Saint Vincent and the Grenadines

The purpose of this Country Support Strategy is to provide a framework for EU assistance programmes in Saint Vincent and the Grenadines (SVG) under the 10th EDF. It outlines the current status of the bilateral relations; elaborates a detailed country diagnosis; summarises the Government’s development agenda; reviews the EC past and present cooperation and the activities of other major donors; and concludes with the proposed EU response strategy and its corresponding indicative work programme.

SVG is a parliamentary democracy within the Commonwealth. Queen Elizabeth II is Head of State represented by a Governor General. Control of the Government rests with the Prime Minister and the Cabinet. The parliamentary term of office is 5 years, although the Prime Minister may call elections at any time. The last general election was held in December 2005, which Prime Minister Gonsalves’ Unity Labour Party (ULP) won for the second consecutive time. SVG is considered as a lower-middle income country with a small open economy. It is an archipelago of islands with a total area of 389 sq km; a population of about 106,000; a GDP per capita of EUR 2 830 (USD 4 300). The economy, highly vulnerable to external shocks and natural disasters, is largely agriculture-based (bananas and other crops) but with a growing services sector including tourism, telemarketing and a small offshore financial sector. Real economic growth averaged 4.4% per annum during the 2002-2006 period. Growth has been largely driven by construction sector - for tourism but also low-income housing, road maintenance and new highways-. On the contrary, agriculture contracted in the face of continued uncertainty surrounding the EU banana regime and adverse weather conditions.

The share of agriculture in GDP declined from 21.2% in 1990 to 9.6% in 2006. The effects of high oil prices, unfavourable weather conditions and increased expenditure on the Universal Secondary Education Programme have led to an increase in the Central Government deficit since 2001 hence an increase in the overall debt. The fiscal performance weakened over the period 2002-6, mainly because of expansionary fiscal policy. The overall deficit deteriorated from 2.3% of GDP in 2002 to 4.6% in 2006. The total public debt rose from 72.9% of GDP in 2002 to 86.9% in 2006. Unemployment, especially among women and the youth, is a serious problem. Although social indicators are good, illegal drug production (marijuana cultivation) and substance abuse have negative social implications. SVG is the poorest country in the OECS with a poverty headcount index of 37.5%.

The Government has drafted a Medium Term Economic Strategy Paper (MTESP), which lays out its policy agenda, goals and objectives, economic prospects and strategy and the financing requirements necessary to achieve sustained growth and reduce poverty. A fundamental contribution to this MTESP is a draft National Health Sector Strategic Plan which seeks to modernise the sector thereby ensuring social equity, the provision of sustainable health care and improving social contributions to the macro-economic plan.

The Government’s economic approach include maintenance of macro-economic fundamentals; placement of social equity at the centre of consideration; consummation of the CSME “single market”; pursuance of balanced growth to reduce inequality and create long-term employment; and rebalancing of the state-market relationship for the private sector to assume a more pivotal role. As traditional ACP banana producer, SVG has received significant levels of EC funding from Stabex, SFA and NIP, making it one of the top beneficiaries of EU assistance on a per capita basis. Both 8th and 9th EDF focused on Human Resource Development.

The EC and the SVG Government hereby propose to allocate 80% of the 10th EDF “A Envelope” to Modernisation of the Public Service in the Health Sector as the single focal sector, with special attention to Health Sector Reform. The intervention is aimed at enhancing accountability, transparency and responsiveness of ministries and departments; measuring performance and encouraging change management, manpower planning, and training. Special attention will be given to the needs related to the delivery of health services to the population. A 10% will be reserved for the Technical Cooperation Facility (TCF), particularly to support Non-State Actors (NSAs) and to provide Trade-Related Technical Assistance (TRTA). The remaining 10% will be allocated to Technical Assistance to the NAO Office.