«The Prospectus has been drawn up in accordance with the rules of the Regional Government Securities Market. The Regional Debt Co-ordinating Committee ...»
GOVERNMENT OF SAINT LUCIA
FOR EC$25 MILLION TREASURY BILL
Ministry of Finance
Telephone: 1 758 468 5500/1
Fax: 1 758 453 1648
PROSPECTUS DATE: July 2008
The Prospectus has been drawn up in accordance with the rules of the Regional Government Securities Market. The Regional Debt Co-ordinating Committee and Eastern Caribbean Central Bank accept no responsibility for the content of this Prospectus, make no representations as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss whatsoever arising from or reliance upon the whole or any part of the contents of this Prospectus. If you are in doubt about the contents of this document or need financial or investment advice you should consult a person licensed under the Securities Act or any other duly qualified person who specializes in advising on the acquisition of government instruments or other securities.
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TABLE OF CONTENTSNOTICE TO INVESTORS
I. GENERAL INFORMATION
II. INFORMATION ABOUT THE TREASURY BILL ISSUE
III. FINANCIAL ADMINISTRATION AND MANAGEMENT
1. Debt Management Objectives
2. Debt Management Strategy
3. Transparency and Accountability
4. Institutional Framework
The GOSL has sought technical assistance from the IMF in an effort to improve its public debt management capabilities. In this regard a technical assistance mission was sent St. Lucia in the month of May 2008 for a period of three weeks. The Mission is expected to provide recommendations on various aspects of debt management including staffing and organizational arrangement, decision making framework, reporting requirement and formulation of debt management strategies
5. Risk Management Framework
IV. ECONOMIC PERFORMANCE
1. MACRO-ECONOMIC OVERVIEW
DOMESTIC ECONOMIC DEVELOPMENTS
2. SECTORAL DEVELOPMENTS
V. CENTRAL GOVERNMENT FISCAL OPERATIONS
VI. PUBLIC DEBT
VIII. CURRENT ISSUES OF GOVERNMENT SECURITIES
IX. SECURITY ISSUANCE PROCEDURES, CLEARANCE ANDSETTLEMENT AND SECONDARY MARKET ACTIVITIES
APPENDIX I LIST OF LICENSED INTERMEDIARIES
P O Box 44
Antigua and Barbuda
ABI Financial Centre
1 Tel: 268 480 2824
Tel: 268 481 4200
Fax: 268 481 4158
Tel: 767 448 4401/4405
Tel: 869 465 2204
Tel: 869 469 5564
Tel: 758 456 6000
9 Brazil Street
Tel: 758 450 2662
Fax: 758 451 7984
St Vincent and The Grenadines
P O Box 880
No. 1 Richmond Street, Ground Floor
Port of Spain
Tel: 868 623 7815/5153
Fax: 868 624 4544/9833 ; 627 2930
APPENDIX II GDP BY ECONOMIC ACTIVITY AT FACTOR COST –CONSTANT PRICES 1990
APPENDIX III GDP BY ECONOMIC ACTIVITY AT FACTOR COST
2 APPENDIX IV EXPENDITURE OF GDP IN CURRENT PRICES – In Millions of ECD 48 APPENDIX V CENTRAL GOVERNMENT REVEUE TO GDP
Please note that the data reported is as at March 2008
APPENDIX VI CENTRAL GOVERNMENT EXPENDITURE TO GDP
APPENDIX VII TOTAL PUBLIC SECTOR OUTSTANDING LIABILITIES....... 51 APPENDIX VIII SINKING FUND PORTFOLIO
APPENDIX IX DEBT SERVICE RATIOS
APPENDIX X SUMMARY OF CENTRAL GOVERNMENT FISCALOPERATIONS 53
NOTICE TO INVESTORS
This Prospectus is issued for the purpose of giving information to the public. The Government of Saint Lucia accepts full responsibility for the accuracy of the information given and confirms having made all reasonable inquiries that to the best of its knowledge and belief there are no other facts, the omission of which would make any statement in this Prospectus misleading. This prospectus contains extensive excerpts from Saint Lucia Economic Review 2007, and therefore the figures contained therein may be verified on website of the Government of St Lucia1.
