The measure of ‘surplus’ and ‘excess liquidity’

Latest

April 15, 2026

This post was originally published on this site.

- In this Caribbean News Global (CNG) analysis, we examine Saint Lucia’s budget surplus, ECCB financial institutions holding XCD 28 billion in deposits, termed “excess liquidity,” and sync this with Domestic Resource Mobilisation: An Important Driver of Africa’s Development. The conclusion submits that Return on Investment (ROI), government budget “surplus” and “excess liquidity” must translate into sustainable economic development.

By Caribbean News Global

TORONTO, Canada – The actual performance for Fiscal Year 2024-2025 has been finalised, and “the following metrics tell the story,” as explained by Prime Minister and Minister for Finance, Philip J. Pierre, in the 2026/27 estimates and expenditure:

- - Current surplus, XCD 138.9 million;
  - Recurrent surplus, $61.2 million;
  - Primary surplus, $75.6 million.

“ These results speak to a continued trend of sound, prudent fiscal management that provides benefits to the people while generating revenue from the effects of economic expansion and growth,” the prime minister explained, “As we embark on this new financial year, 2026-2027, we are alive to geopolitical issues that confront us, over which we have little control. But I can assure the people of Saint Lucia that their government will continue on the path of prudence and responsibility, ensuring that they, the people, will always come first.”

The year-end outlook for Fiscal Year 2025-2026 points to one of the best budget performances in recent times, credited to Prime Minister Pierre, resulting in positive balances on all the fiscal accounts and a significantly reduced overall fiscal deficit.

- - A current surplus of XCD199.3 million was projected. However, the yen outlook for 2025-2026 indicates a current surplus of $243.6 million.
  - A recurrent surplus of XCD 65.9 million was projected. However, we anticipate a surplus of $114.8 million.
  - A primary surplus of XCD 34.7 million was projected by year-end. It is estimated that the primary surplus will be $90.1 million.

Fiscal Year 2024-2025

The overall deficit fell to XCD 144.4 million from the original projection of $215 million.
Capital expenditure (Projected) XCD 243,248,700 (Estimates) XCD 280,075,500

Fiscal Year 2025-2026

The overall fiscal deficit, originally projected at XCD 202.1 million, has been reduced to $143.8 million, reflecting a decline of $58.2 million.

“We have ensured that expenditure remained within the budget ceiling of $2.06 billion. A total of $267.9 million is expected to be spent on capital investments in the 2025-2026 budget year. Given the projected level for revenue and grants and the projected expenditure savings, the budget is expected to reflect an overall deficit of $212 million for the fiscal year 2026-2027.”

“This gap will be financed from a combination of loans and bonds. The Citizenship by Investment Program is expected to deposit XCD 85 million into the Consolidated Fund.”

What is the net result?

Despite these surplus measures, short-term disruption and external carriage in a 12-month budget cycle are not unexpected, with enduring social and economic consequences.

In a people-centred economy, the budget is built on and for people’s growth and development, in areas such as housing, healthcare, infrastructure development, education, reducing the cost of living, strengthening the middle class and social protection. The foundation to achieving this is not primarily on sequential numbers and expenditure trade-offs.

In simple terms: the numbers tell the story that the government of Saint Lucia spent below the proposed and projected revenue and drew down less loan financing (88.8m of 257m)! The net benefactor is a projected reduced fiscal deficit (143.8m)!

These are mathematical equations that speak to revenue and expenditure (line item bookkeeping). It does not relate to and/or solve debt carrying capacity. It does not address serious underfunding in health and security, capital expenditures and debt financing, to capture a few major expenditure sections.

If these departments are resourced and funded appropriately, the surplus equation is immaterial!

The assertiveness to “surplus” amid serious underfunding of public services and development challenges, undercuts and undermines the true expenditure and revenue requirements, leaving unresolved the full potential of the Saint Lucian economy.

Thus, the focus on “surplus” in such light is a practical game of limits vs. actual growth and expansion – functioning at minimalist levels; meanwhile, the problems are recycled.

Statistical surplus

Saint Lucia is very reliant on borrowing to finance its budgetary basic needs, while generating a statistical surplus.

The focus on “surplus” is also a budget priority that tends to come at the expense of government spending, and reduced economic opportunities, visible and routine in capital expenditure (road and water infrastructure, facilities maintenance, etc), reduced healthcare and inadequate hospital facilities, safety and national security, and education setbacks.

- - The prerequisite to invest “surplus” is not significantly represented in the Sovereign Wealth Fund (SWF), and other investment options (if applicable) that contribute to the national budget.

St Lucia government working, ‘but the people are not feeling positive effects,’ says a choice economist: Part 2

In support of government development goals and a healthy economy, “creating a surge in commercial activity,” the approach to a national blueprint becomes more actual with expansive participation, financing structure, public investment, cooperatives, and private capital, to strengthen communities and financial capacity.

In this new era, the repetition-cycle of the annual budget needs to take on a long-term projection in building national wealth, investments and a bold array of manufacturing, housing, education, infrastructure, early-childcare, technology, healthcare, and citizen security.
The run-of-the-mill numbers, percentages, current and recurrent surpluses, although good on paper, have yet to be translated into an advanced economy and marketplace, bubbling with economic activity, and a mature way of life.

