1. Mr Speaker, I wish to first thank the almighty for his continued blessings on our beautiful island. Also, it pleases me to say that in spite of the challenges our people continue to grow and are no doubt stronger as a result of his guidance and grace.

2. This is my fourth budget in three (3) years. Over this period, my Government has sought to rebuild the economy in a systematic and structured way. We recognised from the onset that given the peculiar circumstances that face Montserrat that this would be an extremely difficult and challenging task.

3. In my first budget address, we chose the theme “Building self-sufficiency and earning the right to choose”. My Government had to take decisions that may have appeared difficult but which gave us the greatest chance of supporting ourselves in the future. We saw this as the only way that we will ever be able to choose our destiny. Mr Speaker, this paid off because in that same year, we regained the critical element of local decision making on key developmental issues that were hitherto taken in London.

4. Mr Speaker, in my 2002 budget, the theme chosen was “Securing sustainability in a constraining and dynamic global environment”. We saw the need then to promote a sustainable economy but recognised the constraints resulting from our small size, volcanic risks, inappropriate infrastructure and the adverse changes in the international environment in response to World Trade Centre tragedy.

5. We did not introduce any new revenue raising measures but negotiated an increase in budgetary aid to support the construction and government sectors to ensure that the economic conditions did not become unbearable for our people. We also made a deliberate attempt to choose those projects (such as the Gerald’s airport) that would provide the basis for economic recovery and sustainability.

6. Last year, my budget was presented under the theme “Towards a new era…getting the fundamentals right”. My Government’s aim was to enhance the legal environment in which we operate, strengthen public administration

systems especially in the area of planning and information technology and to move systematically towards an output-focused system. We are still in the process of taking these systems forward.

7. Mr Speaker, the stage is now set for my 2004 budget address in which we want to declare to the world that Montserrat is Ready to Rise from the Ashes and to become the place of choice for those who value Safety, Peace and Tranquillity. I feel a greater sense of optimism today than I felt when my Government took office in 2001. We have struggled in the stormy waters of uncertainty for eight years and are more optimistic that we will reach the land of success safely. But Mr Speaker, you will recall that in my first budget address, I promised to steer this ship to prosperity albeit in an increasingly hostile and dynamic economic environment.

ECONOMIC CONTEXT

8. Mr Speaker, we live in an open economy. The external environment therefore greatly influences the performance of our economy and if the impact is sufficiently large can create significant benefits or serious dislocation for all who live here. Consequently, we need to bear this mind in our planning.

9. Let us now examine this environment.

International and Regional Environment

10. Mr. Speaker, the increased threat of war in the fourth quarter of 2002 and the first quarter of 2003 led to volatility in the financial markets around the world and further depressed consumer confidence. The coordinated reduction in interest rates in the G7 countries, which was implemented towards the end of 2002, prevented a more serious deterioration in global growth. However fundamental factors, such as low consumer and business confidence, problems in the international currency and capital markets, increased security risks and costs, high corporate and sovereign debt overhangs, conflict in the Middle East, the related increase in the price of oil and the emerging threat of a Severe Acute Respiratory Syndrome (SARS) epidemic have conspired to place significant constraints on global growth.

11. The expectation is for world economic growth in 2003 to average 2.4% rising to 3.0% in 2004, with the United States (U.S) economy growing by 2.8% in 2003 and 3.3% in 2004. Canada is however, expected to experience a decline in growth in 2003 from the appreciation of the Canadian dollar and contractions in auto sales, auto production and the housing market.

12. In the Euro area, growth is expected to improve, moving from 1.6% in 2003 to 2.8% in 2004. In the case of Japan, the prospects for growth in the near future remain low.

13. In the Latin American region, continuing problems in Argentina and Venezuela will continue to restrain the region’s growth, in spite of improvements in Mexico and Brazil. Argentina continues to be hampered by an unresolved banking sector crisis and corporate defaults, in spite of improvements on the

fiscal front and a deceleration in inflation. In Venezuela, the depreciation of the currency and the resulting high inflation have caused a collapse in private consumption, but the price of oil has been relatively buoyant.

14. Real Gross Domestic Product (GDP) in the Caribbean Community (CARICOM) region improved modestly in 2003. Trinidad & Tobago and Belize achieved robust growth, while Guyana realized moderate growth. The economies of the Eastern Caribbean Currency (ECC) area, Suriname, Barbados and the Bahamas registered much weaker levels of growth in 2003.

