In a IMF report Article IV Consultation on St Lucia, Saint Lucia’s CIP revenues are expected to bring increased revenues, which however carry risks.
Introduced in January 2016, the citizenship program has attracted only marginal interest thus far. To increase the competitiveness of the program, the government has introduced significant changes . These changes are expected to boost revenues, which the authorities plan to collect into a sovereign wealth fund to be used mostly to fund investment. Like other citizenship programs, St. Lucia’s CIP entails significant reputational and financial integrity risks, which could be minimized by strict adherence to standards for due diligence, governance, and transparency.
St. Lucia introduced its Citizenship by Investment Program (CIP) in 2016 with the intention to attract investments in high-end hotel and real estate products, and employment-generating business enterprises. Additionally, the program envisaged a donation to the Economic Fund and investment in an interest-free government bond as additional options. The program was targeted at individuals of high-net worth and an annual cap on the number of citizenships under the program was imposed.
The program met limited success in its first year of operation. CIP performance was poor, owing to comparatively high requirements and the expectations that a new government might change policies after the elections. Six applications were approved under the real estate option, but none of them had reached investment stage at the time of the discussions. Fourteen applications were accepted under the donation option for a total of US$1.4 million and five applications were approved under the bond option for US$2.7 million. No interest was shown in the enterprise investment option.
The new government introduced several changes to make the program more competitive.
The requirement for an affidavit to declare financial resources of at least US$3 million was removed. The required contribution to the Economic Fund was reduced from US$200,000 to US$100,000 for single applicants and fees for applicants with dependents were reduced as well. An administrative fee of US$50,000 was introduced for the bond option. The cap of 500 citizenships per year has been removed. The remaining two options to obtain citizenship through investment remain the same. Citizenship can be obtained through a minimum investment amount of US$300,000 in a government-approved real estate project or an investment in an approved enterprise project starting from US$1 million.
The authorities expect these changes to significantly boost applications and revenues. In 2017/2018 a total revenue of US$9 million is expected through donations, of which 80 percent will be transferred to the government and the rest used to cover the operations of the CIP office. The real estate option is expected to bring 36 applications. Owing to the newly imposed fee, the interest in government bonds is expected to be limited.
The proceeds from the program will be collected in a sovereign wealth fund. The intention is for all CIP revenues to be transferred to a soon-to-be-announced sovereign wealth fund that will be owned, but not operated, by the government. The fund could then be used to finance investment projects and buy back debt.
