to have any chance at averting an impending health epidemic and all its consequences”.

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We will ensure adequate garbage disposal vehicles, garbage disposal containers and dump sites for all residential and commercial areas across the island. We will encourage the use of organic waste on organic farms and backyard gardens and introduce a system of paying for the recyclable waste that passes through their homes and business operation. This will effectively open up sustainable income earning opportunities especially for young people across the country.

We will introduce a wifi enabled education network, anchored at our schools wherein we establish a homework/afterschool help portal where not only students but their parents also, can participate by getting real time tutor assistance from educators at home and abroad... That network will also be used to prepare our students for entrance exams to international schools/universities. It will also be an adult education facility and professional development platform to build globally competitive HR skills and competencies especially in agriculture, tourism, light manufacturing, renewable energy and other growth engines of our economy.

In recent times deadly vehicular accidents have been on the rise. It is a challenge that is made even more difficult with our limited hospital facilities nationwide. We will build 2 micro-sized Trauma facilities - one on the west coast and one in the south of the island so that accident victims could be urgently given emergency trauma care before being later transported to a main hospital. The expertise of Dominican medical experts like Dr Dale Dangleben – a frontline in trauma surgeon – will be engaged in this necessary intiative to help save the lives of our brothers and sisters who are involved in these increasingly deadly vehicular and fire accidents.

YOUTH EMPOWERMENT

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The UWP TEAM DOMINICA understands the pain and the struggles of the young people growing up in Dominica over the past 17 years. We strongly recommend urgent government action, beginning in this budget year, to facilitate job creation and business opportunities, provide and improve sports and recreational facilities, assist in the development of youth creativity and talents, to ultimately improve the quality of life of our young people

We have the money. We will therefore:

Provide sustainable jobs for youth across all sectors

Provide sports and academic Scholarships which involves transparent selection criteria based on merit and need

Diversify subject areas in primary, secondary, and tertiary schools to include Technical Vocational training

Develop a comprehensive sports policy and action plan

Provide exposure, business opportunities, technical and financial support for youth

Further advance ITC integration in schools and workplaces

Increase social safety netting for youth which would give young people facing social and academic challenges a second chance

Provide job and housing opportunities for youth in city, sub- urban and rural areas

With the urgency of now, we will:

Develop a transparent system for accessing sporting and academic scholarships based on merit

Prepare and implement a sports facilities development plan and training program targeting youth across the nation

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Establish a youth village including a state of the art sound stage and video production studio along with specialized training and recreational facilities

review and enhance existing entrepreneurship programs and establish business incubators in Key Market locations for housing and technical advice for small business growth

initiate a comprehensive adoption of Internet Communication Technology (ICT) at schools, government institutions, and workplaces to improve productivity and speed up services and empower youth

facilitate participation of youth in local, regional, and international sporting tournaments and conferences

Work with educational institutions to expand on curricula to include entrepreneurship studies, as well as sports management, music, dance, culture, technical and vocational skills.

ELDERLY CARE

For wellness, preservation of dignity and the continuing pursuit of happiness

It is the responsibility of government of the people, by the people, for the people to pay attention to continuous improvement in the living conditions of all citizens especially our seniors. In this regard, we will protect the spending money of our retired citizens by significantly reducing the VAT on food and utilities. Additionally, incomes must be reviewed in every budget year, to ensure that they are able to cope with cost of living increases.

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MARIGOT CONSTITUENCY

In the constituency of Marigot our vision is to become a self sufficient, full employment eco city with modern education, health, sporting, and recreational facilities; a road network that effectively connects the residential, commercial, agricultural, tourist and recreational areas; 1st world water and sanitation services; 100% energy requirements from wind and solar; and a minimum 4G platform for world class ICT functionality

For well over a decade, the people of Marigot have been expecting to see adequate resources budgeted for the road network, housing, health, small business and village economy priorities for one of the most progressive and productive communities in this country. A better Marigot means a better Dominica… a politically victimized Marigot means a Dominica operating below its capability for outstanding sustainable growth and development

We are now hearing that even a Land Use Plan for the greater Marigot area funded with World Bank money and assigned to a Grenadian consultant is being frustrated by a certain Minister claiming that Cabinet did not approve the project. Of course the first big issue is the plan is for the benefit of the people of Marigot… and then, the Grenadian consultant sub contracted competent Dominican professionals, Senator Isaac Baptiste and Hon. Joseph Isaac to work with him.

