Global and financial crisis an opportunity to improve efficiency and productivity
St. Kitts and Nevis Prime Minister Hon. Dr. Denzil Douglas (photo by Erasmus Williams)
BASSETERRE, ST KITTS, JULY 13TH 2010 (CUOPM) – The global economic and financial crisis gives St. Kitts and Nevis the opportunity to improve efficiency and productivity.
The Federation’s Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas told the 28th Private Sector Banquet of the St. Kitts and Nevis Chamber of Industry and Commerce that the global recession has severely impacted the economy of St. Kitts and Nevis, as well as the other member states of the Eastern Caribbean Currency Union (ECCU).
He said the crisis has resulted in a severe decline in tourist arrivals, remittances, construction and related Foreign Direct Investments.
“The way forward points to the opportunity for St. Kitts and Nevis to refine its mode of doing business, to improve levels of efficiency and productivity throughout the public and private sectors, and the opportunity to set new standards in all areas of economic activity,” Prime Minister Douglas told the business community.
He pointed out that the Federation was especially hard hit by the closure of the Four Seasons Resort in October 2008 after the passage of Hurricane Omar.
“These factors resulted in a contraction of 9.6 percent of real output in 2009. The construction sector declined by an estimated 25 percent due to the downturn in private sector development projects as demand fell off for long-term investments. Activity in the tourism sector also contracted by 20 percent as increased international airfares and high unemployment in our major source markets influenced the industry,” said Prime Minister Douglas.
He pointed out that the cruise industry remained vibrant and actually expanded by 13.5 percent as the industry continued to benefit from negotiations with cruise lines and strategic marketing campaigns by the Tourism Authority.
Dr. Douglas said the Central Government has been experiencing a decrease in its revenues, and, as such, has only limited fiscal space to respond to the crisis.
“Recognizing that more space had to be created, so that assistance could be given where needed, the Government has exercised further fiscal restraint and prioritized expenditure to those areas that would spur growth. As is well known, we have provided a stimulus package to small hotels, standalone restaurants and small and medium enterprises through the provision of tax and duty concessions. The unemployed youth in the Federation were also targeted through the Youth Empowerment Through Skills Programme. All of these elements, when taken together, would have positive impact in the short and medium terms,” said Prime Minister Douglas.
Recognizing that these are difficult times throughout the world, Dr. Douglas said the Federal Government has had to implement coping measures and preparing the country for challenges ahead.
“These measures include streamlining discretionary tax exemptions, introducing a value-added tax, improving the regulation of duty-free stores, containing expenditure on goods and services and reprioritizing capital expenditure. A wage and hiring freeze will also be implemented. This will form part of Government’s wider Public Sector Reform that is aimed at increasing productivity, while at the same time contributing to Government’s efforts at reducing expenditure. The collection of outstanding amounts owed to Government is also a priority. The high level of debt remains an issue, therefore, the debt strategy that was formulated in 2009 will be further elaborated and implemented in 2010,” said the Prime Minister.
He said that hard decisions have had to be made in order to navigate the crisis, but gave the assurance that the most vulnerable in the society will be protected, that the circumstances present opportunities to restructure and create a new and productive economic environment.