February 13, 2008
Washington-based International Monetary Fund (IMF) Deputy Managing Director Mr. Murilo Portugal has expressed concerns about the debt management challenge faced by Nevis Island Administration (NIA).
This concern was among others raised when Premier of Nevis and Minister of Finance the Hon. Joseph Parry and his Financial Secretary Mr. Laurie Lawrence held discussions with an IMF high level delegation on Sunday February 10, 2008, at the Royal St. Kitts Marriott Hotel.
In an interview with the Department of Information on Monday February 11, 2008, Mr. Lawrence said the NIA acknowledged its debt situation and several instruments would be implemented shortly to alleviate the situation.
“The IMF indicated the need to better manage debt. Debt is also a challenge that we highlighted and we are aware that the debt in Nevis is very high. It is not alarming we are still better off than several other islands in the Caribbean that are highly indebted but of course their [IMF] advise is that we need to start to monitor our debt situation more carefully. This would involve putting in building the capacity within the government to ensure that we could better manage debt.
“The issue of salaries and wages that has increased and they are concerned about that also because of course with the increase in salary we are going to see salary and wages increase and that would put greater pressure on our financial resources but again the feeling is that the outlook is good and should be able to cope with the various challenges,” he said.
The Financial Secretary noted that he had the opportunity to put forward initiatives to address the debt situation.
“We are in the process of establishing a fiscal policy unit and that fiscal policy unit would be involve in monitoring of debt, in doing fiscal and revenue projections, in monitoring cash flow and basically to insure that we have better financial planning and improve the overall debt management,” Mr. Lawrence said.
While economic prospects, opportunities and challenges where high on the agenda, the Financial Secretary said Premier Parry took the opportunity to outline some of the major initiatives that the NIA had planned to undertake and also spoke of his vision for Nevis.
“The other area Premier Parry spoke about was technology. He also indicated several projects which would help to increase the rate of development on Nevis specifically tourism projects, like hotel projects. We are well aware that there are several hotel projects that are proposed for Nevis over the next five years, small ones as well as large ones which could have a significant impact in terms of employment, revenue generation and economic development generally,” he said.
According to Mr. Lawrence, the Premier also spoke about the West Indies Power Nevis Limited renewable energy exploration project which he articulated would help to reduce the cost of electricity in Nevis and contribute to major spins off to the economy.
He said Premier Parry enlightened the delegation on the prospects of Nevis being used as the head office for a telecommunications company which would be operating in the Caribbean and briefly shared our recent success for drilling of water.
The Financial Secretary said the Premier and Minister of Finance mentioned that all of these projects he envisioned would put Nevis in the forefront of development within the region and make it the envy of other countries in the next five to ten years.
While Mr. Lawrence looked at the financial situation, he underscored an eight percent increase generated in 2007 over that of 2006. He pointed out that although revenue centers continued to perform fairly well, the NIA have had some deterioration in the overall financial picture due to the fact salary increases were made retroactive to January and infrastructural development programmes had significantly pushed up the current expenditure in 2007.
“However the Premier is of the view that with all of the projects that are planned for the future that this situation is only temporary and that in the very near future we should witness a significant increase in revenue so that we could just start generating positive balances.
“Of course we are all aware that sometimes you have to put infrastructure in so you can attract development. So you spend the money now with the hope of reaping the reward in the future. There is a time lock but eventually you’d expect that the revenues generated would bring your budget into balance. So while the situation has deteriorated somewhat the prospects are good, we are very optimistic about the future,” he said.