IMF Executive Board Completes Third Review Under Stand-by Arrangement with St. Kitts and Nevis and Disburses US$ 4.76 MillionPress Release No.12/289
August 3, 2012
The Executive Board of the International Monetary Fund (IMF) today completed the third review of St. Kitts and Nevis’ economic performance under a program supported by a 36-month Stand-by Arrangement (SBA). The completion of the review allows the immediate disbursement of an amount equivalent to SDR 3.16 million (about US$ 4.76 million), bringing total disbursements under the arrangement to SDR 39.94 million (about US$ 60.21 million).
The Executive Board also approved a request for waivers of applicability for the end-June 2012 performance criteria. These waivers were necessary because the Executive Board meeting was scheduled to take place after end-June but prior to the availability of data to assess the relevant PCs.
The SBA was approved on July 27, 2011 (see Press Release No. 11/295), for an amount equivalent to SDR 52.51 million (about US $79.15 million), or 590 percent of St. Kitts and Nevis’ IMF quota.
Following the Executive Board’s discussion, Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“While the outlook for the St. Kitts and Nevis economy is for a moderate recovery, weaker domestic activity and the persisting difficult global environment pose challenges. The authorities are continuing to successfully implement their Fund-supported program and remain committed to the sound macroeconomic policies and sustaining the pace of structural reforms.
“The authorities have made further progress on restructuring the public debt and have reached an agreement with Paris Club creditors. Similar negotiations with other bilateral creditors will be necessary to secure debt sustainability. The debt-land swap has also advanced. Key priority now is the swift operational implementation of the Special Purpose Vehicles (SPVs). It will be important to align the governance structure and staffing of these SPVs with best international practices to ensure transparency and accountability. Successful completion of debt restructuring will yield debt service savings, which will help shore up the fiscal position.
“Continued successful program implementation and the achievement of medium-term fiscal targets will depend on a sound macroeconomic framework, including further broadening the tax base, strengthening revenue administration, and improving the efficiency of public spending. Reforms in public financial management will help enhance the quality of adjustment and provide the fiscal space needed to accelerate growth-enhancing expenditures, particularly public infrastructure investment.
“The financial sector remains healthy and adequately capitalized. Continued close monitoring and collaboration with the Eastern Caribbean Central Bank to address any repercussion of the debt-land swap and debt rescheduling on banks’ liquidity and profitability should be an important priority.”