PM Presents Largest-Ever Budget, Cites Global Instability as a Risk

Prime Minister Philip J. Pierre has unveiled Saint Lucia’s largest-ever budget, proposing a record $2.06 billion in Estimates of Revenue and Expenditure for the 2025/2026 fiscal year. However, he warned that global instability—including conflicts, trade wars, rising shipping costs, and climate-related disruptions—could force adjustments to those projections.

Delivering what may have been the shortest Estimates presentations in recent times – lasting just over an hour – in the House of Assembly on Tuesday, Pierre highlighted Saint Lucia’s strong economic performance over the past year, citing record-low, single-digit unemployment, booming tourism, increased foreign direct investment, and improved consumer confidence.

He credited the government’s fiscal policies for creating space “to provide unprecedented support to vulnerable groups and individuals”, emphasising that the 2025/2026 budget would build on the previous year’s focus on infrastructure, healthcare, social development, citizen safety, and job creation.

However, the prime minister cautioned, “The current level of global instability, caused by the continuous Russian/Ukraine conflict, the war in Gaza, the imposition of trade tariffs between major trading partners, proposed increasing international shipping costs and climate events may expose the Saint Lucian economy to increased downside risk.

“If these increased downside risks were to materialise in a significant way, adjustments to the estimates of revenue and expenditure for 2025/2026 will become necessary,” he said.

Pierre proposed a total expenditure of $2.058 billion. Of that amount, $325.6 million has been earmarked for capital projects, covering roads, schools, housing developments, and the commissioning of the St Jude Hospital.

In announcing the provisions for capital expenditure, the prime minister lamented the slow rate of project implementation, saying that efforts to improve would be a priority this year.

Debt servicing remains a major priority, with $370.1 million allocated for repayments. Pierre also noted that public assistance programmes would see increased funding, with $15.2 million set aside for social welfare and $3.2 million allocated to support differently-abled individuals and other organisations and groups.

Pierre projected $1.71 billion in revenue and grants, with $1.45 billion from tax revenue and an additional $171.9 million from non-tax sources. The Health and Security Levy, implemented by his administration, is expected to generate $40.8 million in the upcoming fiscal year.

Other revenue streams will include the Citizenship by Investment Programme, Value Added Tax (VAT), custom duties, international trade, passenger tax, taxes on domestic goods and services, taxes on income and profits and revenue from personal income tax.

Despite robust revenue projections, the budget forecasts an overall deficit of $201.5 million and a financing gap of $235.5 million, which Pierre said would be covered through a mix of foreign and domestic debt financing. 

While noting that the 2.5 per cent Health and Security Levy implemented by his administration is expected to generate $40.8 million in the upcoming fiscal year, Pierre said it was a mere drop in the bucket.

“The total spend by our govenrment for health and security is $433.9 million and the levy projected intake is $40.8 million, leaving a financing gap of $393.1 million, which has to be funded from other revenue sources,” he pointed out.

Pierre acknowledged rising government operational costs, salary increases, and inflationary pressures but assured that his administration’s fiscal management policies remain sound.

“I remain optimistic and excited – and with good cause – about the growth of the Saint Lucian economy, as well as a healthy fiscal position of the government,” he said. “We are on a new and exciting path of a thriving Saint Lucian economy, where all Saint Lucians will have an opportunity to improve their quality of life and make Saint Lucia one of the best places to live in the world. This is the pledge of my Cabinet and I.”

Pierre is expected to expand on the government’s policy priorities and funding strategies in presenting the Appropriation Bill on April 22, outlining how the administration plans to navigate these uncertainties while fostering sustainable growth.