15. In Trinidad & Tobago, the major impetus for growth was derived from the performance of the natural gas sub-sector. Output in this sector rose as several of the newly gas fields discovered increased production. Firmer prices for natural gas, petroleum and urea, together with expected increases in production levels, should bolster growth levels in 2004.

16. The acceleration of the globalisation and liberalisation process, the steady erosion of trade preferences, and the increasing competition for foreign capital will present formidable challenges to Caribbean economic and development policy in 2004 and beyond. Where the region’s productive capacity cannot be expanded then fiscal and budgetary management must be greatly improved.

17. Unfortunately, Mr Speaker, while there is much liquidity within the Organisation of the Eastern Caribbean (OECS) Monetary System, structural weaknesses within the regional financial market and high cost of borrowing will continue to inhibit financial flows to key sectors.

The Domestic Economy

18. Mr Speaker, preliminary indications reveal that the Montserrat economy experienced small growth last year. This performance is commendable considering global trends and the negative influences and impacts associated with crises such as war in Iraq and increasing oil prices. However, delays in public projects also reduced our growth prospects for 2003.

Output

19. In 2003, Montserrat’s economy experienced moderate growth following on from the previous year’s trend. Preliminary data reveal an increase of 1.2% in real output for 2003 compared to 4.9% growth in 2002. There was an increase in the level of output for 2003. The Bank & Insurance, Transport, Real Estate & Housing, Utilities and Government Services sectors contributed to the positive growth in output for 2003. Economic activity continues to be dominated by Government Services and Construction activity together they combine to account for over 50% of GDP.

Prices

20. Inflation rates remained rather low for 2003. At the end of the year, the retail price index increased by 1.2%. The highest increase experienced for the year was 1.6%. There was a significant increase in the cost of renting, but prices for household goods, food and non-alcoholic beverages experienced an overall decline.

Domestic Credit

21. In 2003, there was negligible increase in domestic credit in Montserrat and 0.4% increase in the Eastern Caribbean Currency Union bringing the total domestic credit to $5.9 billion. Much of this increased credit relate to activities in St Vincent and the Grenadines and St Kitts and Nevis.

International Trade

22. The value of imports for 2003 was EC$ 75.2 million, reflecting an increase of 9.5% over 2002 imports of good. While declines were recorded for some categories of imports, inflows of Machinery and Transport Equipment rose by 40.1%. This increase is directly attributable to the construction of the Gerald’s airstrip as heavy machinery and equipment, required for this venture had to be imported. Export receipts increased from EC$4 million to EC$5 million.

Construction

23. The Construction sector continues to be one of the major sectors driving the Montserrat economy. Preliminary data suggests an approximate 22.5% contribution to GDP from this sector, despite a 3% contraction in output for 2003. Although the Gerald’s Park airstrip was the major project influencing construction activity, other public sector sponsored projects, such as the Health Development Programme, Operating Theatre, the Montserrat Volcano Observatory, Government Headquarters extension, Road Rehabilitation, Alignment and Pavements, significantly contributed to the value of output from economic activity in this sector. Public and private sector housing forged ahead as a result of residents’ determination to be housed in more permanent accommodation, and government’s resolved to meet individuals’ needs for accommodation. Activity related to Self-build Housing - Phases II and III also served as major generators of value added in this sector. As reported by the Physical Planning Unit the value of new construction activity more than doubled in 2003 relative to 2002, heavily propelled by the public sector.

Agriculture

24. During 2003, no real growth was realized for this sector, and as recorded for 2002, Agriculture’s contribution to GDP remained at 2%. Crop production managed a 10.5% increase despite the adverse effect of the July 12th ash fall on some crops. The returns of the material and storage housing incentives which farmers received for onions was seen in the more than 100% increase in onions produced in 2003. Other crops such as watermelons which experienced an almost 90% increase in production responded favourably to improved irrigation systems and better quality seeds. Demand for some crops such as pachoi also encouraged increased production efforts by backyard and commercial farmers.

25. The quantity of fish landed rose by 7.2% due to an increase in deep-sea fishing activity attributed mainly to the dedication of a large boat for this purpose.

26. Livestock production benefited from the Agriculture Department’s advice to farmers. This, coupled with Government’s incentives to livestock producers, has led to better quality produce and greater consumer confidence in local meat supplies.

