BASSETERRE, ST. KITTS, DECEMBER 6TH 2006 (CUOPM)
St. Kitts and Nevis is poised to reposition itself in the global economy given the unique opportunity afforded in enhancing its growth potential.
“As we now transform our economy, lowering the public debt to a safer level will be one of our own foremost objectives,” said St. Kitts and Nevis’ Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas as he invited local and regional financial institutions to participate in a Citicorp Merchant Bank Limited-organised presentation for a St. Kitts and Nevis Government Bond Issue at the Bird Rock Beach Resort.
“I therefore invite you to participate in this bond issue which will give you an opportunity to participate fully in the future growth and development of the economy of St. Kitts and Nevis, an economy which has demonstrated resilience and great growing possibilities for economic development,” said Prime Minister Douglas, who noted that the Federal Government has embarked upon a voluntary fiscal stabilisation programme to deal with the high debt situation.“This is aimed at improving the fiscal balance and also moving towards convergence with the Eastern Caribbean Central Bank’s fiscal targets. The resurgence in economic activity together with the implementation of fiscal measures has resulted in significant improvement in the fiscal performance in 2005,” Dr. Douglas said.
Last month, Financial Secretary Mrs. Janet Harris disclosed that as part of the Government’s debt management strategy, the Board of Directors of the Barbados-based Caribbean Development Bank (CDB) had approved the issuance of a policy-based guarantee in an amount up to US$8.2 million in support of a bond issue of up to EC$150 million.
Dr. Douglas said that the Government of St. Kitts and Nevis is currently developing a comprehensive debt-refinancing programme within its own comprehensive fiscal reform agenda.
Like all economies in the region, the economy of St. Kitts and Nevis has been confronted with several challenges over the last few years. These unforeseen events included the impact of five hurricanes over the period 1995 to 2000, the September 11th terrorist attack in the United States and the resulting slump in tourist arrivals, high energy prices and the loss of preferential market conditions in our own sugar industry which necessitated its closure after 350 years.
“Despite these events, the economy has rebounded since 2003, driven mainly by an expansion in the tourism and construction sectors. This economic recovery has been given a stimulus, due to the intense preparation which we are currently undergoing for the 2007 ICC Cricket World Cup and by the transformation from a sugar-agricultural-based economy to one that is now led by services in particular tourism and hospitality services,” said Prime Minister Douglas.
He said that the preparation for this important international event has seen several development projects fast tracked to meet the demands for accommodation and other important support services.
“In addition over the medium to long-term, investor confidence in St. Kitts and Nevis will remain strong as reflected in the large number of projects which are at an advanced stage of planning and preparation here in St. Kitts and Nevis,” said Dr. Douglas, who told the potential investors that in reviewing the Federation’s growth rate, they will find that the GDP growth rate was 4 percent in 2004.”
“This growth resulted from increased activity in tourism, transport, non-sugar agriculture, manufacturing and construction. In 2005, the growth continued to be healthy at around 5 percent fuelled mainly by expansion in the tourism and construction industries. Our own external accounts also showed some improvement as a result of increased receipts from tourism and very strong Foreign Direct Investment flows,” said Prime Minister Douglas, who pointed out that “my country has demonstrated very strong performance in the area of social development as evidenced by achievement in the World Bank’s Human Development Index, specifically enunciated by the United Nations recently and we are second only to Barbados in entire Caribbean region and first in the sub-region.”
In commenting further on the national debt, Prime Minister Douglas noted that it is as a result of the necessity to reconstruct the infrastructure after devastating hurricanes and heavy investment in the human resources over the years.
“These investments have come at great cost to St. Kitts and Nevis, as we have been graduated from concessional financing given our own high per capita income,” said Dr. Douglas, who pointed out that inflation has remained at fairly low levels, averaging 3.6 percent in 2005 compared with 2.35 percent in 2004 despite increases in petroleum prices.
He said that the Government has been able to contain inflationary pressure arising from wage increases in the civil service by adopting wage restraint policies as well as implementing a relative freeze on public sector employment within the last few years.
“Here is an excellent opportunity for St. Kitts and Nevis to partner with the private sector, to partner with our financial institutions, especially our regional Caribbean Development Bank and thus make a tangible contribution in the advancement of the lives of the people of St. Kitts and Nevis and give at the same time, the best opportunities for those who wish to invest and invest in a profitable way in what we believe is a very worthy cause,” concluded the Prime Minister.