Shawn K. Richards
St. Kitts – Nevis
People’s Action Movement
November 06, 2010
“It says quite a lot when the IMF basically says that Prime Minister Douglas’ disastrous and gross mismanagement of our economy can potentially destabilize the economy of the entire OECS,” says Hon. Shawn K. Richards.
The recently released IMF consultation with St.Kitts-Nevis report issued by the Directors of the International Monetary institution has stated that the current and prospective grim economic state of the twin island federation has the potential to negatively impact other OECS countries in the Eastern Caribbean Currency Union (ECCU).
The startling fact was highlighted along with a number of other very grim realities that have developed as a result of the countries dire economic state . The IMF Directors indicated that the government’s heavy reliance on financing from a captive domestic market has led to the high exposure of the banking system to public sector debt. The Directors further stated that high and increasing debt, along with the heavy exposure of the banking sector, poses a major risk to macroeconomic stability. Moreover, there is a high risk of spillovers to other ECCU countries if a fiscal crisis were to develop and undermine public confidence. The economic woes in the country, according to the report, can also essentially devalue the EC Dollar.
“What the report is basically saying to us is that the the Minister of Finance Prime Minister Dr. Denzil Douglas and his labour administration has so mismanaged the economic affairs of this country that it is at a point where the economic state is so dire that it has the potential to destabilize the entire Eastern Caribbean Currency Union. That is every single OECS country from Antigua to Dominica to St.Vincent can all be negatively impacted,” said Opposition Senior MP Hon. Shawn K. Richards. ” Prime Minister Douglas has been the Minister of Finance for at least most of the last 15 years that his admin istration has been in office and his stewardship as the minister of finance can only be described as disastrous. He has dragged down our country from #1 in economic growth and development in the entire Caribbean and Latin America in 1994 under PAM to being dead last in economic growth over the next 5 years according to the IMF World Economic Outlook among 150 countries in the world ,” the Senior MP continued.
The Directors recommended that given the currency board arrangement, they called for further structural reforms to enhance competitiveness, reduce vulnerabilities, and support growth. This recommendation came as a result of the Directors ‘s assessment that the real exchange rate appears broadly in line with current economic fundamentals. In particular, Directors observed that greater labor market flexibility is needed.
The supervision of banks was emphasized and also expressed the need to step up and change the fiscal financing model, given that domestic banks are heavily exposed to the government. They also observed that strengthening regulation and supervision of nonbanks will address major shortcomings in the regulatory framework.
The Eastern Caribbean Currency Union is a development of the Organization of Eastern Caribbean States, this organization is composed of Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.