Tourism

27. Performance in the tourism sector has weakened considerably for 2003. Provisional data shows a 31.6% contraction in the Hotels & Restaurants sector (compared to a revised 2.2% real growth rate for 2002) which is an indicator of economic activity within the tourism industry. This sector’s contribution to Gross Domestic Product remains small - an estimated $0.7m in 2003 (or 1.1% of GDP) relative to $1m in 2002 (or 1.6% of GDP).

28. Total visitor arrivals for 2003 declined by 8.4% compared to 2002. The effect of the 13% fall in the number of stay-over visitors outweighed the effect of the marginal 0.2% increase in day visitors to the island. The lack of accommodation on island, due to the closure of villas and one of our major hotels for the greater part of 2003 (due to its being located in the exclusion zone), is certainly a primary factor accounting for the decline in the number of stay-over visitors. Day tour figures are encouraging however, as there has been a 77.6% increase in the number of persons visiting the island for this purpose in 2003 relative to 2002. This is evidence that we have a marketable product, and we are very aware of the fact that more energy needs to be directed at finding innovative means of increasing tourism receipts, as we realized a 14.5% decline in visitor expenditure for 2003.

Prospects

29. Increase in economic activity on Montserrat is expected to generate, on average, an estimated 5% increase in GDP. This, in my view is a very conservative estimate. My government is optimistic about the future and has no reason to revise this figure downwards in 2004. In the Construction sector alone, activity such as the airport project (which will dominate economic activity during 2004), the Community College project and road works will certainly make a significant contribution to growth in GDP. Also expected to come on stream is the Little Bay Infrastructure project, as well as the construction of the Public Market. Self-build housing as well as Lookout Phase II project are also expected to continue into the year. Some growth is anticipated in the Agriculture sector as the Ministry of Agriculture is actively encouraging the production of crops such as sweet potato and pumpkin, and fishing activity increased as it is now possible to fish in previously restricted waters. In the Mining and Quarrying sector, the establishment of an additional quarrying company will promote significant growth in that sector. We expect increase growth in the number of stay over visitors given the recent re-opening of the Old Towne/Isles Bay area, and this will in turn generate an increase in our tourism receipts. In addition the Tourism project due to take off in April of this year should also influence the economy in a positive fashion, fuelling growth in a number of sectors.

BUDGET CONSIDERATIONS AND PERSPECTIVES FOR 2004

30. Mr. Speaker, it is against this background that my Government presents the 2004 budget. We will continue to pursue the strategic objectives outlined in my 2003 Budget speech. These are population growth, economic and financial stability and growth, quality of life enhancement, efficiency within the public service, external relations and environmental and risk management.

31. As promised we will continue to focus on outputs and a gradual shift towards a performance-oriented budget. You will note Mr Speaker, that for the first time the budget covers a period of three (3) years and we have circulated corporate plans that cover a similar period. This will greatly enhance our medium term financial and economic planning and conforms to best practices at the international level.

Population Growth

32. Mr Speaker, in my last budget address we recognised that the increase in population growth could not be achieved through any single strategy. We pointed out that housing, employment, health, post secondary education facilities, sports and cultural activities and growth in investment in the key economic sectors were essential ingredients in making this objective a reality.

33. Mr Speaker, we are anticipating a minimum of 4% increase in the population for 2004 as a result of the investments being undertaken in the various sectors. We will also continue to support the Montserrat Chamber of Commerce and its programmes to bring about a more viable population.

34. The question now is how would we know when we have succeeded in taking forward this objective? Mr Speaker, the Government is working on several initiatives aimed at monitoring and identifying training and skills needed to make the workforce more effective. This labour market information will be necessary for more effective planning and to ensure that this vital resource is harnessed and utilised efficiently.

35. We will targeting the return of Montserratians overseas but at the same time we recognise that as a Member of the CARICOM our immigration policy must take account of the free movement of our brothers and sisters from the region. In addition, we will encourage persons from other countries with specific resources and skills to contribute to the redevelopment process.

36. In 2003, our direct investment in this objective was three hundred and eight four thousand nine hundred and forty dollars ($384,940). It is our intention to increase this figure to one million and sixty thousand dollars ($1,060,000) in order to intensify our efforts in this area.

37. Mr Speaker, as you can see we are fitting the pieces of the puzzle together to bring about the sustainable economy we have promised and we intend to deliver a viable economy with the support of our people.

Economic Growth and Financial Stability

38. As stated in my last budget, the achievement of this objective is dependent on the provision of adequate and appropriate infrastructure, a strong private sector and well targeted public expenditure. I also underscored the need for improvements in the Customs, the Treasury and the Inland Revenue.

