IMF To Examine Economic Program
Basseterre, St. Kitts – Nevis
June 01, 2011 (CUOPM)
A home-grown Government Economic Programme prepared by the Federal Ministry of Finance following consultation with the Ministry of Finance in the Nevis Island Administration (NIA) was presented to visiting officials of the International Monetary Fund (IMF) at a Joint Cabinet Meeting of the Federal Government of St. Kitts and Nevis and the Nevis Island Administration.
The IMF Team which has been visiting St. Kitts and Nevis over the past two weeks and has been working closely with the Ministries of Finance in the Federal Government and the Nevis Island Administration has completed a full and comprehensive analysis of the state of the economy in the twin-island Federation.
The findings and analysis were formally presented to the Joint Cabinets during the meeting at Government Headquarters Wednesday at which the Government’s Economic Programme was also discussed.
The Economic Programme addresses the financial gaps that are still present even after there has been full implementation of the fiscal measures introduced by the Government over the last eight months.
The measures included the introduction of the Value Added Tax (VAT), the increase in the rates of electricity, the planned corporatization of the electricity department, the imposition of an excise tax and the restructuring of the public corporations to ensure that they are no longer a drain on the Central Government for financial support.
The Government Economic Programme approved by the Joint Cabinet and presented to the IMF Team will be seriously considered for eventual submission to the IMF Board at a later date.
It is hoped that over the next few days as the IMF Team considers and further discuss with the ECCB the proposed Economic Programme will be able to convince the IMF Board that the Government Economic Programme will require necessary financial resources to assist in its implementation to bring the economy on a path of sustainable growth and debt reduction.
During Tuesday’s programme “Ask the Prime Minister”, Dr. Douglas said the burden of closing the financing gaps has to be shared not only by the citizens and residents of St. Kitts and Nevis, who are already making their full contribution, but others who have been benefiting from the economy of St. Kitts and Nevis over the years of growth and expansions.
“With the assistance of the Canadian government in particular for the last two to three years working very closely with the Eastern Caribbean Central Bank, which has its own in-house debt advisory capacity, we have been looking at how we can tackle the debt situation which has been a tremendous challenge for the people of the Caribbean including the people of St. Kitts and Nevis” said Prime Minister Douglas.
He said although St. Kitts and Nevis has been fairing well and never defaulted on its debt payments, has continued to provide important critical services has made payments of monthly salaries to civil servants and wages on time, the debt at its present level is unsustainable.
“This of course is not only the debt of the Central Government of St. Kitts and Nevis and the Nevis Island Administration, but also the debt that have been incurred by Statutory Corporations – the former St. Kitts Sugar Manufacturing Corporation (SSMC), the St. Christopher Air and Sea Ports Authority (SCASPA), the Nevis Air and Sea Ports Authority (NASPA) and several other entities that have been established by law,” said Dr. Douglas.
“We need to begin to talk to our creditors. We need to ensure that the cost of servicing this debt over the short to medium term is sustainable. It is a tremendous burden and we need to spread this burden,” Dr. Douglas said on the programme.
“We have spoken with governments, especially those who have given us sovereign debts and there are several friendly countries around the world, which have assisted us in the past and we have been negotiating some of the terms of these loan agreements. We have been successful and we have to begin to look to others,” said Dr. Douglas.
He said even though the global economic and financial crisis continues, the Government will continue to provide incentives to attract local and foreign direct investments to St. Kitts and Nevis to help to improve the economy.