IMF expresses confidence in St. Kitts and Nevis’ home-grown Economic Programme, says it could become model for sub-region

Mr. Alfred Schipke, Division Chief, Caribbean Division in the Western Hemisphere Department of the International Monetary Fund (IMF)

BASSETERE, ST. KITTS, JUNE 5TH 2011 (CUOPM) – Announcing an US$84 million or EC$226 Stand-by arrangement for St. Kitts and Nevis, Alfred Schipke, Division Chief, Caribbean Division in the Western Hemisphere Department of the International Monetary Fund (IMF) has expressed confidence in the home-grown Economic Development Programme submitted by the Government of St. Kitts and Nevis.

Mr. Schipke, who is based in Washington D.C., also lauded the programme saying that despite the stigma, the dialogue with the Government of St. Kitts and Nevis could be used as a model for International Monetary Fund relationships with other Caribbean countries.

“We have confidence in the strategy of the government because we are also putting our risk and reputation on the line. We are setting a path of confidence and strong economic growth,” said Mr. Schipke in an opening statement at a joint Ministry of Finance-International Monetary Fund Press Conference at the conclusion of a two and a half -week mission to St. Kitts and Nevis.

Mr. Schipke said that despite the stigma of the IMF in the region, “the dialogue that we have had with the Government of St. Kitts and Nevis is exemplary and hoped it might be a model for the relationships with other Caribbean countries in the region.”

He told reporters that the Government of St. Kitts and Nevis is embarking on comprehensive debt restructuring to put the country on a sustainable debt path.

“The reforms will be a change in paradigm and will create the conditions for improved confidence, investment, and economic growth. This would also ensure burden sharing by all stakeholders. Domestic population has already made sacrifices,” said Mr. Schipke.

(left to right) St. Kitts and Nevis’ Financial Secretary, Mrs. Janet Harris; St. Kitts and Nevis’ Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas; Mr. Alfred Schipke, Division Chief, Caribbean Division in the Western Hemisphere Department of the International Monetary Fund (IMF) and Mr. Wendell Samuel, IMF’s Regional Resident Representative based in Antigua

He noted that the government intends to implement a number of complementary measures to strengthen public financial management, improve the collection of revenue at the Customs and Inland Revenue departments; and develop a debt-management strategy to reduce the debt-to-GDP ratio over the coming years.

“A key element of the government’s programme is to further strengthen the social safety net and making it more efficient to protect the most vulnerable in the society,” said the IMF official.

He said ever since the Global Economic and Financial Crisis hit St. Kitts and Nevis as well as the entire Eastern Caribbean Currency Union (ECCU), “we have worked very closely with the government as their partner and we hope as their trusted advisor.”

“I would say that this does not only reflect what some call ‘the New IMF’ but a commitment to assist the authorities in implementing their economic programme.

“Over the past 2 ½ weeks we have analyzed economic and financial sector developments and the outlook for St. Kitts and Nevis and discussed with the Government their comprehensive economic program. As you know, the government started to implement important fiscal reforms since the end of last year and they are yielding already significant positive results, in particular the VAT,” said Mr. Schipke.

He said there are still financing gaps despite all the fiscal efforts and the debt would remain unsustainable.

“As you know, at 200 percent of GDP (or EC$3 billion), St. Kitts and Nevis’ has one of the highest debt levels in the world. Currently interest payments amount to 20 percent of revenue and the high debt levels undermine the country’s growth potential, make the it more vulnerable, and constrain the government in responding to exogenous shocks,” said Mr. Schipke.