39. In 2003, we allocated sixty million six hundred and one thousand eight hundred and thirty dollars ( $60,601,830) to this objective and for 2004 we have allocated directly through our budget sixty million two hundred and ten thousand seven hundred and ten dollars ($60,210,710). Projects funded and paid directly from the European Union’s budget such as part of the airport runaway, housing and the Community College will account for a further forty three million five hundred thousand dollars ($43,500,000). The total sum to be spent on this objective is therefore, one hundred and three million seven hundred and ten thousand seven hundred and ten dollars ($103,710,710).

40. The European Union (EU) under the European Development Fund (EDF) has also allocated 11 million Euros or ($35 million) over the next five (5) years and which will be used for the development of the Little Bay Area including the Sea Port. Clearly, Mr Speaker, the funds are available, what is required is the timely implementation and management of projects.

41. Let me now begin to examine our economic infrastructure programme and prospects in greater detail.

Airport

42. Mr Speaker, the contract for the major works was awarded to Lagan Holdings Limited, an Irish Construction Company and by early August, the contractors had begun the mobilization process. Significant advancement has been made on constructing the platform which will serve as the parking apron for the new airport. This will also serve as the landing pad for the helicopter while the runway is being constructed.

43. The new terminal building is almost completed and the new road and tunnel are well advanced. This will allow the rapid construction of the 540 metre strip on a 600 metre platform which meets the requirements of the Directorate of Civil Aviation for the operation of twin otter aircraft. Preliminary studies are being undertaken to determine the method and cost of future extensions to the runway.

44. It is anticipated that the new airport facility will enhance our tourism product and provide reliable, safe, efficient and reasonable air-transportation that will also encourage businesses to come to Montserrat. The Gerald’s Airport will serve to enhance population growth and induce greater economic activity.

45. Mr. Speaker, we have sought to ensure that the airport project is developed in an environmentally consistent manner. A comprehensive Environmental Impact Assessment is being undertaken as part of the Airport Project.

46. Government has just completed a Future Operations Needs Study for the airport. This Study recommends the international staffing requirements and standards for fire fighting capability, security, air traffic control and management of the airport. Many of the recommendations especially those of staffing and safety will be fully implemented. This will mean additional employment for at least six security officers and other support staff at the new airport all of whom will be trained to international standards in time for the opening of the airport by the end of 2004.

47. The Gerald’s Airport Project is budgeted to cost EC$42.6 million dollars. This also Project represents the largest financial output of aid to Montserrat for the last ten (10) years. Most importantly, we ought to recognize that the implementation of the Airport Project is being coordinated and managed by our local technicians through a Project Steering Group under the auspices of the Ministry of Communications and Works (MCW).

Sea Port

48. Mr Speaker, the port land based infrastructure project, which seeks to properly house, and safeguard imports, and which will also be utilized for the processing of passengers and proper accommodation of staff is nearing completion.

49. The Port Project is being implemented at a cost of EC$1.8 million. The project consists of a large steel framed shed with associated two storey offices is expected to be completed by the end of April. The building will greatly assist the Montserrat Port Authority (MPA) with the storage and processing of all inbound and outbound freight and the office building will provide Montserrat Port Authority with a permanent headquarters.

50. A maintenance workshop was constructed to the rear of the Port warehouse. This project was completed at a cost of two hundred thousand dollars (EC$200,000) and was handed over in August 2003. The building provides facilities for the maintenance of all port vehicles and equipment and provides accommodation for mechanics, electricians and other technical staff.

51. My Government considers the Port as one of the principal organs in Montserrat’s redevelopment and the jetty extension is viewed as a critical project for the sustained economic development of the island. It is anticipated that this facility will serve to increase port vessel calls and throughput and most importantly will allow vessels to dock even in bad weather. Government has agreed to make funds available from the EDF 9 tranche to allow implementation of this project. Additional resources may be required and we will consider assisting the Authority in acquiring loan financing to deliver this facility.

52. Mr Speaker, we will also be allocating $0.5 million in 2004 to construct a slipway at the Port to accommodate the boats of our fishermen. It will also be built to accommodate the Police launch and other similar crafts.

Road Networks

53. Mr Speaker, improving the island’s road was one of this Government’s main objectives for 2003. During that period, a total of one million four hundred thousand dollars ($1,400,000.00) was allocated to the recurrent maintenance budget for roads. Of the recurrent road maintenance budget, seven hundred and five thousand six hundred and three dollars and thirty-nine cents ($705,603.39) was spent on minor projects with the balance of the allocation being spent on recurrent works of drain cleaning and road patching. During the implementation of these works, the Ministry applied the policy of splitting road works projects into sub-projects to allow as many persons as possible to remain in employment while ensuring that expenditure did not exceed projected amounts.

