Press Release: Statement by the IMF Mission to St. Kitts and Nevis
December 12, 2011Press Release No. 11/462
December 12, 2011
Mr. Alfred Schipke, head of an International Monetary Fund (IMF) staff mission to St. Kitts and Nevis, issued the following statement today at the conclusion of the mission:
“An IMF team visited Basseterre during November 28–December 12 to undertake the first review of the program under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on July 29, 2011. The mission held meetings with Prime Minister and Minister of Finance Hon. Denzil Douglas, Premier Joseph Parry of Nevis, Members of the Federal Cabinet and the Cabinet of the Nevis Island Administration, Governor Dwight Venner of the Eastern Caribbean Central Bank (ECCB), and senior officials of the Ministries of Finance, Sustainable Development, and the ECCB. The mission would like to thank the authorities and technical staff for their warm welcome and excellent cooperation.
“The mission reviewed the ongoing macroeconomic and structural policies and also assessed the performance of the program’s quantitative targets at end-September 2011. All quantitative performance targets appear to have been met, despite continued weakness in real output growth. The revenue enhancement measures implemented last year continue to yield increased tax receipts in line with program expectations at the time of the SBA approval. The authorities have also restrained expenditure growth in order to meet the program target for the overall fiscal balance.
“Significant progress has been made on the structural reform agenda that aims to strengthen revenue collection and Treasury management to improve budget performance, enhances financial regulation and supervision, and supports the debt restructuring. The legislation to facilitate the corporatization of the electricity department has been passed resulting in the establishment of the St. Kitts Electricity Corporation, which is expected to cover its costs. At the same time, progress has been made in discussions with both external and domestic creditors over the terms on which the public debt, which remains unsustainable, will be restructured. Possible scenarios for the restructuring of the external debt have been discussed with creditors and discussions on a framework for the dealing with domestic creditors are advancing. As the government has previously indicated, Treasury Bills will be excluded from the debt restructuring exercise. Meanwhile, the registration and valuation of the first 600 acres of land, which are part of proposed debt-land swap, is expected to be completed before the end of this year.
“The mission and the authorities have agreed on a draft letter of intent that incorporates the policies to be presented in the 2012 Budget to continue the Government’s home grown fiscal consolidation program, and reconfirms the structural benchmarks for 2012. These include, among others, the drafting and enactment of new procurement legislation, development of a medium term expenditure framework, and strengthening of social safety nets. Based on these actions and on the fiscal performance, the mission would recommend to the IMF Executive Board completion of the first review under the SBA. The IMF Board is expected to discuss the first review at the end of January 2012.
“The authorities remain firmly committed to the program’s policies and objectives, and recognize the benefits of strong macroeconomic policies in achieving the goals of their economic program. The government is aware that there are still many challenges ahead, including the impact of the protracted global recovery and volatility in world financial markets on domestic economic activity, elevated food and fuel prices, and the ever-present threat of natural disasters. Despite the strong performance in 2011, and given the weakened global environment, the fiscal situation continues to be constrained. Continued implementation of the program, including the execution of comprehensive debt restructuring agreements with creditors, will help establish the conditions for strong economic growth and employment to improve the living standards of all citizens.”