Economic and Social Development Policy Loan

closed

The objectives of the Economic and Social Development Policy Loan and Credit Program are to: a) improve the business environment, competitiveness, and strengthen the financial sector, by supporting reforms to reduce delays in starting a business, buttress financial sector regulatory environment, mitigate regional contagion risks, and promote investment; and b) improve public sector governance and economic management, by supporting reforms to improve public service efficiency and performance, increase the efficiency of tax collection, enhance fiscal discipline and strategic allocation of resources, strengthen accountability, and help cope with the adverse consequences of the global economic downturn. The Economic and Social Policy Development Policy Loan and Credit (ES DPL/DPC) provides timely financial support to the Government of St. Lucia to manage the impact of the global economic crisis and to maintain and reinforce the implementation of the longer-term structural reform agenda. St Lucia's economy was hit by hurricane dean and an earthquake in 2007, the fuel and food price increases in 2007 and 2008, and now the global crisis. In addition to the rigidity of the budget due to high debt servicing and wage bill, the fall of fiscal revenues has further limited the Government's room for implementing counter fiscal policies. St Lucia needs financial and technical support to adjust to the deteriorated global environment and to address most urgent social issues. The ES DPL/DPC will help the government in maintaining macroeconomic stability and protecting the poor while enhancing economic and institutional foundations for faster development. Therefore, the ES DPL/DPC supports specific actions to: (i) improve business environment, competitiveness, and strengthen the financial sector; (ii) improve public sector governance and economic management; and (iii) improve effectiveness and efficiency of social safety nets.