54. In 2003, the round-a-bout by the Hospital aimed at improving the movement of traffic in the area was re-designed and completed. The road while improving the three-pronged flow of traffic in this area, also reduced risks to other road users including pedestrians.

55. The Volcanic event of July 12^th 2003 has contributed to the deterioration of the road and associated drainage infrastructure. In response, we are currently pursuing a project, at an estimated cost of approximately $3.0 million

which will rehabilitate road and drainage from Cheap End to the Belham Valley. This project when realized would significantly increase activity in the transport sector but more importantly enhance the quality of our roads.

56. Mr Speaker, Government is in the process of securing funding for maintenance works in other areas of the road network. The major concerns are the Carr’s Bay Bridge and the bridge over Bottomless Ghaut, which are in need of urgent works to ensure the integrity of the main road network. Other areas targeted for priority consideration include the main route serving the communities between Cudjoe Head and St. John’s through Barzeys and access to the Drummonds area.

57. Mr Speaker, this means continued employment for those people who want to work while we seek to implement programmes in other key sectors.

Power and Water

58. Mr Speaker, Montserrat Electricity Services Limited (MONLEC) ability to provide dependable power was severely affected during the last quarter of 2003, following the failure of its newest generator. Consequently, the company made arrangements to satisfy the immediate demand for power by purchasing two new packaged generating sets. However, a more substantial investment in generating plant will be made for the construction of a 1.8 Megawatt permanent power station, commencing late 2004.

59. In order to finance this power station project, the company anticipates that it will require a loan of approximately EC$6.0 million, in addition to its own resources. This project is critical if we are to avoid the high cost and risks associated with supplying power using current emergency generating sets.

60. We will now focus our attention on the supply of water. Efficient, reliable and cost effective supply of water is essential to the overall development of Montserrat. Water is a basic need and the Montserrat Water Authority (MWA) will continue to upgrade the distribution network in the North in order to provide a better quality, reliable and efficient service to the populace.

61. Mr. Speaker in 2003 we upgraded the transmission main to Dick Hill Reservoir and installed a new 6” mainline from Collin Ghaut to St John’s Centre. This improvement of the network will allow for increase flow of water into the Dick Hill reservoir in order to satisfy the growing demand for water in that area, in addition to solving some of the low pressure problems that consumers in the upper reaches of St Johns usually experience at peak time. This was completed at a cost of two hundred and thirty-three thousand dollars ($233,000).

62. The 6” supply line from Hope Springs to Hope Reservoir was also replaced at cost of forty-five thousand dollars ($45,000).

63. Spring yields have declined generally, over the years. In order to ensure that the daily spring production was captured and very little water was wasted the MWA spent eighty thousand dollars (EC$80,000) from its local financial resources to effect improvements at the catchment points. These have led to some improvement, but the real issue is that springs are not recharging. This is a cause for concern and alternate sources of water must now be sought to

complement spring production. I wish through this medium to encourage Montserratians to change their water using habits; waste must be eliminated at all costs or the consequences could be serious.

64. During the third quarter of 2003 we conducted a Survey of Ground Water Resources on the island which was undertaken by British Geological Society. The survey confirmed the existence of ground water in the Belham Valley and Department for International Development (DFID) has provided approximately EC$1.0 million dollars as part of the Water III Project to explore and develop this resource. To this end, Government has awarded a contract to Hydrosource Associates Incorporated - a water drilling company using the most advanced drilling techniques, to explore and determine the amount of this resource. Once this proves successful we will go on to develop the resource. It is hoped that this will produce at least two hundred thousand (200,0000) gallons per day.

65. As part of the Water III Project, DFID has also approved the procurement and erection of several water tanks as a means of improving water storage in the North. Contracts have been awarded and fabrication of the tanks is ongoing.

66. Mr Speaker, our high quality water also has significant investment potential. However, we have had to put on hold a multi-million dollar water bottling project pending the location of appropriate volume of water. The German company has already purchased land on Montserrat and if all goes well this project can have significant benefits for Montserrat in terms of skills transfer, employment, export earnings and the other usual economic benefits.

