St. Kitts and Nevis gets kudos from IMF for meeting targets, downgrades growth for 2012, but projects real GDP growth of 1.8 percent in 2013

BASSETERRE, ST. KITTS, OCTOBER 8TH 2012 (CUOPM) – An International Monetary Fund (IMF) delegation ended a two week visit to St. Kitts-Nevis on Friday, giving the Labour Party Administration of the Rt. Hon. Dr. Denzil L. Douglas, kudos for meeting all quantitative performance criteria despite the continued sluggish global economic crisis.

But the IMF said that economic growth for the island had been downgraded to 0.7 percent.

St. Kitts and Nevis’ Prime Minister and Minister of Finance, the Rt. Hon. Dr. Denzil Douglas; Financial Secretary Mrs. Janet Harris, other Ministry of Finance officials and the IMF team.

The delegation, headed by Mr. George Tsibouris, met here from September 24 to undertake the fourth review of the US$38 million Stand-By Arrangement (SBA) the twin island Federation has with the Washington-based financial institution since 2011.

The IMF delegation reported at a Meeting of the Cabinet of the Federal Government of St. Kitts and Nevis led by Prime Minister Douglas that all quantitative performance criteria were met at end June 2012 despite the continued sluggish global economic activity. The structural benchmarks at the end-June 2012 were also met, Tsibouris said.

In a statement at the end of the meeting Mr. Tsibouris said the Mission reviewed macroeconomic and structural developments and policies; assessed program performance at end-June 2012 under the SBA; and examined the outlook through the end of 2012 and the 2013 budget. All quantitative performance criteria were met at end−June 2012 despite the continued sluggish global economic activity. The structural benchmarks at the end-June 2012 were also met. Weaker imports and buoyant receipts from the Citizenship by Investment Programme reduced the external current account deficit and inflationary pressures abated further.

It added that the overall fiscal position through end-June 2012 was stronger than originally expected (and budgetary arrears were repaid) due to lower-than-expected capital outlays, and sizeable non-tax revenue and direct tax receipts which offset weaker indirect taxes.

Cabinet Secretary, Mr. Joseph Edmeade, Nevis Financial Secretary, Mr. Laurie Lawrence and Federal Cabinet Ministers at the briefing with the IMF. (Photos by Erasmus Williams)

“The growth outlook for 2012 has been downgraded from 0 to −0.7 percent, with a sharper contraction of construction than previously anticipated. However, real GDP growth is projected to recover to 1.8 percent in 2013 owing to Foreign Direct Investment projects in the pipeline,” said the IMF.

“The policies and objectives of the authorities’ home-grown program, aimed at consolidating public finances and securing a sustainable path for public debt, will be the backdrop for the 2013 budget, currently under elaboration

In this context, the IMF mission supports enhancing tax revenues through continued reforms in revenue administration and broadening of the tax base, pursuing efforts to contain current expenditure and increasing public investment.

“The mission and the authorities discussed a draft memorandum of economic and financial policies through 2013. These discussions are expected to be concluded in the coming days. At that point, the mission would be in a position to recommend to the IMF Executive Board the completion of the fourth review under the SBA; the resulting Executive Board discussion could take place in November 2012.

The IMF said during the review, the mission held meetings with Prime Minister and Minister of Finance the Rt. Hon. Dr. Denzil Douglas, Premier Hon. Joseph Parry of Nevis, members of the Federal Cabinet and of the Cabinet of the Nevis Island Administration, senior officials of the Ministries of Finance and Sustainable Development, the Eastern Caribbean Central Bank (ECCB), and representatives of the private sector. The mission would like to thank the authorities for their excellent cooperation.”