St. Kitts – Nevis Must Embrace Economic Change

Prime Minister - Denzil Douglas

Prime Minister – Denzil Douglas
Photo By Erasmus Williams

Basseterre, St. Kitts – Nevis
September 10, 2011 (CUOPM)

The St. Kitts and Nevis economy is projected to experience a 1.5 percent growth this year and slightly higher in 2012.

Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas told the National Consultation on the Economy at the St. Kitts Marriott Thursday the mild recovery is driven primarily by the outlook for the Tourism Sector and is expected to pick up gradually in the medium term as the quality of services is enhanced and competitiveness increases.

“Several projects are ongoing and even though they may be progressing at a slower pace than originally anticipated we are thankful that none of them have been discontinued. In the end these projects will bring much needed hotel rooms to the Federation so that we can approach that critical mass that makes the sector more sustainable,” Dr. Douglas told economic and social stakeholders from a wide cross section of twin-island Federation.

“In a nutshell, the global environment is changing rapidly, and we must continue to embrace social and economic change as the means of coping with global developments. We must also be creative in the deliberations today in order to continue to chart a course that is home-grown and sustainable,” said the Prime Minister, who expressed a firm commitment to the view that progress as a nation in the face of massive external shocks, global change, fiscal and debt challenges as well as social issues will require cooperation and collaboration as well as sharing, as critical components of the solution.

“I also believe that with these ingredients coupled with experienced leadership that cares, we will be able to build an economy in which all of us can thrive and reach our highest potential,” said Dr. Douglas.

The one-day consultation in preparation for the 2012 Budget was held under the theme: “The Architecture of an Efficient and Sustainable Public Sector in Support of our Economic Growth Agenda.”

Dr. Douglas said the selection of this topic signifies that Government’s strategic planning process is designed to deal with the current realities of the economy.

“The reality that we now face is the need to grow the economy and in order for growth to take place and be sustainable we need to continue to build an efficient and effective public sector. Therefore at this time when we begin our strategic planning process we are opening up ourselves to you, our stakeholders, to tell us what you see as the  tactical direction that Government should take in order to spur growth and in so doing improve the livelihood of our citizens in the Federation of St Kitts and Nevis,” he said.

He said the successes include the implementation of the Value Added Tax (VAT) in November 2010 in-spite of much doubt both locally and internationally.

“We have been able to successfully implement a VAT System that can be used as a model in the region in terms of its depth of coverage and strategic support to important sectors in the economy. We were very careful to give support to critical sectors such as the tourism and agricultural sectors and to provide interim concessions for the construction sector so that the introduction of the VAT would not have proven to be detrimental,” said Dr. Douglas.

He disclosed that Government has successfully weathered what can be termed as the worst economic downturn in recent history as depicted by a contraction in the economy in both 2009 and 2010 when declines in stay-over tourist arrivals and construction related FDI inflows were experienced.

“We were able to see this coming and therefore designed an economic program that has been endorsed by the IMF as evidenced by the approval of a Stand By Arrangement for an amount of US$84.5 million,” said Dr. Douglas.

He said the Government was taking the bold step to restructure the public debt in the context of a burden sharing strategy given that several measures on the fiscal front are already implemented and it was necessary for creditors to play their role in supporting the Government’s efforts at sustainability.

“We expect to see a large and sustainable reduction in the debt and to continue to produce primary fiscal surpluses as these are critical to our success at improving our fiscal position,” said Dr. Douglas.

He said although tough decisions have to be made with respect to the fiscal and debt situation “we have not been oblivious of our responsibility to create an enabling environment in support of the private sector and to protect the vulnerable in our society.”

He said concessions have been extended to the restaurant sector by the provision of concessions to the construction sector, continued support to small businesses in the area of start up costs in particular and a concession package for first time home owners to boost the construction sector.