Mining and Quarrying

67. Mr. Speaker, it is ironic that the ash and other volcanic fallout that plaqued us for eight years is likely to become our largest export. SELSI Limited has been operating from the Belham Valley area producing mainly sand and aggregate for the domestic construction industry. In 2004, the company plans to step up significantly its production levels and exports to regional markets utilizing the Plymouth Jetty.

68. Phoenix is a newly established quarrying company, jointly owned by local and foreign investors. The company is set up in the Little Bay area and will begin producing sand and aggregate mostly for export. Montserrat stands to benefit from revenues generated through increased exports.

69. Mr. Speaker, the Montserrat Chamber of Commerce and Industry (MCCI) and my Government have been involved in discussions with an Irish based company, Silverlock Management Resources Limited (SMRL), seeking to utilize their technology to exploit the fallout from the volcano. SMR Limited has been working with similar technology in areas close to the Caribbean region and is aiming to commence operations in the latter half of 2004. The company plans

to use the volcanic ash to make composite Slate products. This high-value, durable material, among other things, will be employed in the production of tiles and roofing material for local use and for export.

70. We are confident that these three companies will substantially contribute to employment, income, output and economic activity in general on Montserrat. It is my Government intention to facilitate these initiatives with appropriate incentives and the provision of factory space where possible.

Agriculture

71. Mr Speaker, the agricultural sector once again suffered a major set back in 2003. The volcanic eruption of July 12^th left the agricultural sector devastated. Damage to the sector was estimated at approximately eight hundred and fifty eight thousand dollars (EC$858,000.00). Government responded to the disaster by providing the sum of three hundred and thirty-five thousand six hundred and eighty-four dollars (EC$335,684.00) to assist with implementing recovery action for the sector. To date all areas of the sector have rebounded significantly. It is especially important to note that approximately 50% of the crop acreage destroyed was replanted by September and all lands were in production by the end of November. Local produce of most of the major crops is presently on the market.

72. Emphasis in 2003 was once again placed on import substitution and food security as well as the implementation of a number of programmes and projects geared towards improving livelihoods.

73. The irrigation project is presently providing in excess of 2 million gallons of water to 30 farmers; 60 backyard gardeners have functioning roof collections systems and twenty persons (20) have been trained in soil and water conservation and irrigation techniques. The department expects to construct 2 more dams in 2004 with a total capacity of 1 million gallons.

74. The feral pig eradication project initiated in 2003 was aimed at reducing the number of feral pigs in the forests. 200 pigs have been destroyed to date but anecdotal evidence suggests that the remaining population is still quite large. This project will continue into 2004.

75. The owners of Mars chocolate company collaborated with the Department of Agriculture to test some new varieties of cocoa on island. As a result a cocoa project was also initiated in 2003. This project however, suffered a major setback during the July 12^th eruption when fifteen hundred (1500) seedlings were destroyed. Replanting has since been done and to date three hundred (300) of the plants that survived have been transplanted in the Cassava Ghaut area.

76. 2003 saw the completion of an industry plan for the production, processing and marketing of cassava and cassava products from Montserrat. The objectives of the project are to increase significantly the cultivation of cassava, to increase productivity, to establish a viable cottage industry and to develop systems for utilizing cassava based products in livestock feed. The

establishment of the industry is valued at approximately two hundred and fifty thousand dollars (EC$250,000.00). The implementation phase of the project will be initiated in 2004.

77. The focus on backyard gardening continued in 2003. A small project for backyard farmers resulted in over 40 farmers being provided with fencing wire to assist them in securing their cultivation from loose livestock.

78. This Government once again is embarking on a drive to promote agriculture and agricultural production on island. For this two (2) new tractors have been purchased.

79. I am also pleased to report that the Department will be staging the National Agricultural Exhibition in April. This year’s exhibition will showcase the island’s finest in vegetables, fruits, flowers, livestock and value added products derived from the farming industry.

Tourism

80. My Government continues to view the Tourism Sector as the lead sector for long term economic growth and transformation. The overall strategic objective of this sector is to “contribute to the economic well-being and enhanced quality of life for all Montserratians, consistent with the protection of their environmental assets, cultural heritage, human resources and lifestyle. Consequently, Government is pursuing an investment programme which will reposition the Tourism sector.

81. Government of Montserrat has earmarked over EC$7m over the next 3 years to fund projects emanating out of this recently completed Tourism Repositioning Strategy.

82. A Technical Advisor will be attached to the Montserrat Tourist Board from April 2004 to assist with the implementation of the strategy.

