One novelty used to lure tourists back to Saint Lucia, in the face of the global recession, has been a publicity campaign showing the beauty of the island's landscape, launched on the back of a popular US-based reality television series, 'The Bachelor', which filmed two episodes in the Caribbean island country.
"It really did work. So much so that up until September this year we are projecting an increase in visitor arrivals of 15% over last year," - a significantly better recovery in the tourism sector than experienced in most other Caribbean destinations, says Isaac Anthony, the permanent secretary of Saint Lucia's Finance Ministry.
Indeed, on the strength of the improvement in tourism, Saint Lucia's principal source of revenue, the island's government is forecasting a modest 1.5% increase in gross domestic product (GDP) growth this year, in contrast to a 5% contraction in 2009.
Stimulus measures
During the worst of the crisis, like many nations in the Caribbean, Saint Lucia expanded social safety nets to protect its poorest citizens, and adopted stimulus measures to mitigate the impact of the recession.
A large public works programme was introduced to reduce unemployment, for example, which rose from 15% to 20% during the crisis. And, in order to keep hotels open, the government deferred hotel occupancy taxes and slashed hoteliers' imported food and drink taxes.
The combination of higher capital expenditure and lower tourist revenues, however, resulted in a current account deficit of about 20% of GDP in the 2009/10 fiscal year, close to a historic high according to the International Monetary Fund's most recent report published in April on Saint Lucia's economy. That caused an increase in borrowing, and the country's debt-to-GDP ratio is projected to be 75% by the end of this year, according to Mr Anthony. He adds that this ratio is by no means the highest in the Caribbean at the moment, and that Saint Lucia's government has a target of bringing the ratio down to 60% by 2020.
Meanwhile, Mr Anthony is confident that once the global economy starts to pick up again, foreign direct investment (FDI) in Saint Lucia - which ground to a halt in 2009, leaving many infrastructure, construction and tourist projects half-built - will begin to recover.
Doing business
There are good grounds for Mr Anthony's optimism. Among Latin American countries, Saint Lucia ranks second only to Puerto Rico in the 2010 World Bank Group's Doing Business survey, which investigates the business environment in the region.
Over the past eight to 10 years, Saint Lucia has reengineered its economy away from agriculture (being a leading banana producer) to tourism, tourist-related services and some manufacturing. Now, it seems, it is preparing for another transformation.
In spite of fierce competition from neighbouring countries such as Barbados and Saint Kitts and Nevis, and obstacles such as the Organisation of Economic Co-operation and Development (OECD) relisting and blacklisting countries that are deemed tax havens, Saint Lucia's government wants to develop the country's incipient offshore financial centre, says Mr Anthony.
For instance, the Saint Lucian government has signed tax information treaties with 19 countries. And it is also considering entering into double-taxation agreements with a number of others. "We hope to attract some more international business companies, banks, insurance companies and mutual funds," says Mr Anthony.