This prospectus contains excerpts from the Saint Lucia Economic Review 2007.
Statements contained in this Prospectus describing documents are provided in summary form only, and such documents are qualified in their entirety by reference to such documents. The ultimate decision and responsibility to proceed with any transaction with respect to this offering rests solely with you. Therefore, prior to entering into the proposed investment, you should determine the economic risks and merits, as well as the legal, tax and accounting characteristics and consequences of these Treasury bill offerings, and that you are able to assume those risks.
This Prospectus and its content are issued for the specific Treasury Bill issue described herein. Should you need advice, consult a person licensed under the Securities Act or any other duly qualified person who specializes in advising on the acquisition of government instruments or other securities.
The Government of Saint Lucia (thereafter referred to as GOSL) proposes to raise twenty five million Eastern Caribbean dollars (EC$25.0m) through the issue of a 180-day treasury bill. The Treasury bill is being issued to refinance a maturing treasury bill.
The treasury bill is being raised under the authority of the Revised Treasury Bills (Amendment) Act, 2003 under the Constitution of Saint Lucia, the interest and principal repayments are a direct charge on the Consolidated Fund.
The GOSL has not been rated by any Regional or International Rating Agency.
However, GOSL assigns very high priority to honouring its debt commitments. It has an unblemished track record in meeting debt service obligations in a timely manner, and in complying with the terms and conditions of debentures and loan agreements. GOSL has also established a Debt and Investment Unit in the Ministry of Finance to facilitate its debt and investment management.
The 180-day Treasury bill will be issued on the Regional Government Securities Market (RGSM) in the months of July 2008 and January 2009 and will be traded on the Eastern Caribbean Securities Exchange Ltd (ECSE) under the trading symbol LCB210109 and LCB220709.
The Treasury bill will be opened for bidding commencing at 9:00 a.m. on 24th July 2008 and 22nd January 2009 and close at 12:00 noon on the respective days.
A competitive uniform price auction will be run at 12:00 noon on 24th July 2008 and 22nd January 2009. Settlement for successful bids will take place on 25th July 2008 and 23rd January 2009 respectively.
I. GENERAL INFORMATION
II. INFORMATION ABOUT THE TREASURY BILL ISSUEa. GOSL proposes to auction a twenty-five million (EC$25.0m) 180-day treasury bill.
b. Maximum bid price for the 180-day Treasury bill is 6.0 percent.
c. Treasury bills will be opened for competitive bidding commencing at 9:00 a.m. on 24th July 2008 and 22nd January 2009 close at 12:00 noon on the respective days.
d. The Treasury bill issues will be settled on 25th July 2008 and 23rd January 2009, respectively.
e. The maturity dates of the Treasury bills will be 21st January 2009 and 21st July 2009, respectively.
f. The Treasury bills will be issued in the Regional Government Securities Market (RGSM) and will be traded on the Eastern Caribbean Securities Exchange Ltd (ECSE).
g. A Competitive Uniform Price Auction with open bidding will determine the price of the issue.
h. The Treasury bills will be identified by the trading symbol LCB210109 andLCB210709.
i. Each investor is allowed one (1) bid with the option of increasing the amount being tendered until the close of the bidding period.
j. The minimum bid amount is $5,000.
k. The Bid Multiplier will be set at $1,000.
l. The Investors may participate in the auction through the services of a licensed intermediary who are members of the Eastern Caribbean Securities Exchange. The
current list of licensed intermediaries is as follows:
• ABI Bank Ltd.
• Antigua Commercial Bank Ltd.
• St. Kitts Nevis Anguilla National Bank Ltd.
• Bank of Nevis Ltd.
• Bank of Saint Lucia Ltd.
• National Commercial Bank (SVG) Ltd.