83. It is anticipated that visitor arrivals will increase with this new focus on the sector, the completion of the airport, and increased marketing of Montserrat.

84. The re-occupation Old Towne, Isles Bay Hill areas and the relevant parts of Olveston has seen a modest increase in villa tourism. Further, the re-entry of the Vue Pointe Hotel on the market provides not only additional accommodation but also a venue for small to medium sized conferences.

85. The opening of some areas of the exclusion zone has allowed conducted tours into Plymouth. This has proven to be very successful and efforts will be made to extend these tours to Day Tour Visitors to afford them an experience of a lifetime.

86. The Jack Boy Hill Visitor Facility has been completed and will afford visitors and residents an excellent vantage point for viewing the volcano, with picnic tables and benches, restrooms, concession area and a mini-walking trail. The area has been enhanced with colourful plants and a parking apron for vehicles.

Trade, Industry And Commerce

87. Montserrat’s sustainable economic development is the prime goal of the Government of Montserrat. Government is aware that to achieve this goal it must be and is committed to work in close collaboration with the Private Sector. Hence government’s continued budget support for the Montserrat Chamber of Commerce.

88. Mr Speaker, Government wants to encourage and facilitate locals investing in the economy. It is government’s intention to offer suitable incentive packages consistent with our Fiscal Incentive Ordinance, to this sector of the economy to stimulate growth. This is to be complimented by the revision of the Small Enterprise Development Legislation. The revised legislation will help to stimulate growth in this vital sector.

89. Generally, new areas of investment are being targeted with special emphasis on those relating to the tourist industry. The water bottling plant is still seen as one of the many ways in which a local product can be utilized efficiently and effectively for particular niche markets. The exporting of aggregates has been given a boost with the rehabilitation and development of alternative port sites which will facilitate transporting of the product to external markets.

90. It is our intention to ensure that our beloved island and its investment opportunities reach at least over 40% of the Chief Executive Officers and investment managers in the Americas, Europe and Asia. That is why Government of Montserrat has placed an article in the March 2004 issue of the Institutional Investor Magazine which targets readers in these continents. We are assured of this coverage Mr Speaker, because of a study of markets and media done by Erdos and Morgan, an international firm, which confirmed the wide circulation of this magazine.

91. A recent study has predicted that the CARICOM Single Market and Economy is likely to increase our GDP by more than eight (8%) percent. Mr Speaker, It is our intention to use our status as an Overseas Country and Territory (OCT) of Europe and our membership in CARICOM as a conduit for investment for goods and services to both regions. Clearly, Mr Speaker, if we get the right investments, we can probably double this predicted increase in GDP.

92. We will therefore continue to support the efforts of the Chamber of Commerce and in particular its efforts to develop the financial services sector and its facilitation of returning Montserratians. We will expand the role of the Government of Montserrat’s Office in London to broaden its involvement in the promotion of investment and tourism of the island. We will request Her Majesty Government (HMG) to assist us in this effort in two ways. First to ensure that they do nothing that will have a negative impact on the Montserrat economy and secondly, using the United Kingdom (UK) investment networks to support our efforts.

Telecommunications

93. Mr Speaker, this is the era where technology plays a key role in development. Communications and Technology must assume a central position in our island’s development and Government has begun the process ensuring that Information Communication and Technology (ICT) will be a main focus in our development strategy.

94. Full liberalization of the telecommunication market is one of government’s main goals. It is believed that through this process we can provide our citizens with reliable and cost effective technology services. Government recognizes that the process is a long one, but has already taken the first steps in realizing this goal at the appropriate time.

95. The world has advanced in the area of ICT. Indeed the region including Montserrat has also advanced in this area, and new developments in the field of telecommunications are creating waves for change. In order to respond to the needs of the industry, Government has appointed a Telecommunications Officer on a full time basis.

96. The existing legislation was carved out in 1951 and in order to make it relevant to the 21^st century, a substantial amount of work is required to have it upgraded. Work has already begun in this regard, but there is still much to be done and Government will seek the assistance of HMG in this regard.

97. It is recognized that Cable and Wireless the incumbent provider has served Montserrat well for the past half a century. However, the dismantling of monopolies and preferential treatment at the international level has led and will create waves even in small territories like Montserrat. In fact, Government has had several applications for new licences to provide telecommunications services, but have been constrained by the existing operating agreement with the incumbent provider. We intend to discuss with Cable & Wireless a mutually acceptable way forward.

