PM Douglas announces measures to achieve fiscal stability, growth and development

St. Kitts and Nevis’ Prime Minister and Minister of Finance, Hon. Dr. Denzil Douglas in the National Assembly

ST. KITTS, JUNE 16TH 2010 (CUOPM) – St. Kitts and Nevis Prime Minister Hon. Dr. Denzil L. Douglas has announced several measures that signal the commitment of his Government to the fiscal stability, growth and development of the twin-island Federation.

“We must never take the progress and achievements of our beloved nation for granted. Instead we must give thanks to Almighty God and be prepared to take definitive and preemptive action to mitigate the global economic and financial risks in order to protect the standard of living that we have strived so hard to achieve,” Prime Minister Douglas in his capacity as Minister of Finance, reminded the National Assembly of the theme of his 2010 Budget Address on 23rd March 2010.

Dr. Douglas reiterated that serious action would be taken to address the fiscal and debt situation and elaborated some more on the steps that are being taken to deal with the impact of the global financial crisis and to address the fiscal and debt situation.

He told the National Assembly and the Nation that measure will include contain expenditure on goods and services, prioritize capital expenditure, streamlining lining discretionary tax exemptions, adjusting the base tariff of electricity, close the loopholes in the duty free shipping system and implement a wage and hiring freeze.

Streamlining the discretionary tax exemptions is expected to yield EC$15.2 million.

“This would involve the assessment of existing tax concessions with a view to adjusting those areas that require modification so as to ensure that those areas of the economy which require such support receive the necessary support, that we wean those areas which have now become of age and ensure that there is no wastage in the system,” said Prime Minister Douglas.

He said that the adjustment to the Base Tariff for electricity will yield EC$14 million as the formula for calculating electricity rates is quite old and needs to be adjusted. The exercise he said would require technical assistance from the country’s international partners.

Dr. Douglas also said that with the closure of the loopholes in the Duty Free Shopping System, the government is expected to get some EC$7.2 million in revenue.

“The Draft Duty Free Stores Bill is being reviewed by the Ministry of Finance. The Ministry expects to have the Act passed by July 2010. The intention is to ensure that the system continues to achieve the intended objectives and to make improvements where necessary,” he stated.

Dr. Douglas indicated that by implementing a wage and hiring freeze, the government expects to save EC$11.1 million. Expenditure for Personal Emoluments and wages amounts to 41 percent of Recurrent Expenditure.

“It is therefore apparent that there cannot be any meaningful reduction in expenditure without a reduction in Personal Emolument costs. The Government therefore intends to initiate the necessary changes to keep this item of expenditure under control in the entire public sector,” said Prime Minister Douglas.