• National Mortgage Financial Company – Dominica
• Republic Finance & Merchant Bank (FINCOR) – Grenada
• Caribbean Money Market Brokers Limited (CMMB) – Trinidad and Tobago
• Caribbean Money Market Brokers Limited (CMMB) – Saint Lucia
• National Bank of Anguilla Ltd.
m. All currency references are in Eastern Caribbean Dollars unless otherwise stated.
III. FINANCIAL ADMINISTRATION AND MANAGEMENT
1. Debt Management Objectives The objective of the GOSL is to ensure that the proceeds of debt are used in the most effective manner and that the terms and conditions of debt, including maturity and interest rate, result in the most efficient debt management strategy that are compatible with the periodic cash flows of the Government.
2. Debt Management Strategy The debt management strategy of the Government is an integral part of its programme of fiscal consolidation. The key elements of the GOSL’s debt
management strategy include:
Maintaining a satisfactory and prudent debt structure;
Refinancing high cost loans and facilities to reduce debt servicing and to adjust the maturity profile of Central Government Debt in a way that balances lower financing cost and risk;
To support the development of a well functioning market to provide funds for the government at the lowest possible cost.
3. Transparency and Accountability The GOSL is continuously seeking ways of improving its systems of accountability and transparency. With a view to adopting more prudent and transparent fiscal management practices as well as enhancing the functioning of the Regional Government Securities Market (RGSM), the GOSL intends to 7 borrow using a variety of instruments. As a consequence, disclosure of information on the cash flow and debt stock will be made available bi-annually to all investors, consistent with the rules of the Regional Debt Coordinating Committee (RDCC). The Government intends to use the services of BOSL in facilitating timely disclosure of information. This will be done on an ongoing basis.
4. Institutional Framework The Debt & Investment Unit (DIU) of the Ministry of Finance (MOF) of the GOSL is charged with the responsibility of administering the Government’s debt portfolio on a day-to-day basis and implementing the Government’s borrowing strategy. The unit is directly accountable to the Director of Finance.
The GOSL has sought technical assistance from the IMF in an effort to improve its public debt management capabilities. In this regard a technical assistance mission was sent St. Lucia in the month of May 2008 for a period of three weeks. The Mission is expected to provide recommendations on various aspects of debt management including staffing and organizational arrangement, decision making framework, reporting requirement and formulation of debt management strategies.
5. Risk Management Framework The establishment of an effective and efficient debt management system as a major element of economic management is of paramount importance to the Government of Saint Lucia (GOSL). Accordingly, attempts have been made to strengthen the capacity of the Debt & Investment Unit (DIU). Consequently, the DIU’s functions
have been broadened to include:
• Assisting in the formulation of debt management policies and strategies;
• Managing the debt portfolio to minimize cost with an acceptable risk profile;
• Conducting risk analysis and developing risk management policies; and
• Conducting debt sustainability analysis to assess optimal borrowing levels.
IV. ECONOMIC PERFORMANCE
1. MACRO-ECONOMIC OVERVIEW
DOMESTIC ECONOMIC DEVELOPMENTSPreliminary data indicate that real output in the economy decelerated to 0.5 percent in 2007, primarily as a result of contractions in key productive sectors, particularly tourism and construction. Consequently, the associated weakened economic impulses were transmitted to the rest of the economy and resulted in marginal and moderated growth in the transport and distributive sectors respectively. By contrast, the financial and real estate sectors, buoyed by the properties market, registered strong growth of 12.1 percent and 7.6 percent respectively. Growth in the utilities sector rebounded in 2007 to 12.7 percent while manufacturing and agriculture provided little stimulus to the economy in the review period (See Appendix III).
2. SECTORAL DEVELOPMENTS TOURISM The tourism sector recorded another year of decline occasioned by unfavorable external developments in a more challenging and competitive global travel market.
After falling by 2.7 percent in 2006, real activity in the sector, as measured by the hotel and restaurant sub sectors, contracted further by 7.4 percent in 2007 (See Appendix III). This resulted in a slightly moderated direct contribution of tourism to real GDP of 11.7 percent. Notwithstanding, tourism remains a primary source of economic activity in the economy, generating a significant level of foreign exchange, employment and revenue to the central government.