Social Development and Justice

Social Policy

98. The principles on which our social policies are based can be defined as providing access to the basic necessities of life that is, housing, education, health, welfare services; reducing marginalization and social exclusion;

promoting social justice and equity; promoting the empowerment of our people and ensuring that an appropriate balance is maintained between social expenditures and expenditures on economic development.

99. Government’s commitment to these principles is unwavering. The $5.3 million from the recurrent budget and over $4 million allocated to the construction of the Community College is evidence of this commitment. Government intends over the next two years to focus on the development of post-secondary education development of programmes for the Community College and expansion of the library services.

100. Mr Speaker, expenditures on health and community development services include EC$11.5 million from the recurrent budget and EC$2.6 million from the development budget.

101. When we add the allocation for social housing and other programmes, the total provided to this objective is thirty million and seventy thousand one hundred dollars ($30,079,100).

Housing

102. The provision of Housing, Mr. Speaker, is an important part of this Government’s strategy to retain and increase the population while at the same time developing the island’s social infrastructure.

103. Phase II of the Self-Build Materials Grant Program was closed officially in 2003 with the final draw-down of seven hundred and twenty three thousand eight hundred and thirty dollars ($723,830) facilitating the completion of twenty two (22) dwellings bringing the total number of households assisted under this Phase to two hundred and eighty eight (288), including thirty (30) direct built at a total cost of EC$13.5 million.

104. In 2003, under Self-Build-Phase III, eighty seven (87) additional households were awarded grants including, thirty eight (38) direct-built houses for vulnerable persons relocated from Gerald’s Park, Shelters and Family Units. This brings the total number of approved applicants to one hundred and forty (140) under Phase III, committing the entire project sum of EC$9.6 million. Some seventy five (75) dwelling units were completed during 2003. LDA plans to complete the construction of another thirty (30) direct-built dwelling units for the vulnerable in 2004.

105. Improvements were undertaken to some of the properties. For example, patios were added to all fifteen (15) CARICOM houses to prevent water penetration; all corroding external light fixtures were replaced at Lookout, and remedial infrastructural work were carried out, as available financing allowed. Other remedial works included painting all the metal supports on all the Force 10 Houses on steel columns.

106. As of November 20, 2003, thirty eight (38) houses have been sold: twenty three (23) at Davy Hill, one (1) at Shinnland and fourteen (14) at Lookout 1 (Phase 1) resulting in proceeds totalling six hundred and ninety five thousand three hundred and twenty dollars ($695,320) which have been placed in a Revolving Housing Fund account to finance additional housing solutions. Approximately 80% of the remaining tenants at these three (3) estates have expressed interest in purchasing their homes.

107. In October 2003, Government approved the sale for the remainder of Government’s housing stock comprising the Lookout I-Phase 2 Development and formally approved its sales Policy. Government’s approved sales Policy includes a discount equal to the appropriate standard for 1- 2- and 3-bed

houses plus a 5% cash discount to outright purchasers. Given such generous terms, it is anticipated that the majority of these tenants will opt to buy their homes.

108. Also in 2003, Mr. Speaker, this Government acquired four (4) acres of land at Drummonds, which has been subdivided into thirty six (36) lots on which eleven (11) houses have already been constructed. Nine (9) more houses are being constructed and will be available for occupation by April 2004. The remaining sixteen (16) lots will be allocated for sale to persons who have had difficulty finding serviced-lots.

109. Under Lookout Phase II we anticipate approximately seventy five (75) serviced lots will be available for allocation and sale during 2004 once the entire infrastructure, roads, sidewalks, water and electricity is installed. The new sewage treatment pond and sewage reticulation system will be operational during 2004.

110. The European Union has approved 5.7 million Euros or approximately EC$16.3 million to fund a site development and another housing development project at Lookout designed to deliver a total of sixty (60), two and three bedroom houses by the end of 2004. These houses will be offered for sale and the proceeds will be re-invested in additional housing.

111. Ministry of Agriculture, Lands, Housing and the Environment is currently contemplating vesting in Land Development Authority (LDA), the commercial lands at Lookout Phase 3 for development. Once this is realized, LDA plans to seek financing to construct a mini-shopping mall for lease to entrepreneurs

112. The final detailed design of the Little Bay Area Plan was also approved for implementation of Phase 1, that is, the construction of roads and utilities to be completed during 2004. Land has been made available to relocate the businesses currently encroaching on the Little Bay area.

Education

113. Mr. Speaker, the Department of Education commenced the implementation of the Five Year Education Development Plan in 2003.