European Union assists St. Kitts and Nevis with budgetary support

European Union Delegate to the Federation of St. Kitts and Nevis, His Excellency Mikael Baford (Photo by Erasmus Williams)

BASSETERRE, ST. KITTS, JANUARY 25TH 2013 (CUOPM) – The European Union, St. Kitts and Nevis’ largest grant aid partner for development says it has provided Euro 15 million (One Euro = US$1.34 cents) in budgetary support to the St. Kitts and Nevis government over a three month period last year.

An EU statement said that the grant aid is aimed at assisting the country in diversifying its economy away from sugar into value added and competitive areas.

“These payments, in particular, were made based on St. Kitts and Nevis attaining targets related to macro-economic stability, public financial management reform and the implementation of its National Adaptation Strategy,” the statement said.

Recently appointed European Union Head of Delegation, Mikael Barfod, said that “the high level of achievements made by St. Kitts and Nevis in the implementation of the Sugar Budget Support Programmes reflect the strong commitment shown even within the context of the present downturn in the global economy.”

The EU statement said that Administration of the Rt. Hon. Dr. Denzil L. Douglas has created the policy basis for a number of key reforms ranging from sector strategies to public and economic affairs including increase in provision of State land to farmers for agricultural use, and the maintenance of the share of budget expenditures social services at levels at least as those of 2007.

“This assistance has gone towards supporting the implementation of the National Adaptation Strategy aimed at enhancing economic diversification and social development in response to the closure of the sugar industry.”

In addition, the twin island Federation and the EU have been formulating a follow-on Budget Support programme in the area of poverty reduction and social protection, private sector development and employment and human resources.

As part of accompanying measures for sugar producing countries due to losses resulting from the cuts the European Commission has allocated 45.13 million Euros to St. Kitts and Nevis for the period 2006-2013.

St. Kitts and Nevis has chosen macro-economic reform and public financial management reform, including public sector modernization; private sector development; and support to poverty reduction initiatives as their priority areas for this funding.

Over the years some of the projects and programmes supported by the EU include rehabilitation of the Joseph N France General Hospital and IT-based management and Training.

The present EU 10th EDF intervention in St. Kitts and Nevis which has a financial envelope of €4.5 million, focuses on Safety and Security where special attention will be given to its organisational and planning capacity to prevent, detect and solve crime.

St. Kitts and Nevis also benefits from the EU’s Fluctuation in Export Earnings (FLEX) mechanism, which was introduced in 2000 for ACP countries, to assist governments facing sudden loses of revenues.

It provides additional budgetary support in situations where countries have registered a 10% loss in export earnings and a 10% worsening of the programmed public deficit.

The European Investment Bank (EIB) also helps to implement the EU’s cooperation and development policies outside the EU and has made loans available to St. Kitts and Nevis. EIB loans have been utilised in the country for airport development,

In addition, credit lines have been provided to the St. Kitts and Nevis Development Bank for the financing of productive investments for small and medium sized enterprises in the industrial, agro-industrial, transport and service sectors.

The EU is placing increasing emphasis on climate change, alternative energy and food security as well as mainstreaming issues such as environmental protection, gender and governance in its development co-operation. The EU is committed to the promotion of Human Rights, the rule of law and democracy worldwide.

The European Union Delegation continues to work closely with all stakeholders in St. Kitts and Nevis and has assisted with the establishment of the Non-state Actors Panel which is actively involved in all aspects of our cooperation from programme formulation to implementation.

St. Kitts and Nevis has had a formal relationship with the European Union (then the European Economic Community) since 1984. As a former British colony, which became independent in 1983, it was the entry into the EEC by Britain in 1973 which offered St. Kitts and Nevis and other Commonwealth countries in Africa, Caribbean and the Pacific (ACP) the possibility of negotiating their future relations with the EU.

The overall aim of EU co-operation is to improve the quality of life of the populations in the beneficiary countries through targeted and sustainable programmes.

In 2010 the EU Delegation to Barbados and the Eastern Caribbean, which covers St. Kitts and Nevis, disbursed 130 million Euros in development co-operation aid amongst the ten countries it is accredited to in the region.

Historically EU-ACP co-operation has been underpinned by four Lome agreements and now the Cotonou Agreement signed in 2000, through which the European Development Fund (EDF) provides grant aid towards development projects and programmes.

The European Commission manages the funds and jointly implements the projects. Lome also introduced the STABEX system, to compensate ACP countries for the shortfall in export earnings due to fluctuations in the prices.

Apart from the EDF which runs in five year cycles, St. Kitts and Nevis has long benefited from the Sugar Protocol, which permitted exports to the EU of 14,800 tonnes of sugar per year at guaranteed prices significantly higher than international prices.

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