Excess liquidity

At the launch of the Eastern Caribbean Central Bank’s (ECCB) 2026–2031 strategic plan, Governor Dr Timothy N.J. Antoine highlighted a significant structural weakness in the Caribbean region’s financial system.

Commercial banks across the Eastern Caribbean are currently holding billions in “excess liquidity,” creating a major barrier to economic growth as local businesses and entrepreneurs continue to struggle to secure loans. Financial institutions are holding more than XCD 28 billion in deposits, yet, about XCD 16 billion in active loans.

ECCB is rolling out its new “Big Push” strategy to unlock credit, improve access to finance, and modernise the region’s financial infrastructure. At the core of this initiative is the expansion of the ECCB’s partial credit guarantee programme:

ECCB’s strategic plan includes technological and structural upgrades;
Implement a regional credit bureau to help lenders assess borrower risks more accurately, which could lower borrowing costs;
Modernise payment systems, including a fast payment system for cheaper, quicker transactions within the currency union;
Pilot program for the CARICOM payment and settlement system to handle real-time, low-cost cross-border payments in local currencies.

The banks are only part of the equation, according to Governor Antoine, pointing to a critical shortage of “bankable” projects, while urging the private and public sectors to collaborate in generating viable business opportunities that can successfully qualify for available financing.

Domestic resource mobilisation (DRM)

African Development Bank Group chief economist and vice-president for economic governance and knowledge management, Prof. Kevin Chika Urama, has highlighted the fundamental role of domestic resource mobilisation as an enabler of development – “critical to strengthening resilience, reinforcing sovereignty, and delivering essential public services and infrastructure.“

“DRM is not merely a fiscal issue; it is a foundational enabler of development – critical to strengthening resilience, reinforcing sovereignty, and delivering essential public services and infrastructure.

“Strengthening DRM reduces dependence on external financing, enhances resilience to shock, and creates fiscal space for priority investments. Technology-enabled reforms – digital platforms, interoperable data systems, and AI – represent some of the highest-impact levers to close compliance gaps.”

“As shown in the Bank’s African Economic Outlook (AEO) 2025 estimates, with stronger enforcement, simplified systems, and scaled digitalisation, Africa could mobilise an additional USD 469.4 billion annually between 2025 and 2029. And we cannot talk about DRM without talking about efficient utilisation of mobilised resources to achieve tangible national development outcomes.

“ DRM works better where the social contract between the state and citizens is effective. It goes beyond mobilising revenues – covering sustainable debt management, investments in productive infrastructure, and delivery of public services to improve the quality of lives of citizens.”

Ensure productive investments

Importantly, effective budgets, policies, and financial packages require comprehensive and well-coordinated foundational and execution procedures.

It is important to utilise public resources to maximise productive investment tools and reduce inefficiency. The implementation gap must aim for scale, with enhanced measures that expand the formal economy and broaden the tax base with limited distortion.

In basic terms, when approached coherently, it is far more effective than piecemeal measures in 12 months year- to-year politically driven budgets. With such an approach to policy and financing, it does not concurrently reduce uncertainty, build capital, or reinforce expectations of capital inflows and robust investment decisions.

While Saint Lucia is laying the foundation for stability, improving livelihoods and business life cycle over time, it must facilitate a much-improved ease of doing business, to improve the business environment, scale up public-private partnerships (PPPs), boost skills set, improve technology, enhance regional and international mobility, partnerships and integration to allow innovation and an elevated level of thinking. There are no shortcuts!

Strategic reform must also curb illicit financial flows, the underground economy, corruption, and leakages in duplicitous public programs, so-called economic and community development and infrastructure activities, among others, to shape Saint Lucia’s development.

- - Statistical surplus should not override deficits, inadequate human services, social care, and infrastructure decay.

Strategic investment – SWF

In 2025, Saint Lucia established its first-ever Sovereign Wealth Fund (SWF), “for national development” … “to recognise the transformative power of savings.”

“A forward-thinking public investment fund designed not only to secure sustainable economic development but also to bolster our climate resilience,” said the OPM, February 3, 2025.

Utilising the power of savings and strategic investments of “surplus” and “excess liquidity,” can amplify regulatory reforms, allow innovation, entrepreneurship and further investments in climate adaptation and mitigation to realise Return on Investment (ROI) with material impact on development goals and the economy.

In the equation of “surplus” and “excess liquidity,” hitherto, disproportional levels of poverty, human resource development, and capital projects are underfunded. “Surplus” and “excess liquidity” must translate into sustainable economic development to help offset the dependence on external loans and grants, and challenging societal issues across the country and region.

To strengthen linkages, build better partnerships and unlock sustainable economic growth, “surplus and “excess liquidity” must generate ROI. Regional banks, financial institutions, PPPs, commercial interests, and governments must lead with an actionable plan and economic strategy.

Conversely, the reliance on weak policy execution, deferred and terrible monetary policymakers, will not achieve the expected ROI on “surplus” and “excess liquidity.”