We cannot unite Dominica with hate and prejudice…we cannot build Dominica with partisan, political pettiness and vindictiveness. All ideas must contend and all talents and skills must be allowed to serve. All must be allowed to eat.

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In this year’s budget an amount of 18.8 million dollars is provided over the next two years for construction of the new Marigot Hospital - 14.1 million by way of a grant from the government and people of Mexico and 4.7 million from local funds. 6.4 million will be spent in year one and 12.4 million in year two. This new Marigot Hospital is a sore point for the residents of the North East from Crayfish River to Calibishie. 1.2 million is also budgeted for a Health Center in Marigot. We need work to commence on both facilities no later than September 2017.

In this year’s budget as well the amount of $4.9 million budgeted but not spent in the last two budget cycles to correct the wave over-topping problem at Melville Hall has been increased to $20 million. We need work to commence on the resolution of the decade old problem no later than September 2017.

Some years ago, citizens with long-standing interests in land in the housing area at Melville Hall were promised that land reserved for them by the Housing Division would be officially allocated. This has not happened. As a result, persons willing to build are unable to do so and in some instances allocations agreed to are being compromised by intervening arrangements. Again, we are asking the government and the minister responsible to give urgent attention to what has become a particularly vexing matter. A number of persons in the constituency, like remain anxious about a housing revolution intervention to address their deplorable housing conditions

The playing field at Concord needs urgent attention. And the excellent sporting facility at Lio Park regrettably abandoned by the government is in desperate need of rehabilitation

We need budgeted resources for small business development in Marigot

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We need budgeted resources to rehabilitate a number of other feeder roads:

Baron/Tantan roadCaptain Bruce/Windy lodge roadMyshall road, Craig roadCoffee road, Tantan/pagua link road

We also need budgeted resources to bring a number of village roads up to acceptable standards:Fine Grass, Bull Hole, six acres Melville Hall link roadValley road, North End road, Overgutter Road

We need a new bridge at ManTiPo, we need to fix the Dam bridge and we need Speed bumps for the highway passing through Concord

CONCLUSION

The Dominica Labour Party’s political survival strategy of building dependence on hand outs from ministers of Government who fancy themselves as the State is casting the shadows of a Venezuelarization of the Dominica economy that we do not wish on ourselves.

And so in the final words of this budget response, I quote a May 2017 article from the Associated Press on the background to millions of Venezuelans regularly in the streets venting their anger over violent crime, crushing shortages and an economy in shambles:

“For many years, elites controlled Venezuelan politics and the poor had little place voice. The late President Hugo Chavez won election in 1998

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as a political outsider promising to upset the old order and funnel some of the country's enormous oil wealth to the poor. Poverty rates fell sharply during his administration, and many people continue to see him as a beloved Robin Hood figure who gave them houses, free health care, better education and a place at the table in government.

Chavez was helped by the fact that when he took over the presidency, oil was trading at about $10 a barrel, and when he died in 2013, it had risen to $100. Venezuela derives 95 percent of its export earnings from oil.

Shortly after Chavez's death, the price of oil fell by half. That's left his hand-picked successor Maduro struggling. The economy is forecast to sink 8 percent this year and the International Monetary Fund forecasts inflation will soar to four digits next year. The plunge in world oil prices has left the government owing money across the board, from foreign airlines to oil service companies. Most of the anti-poverty gains made under Chavez have been erased and people are grappling with severe food and medicine shortages.

This is the country with the largest oil reserves in the world that gave us the hundreds of millions of Petro Caribe money. We will never make as much passport dollars per capita as Venezuela made oil dollars per capita. The model this government is hell bent on perfecting did not work for Venezuela and it will not work for us

Again this year, I close again this year with the final stanza of our National Anthem:

Come ye forward, sons and daughtersOf this gem beyond compareStrive for honour sons and daughtersdo the right be firm be fair

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toil with hearts and hands and voiceswe must prosper, sound the callin which everyone rejoicesall for each ad each for all

And so Madame Speaker, to paraphrase John Bunyan: “Though with much difficulty in the past 20 hours, I have come hither, I do not repent, the trouble I have taken”. Thank you Madame Speaker… May our ancestors be pleased… All praise to our redeeming Lord… We love you Dominica… God bless you.

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