IMF Executive Board Completes Fifth and Sixth Reviews Under Stand-by Arrangement with St. Kitts and Nevis and Approves US$6.45 Million DisbursementPress Release No. 13/278
July 25, 2013
On July 24, the Executive Board of the International Monetary Fund (IMF) completed the fifth and sixth reviews of St. Kitts and Nevis’ economic performance under a program supported by a 36-month Stand-by Arrangement (SBA). The completion of the reviews allows the immediate disbursement of an amount equivalent to SDR 4.266 million (about US$6.45 million), bringing total disbursements under the arrangement to SDR 47.37 million (about US$71.58 million).
In completing the reviews, the Executive Board approved waivers of applicability for the end-June 2013 performance criteria, waiver of non-observance of the continuous performance criterion on the ceiling of external arrears accumulated on debt contracted or guaranteed by the central government, and rephased disbursements under the SBA. The Executive Board also approved waivers for non-observance of the continuous performance criterion on the ceiling of external arrears accumulated on debt contracted or guaranteed by the central government following minor data revisions after the completion of each of the first, second, third, and fourth reviews under the SBA.
The SBA was originally approved on July 27, 2011 (see Press Release No.11/295), for an amount equivalent to SDR 52.51 million (about US$79.35 million), or 590 percent of St. Kitts and Nevis’ IMF quota.
Following the Executive Board’s discussion, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“The St. Kitts and Nevis authorities have continued the successful implementation of their Fund-supported program, in particular making progress toward achieving fiscal objectives and debt restructuring. Following a four-year contraction in economic activity, signs of an economic recovery are emerging. Sustained commitment to prudent macroeconomic policies and reforms will be necessary to address remaining risks and vulnerabilities and to support stronger and inclusive growth.
“The 2013 budget is aligned with the authorities’ dual objectives of redeploying resources towards growth-enhancing outlays and continuing fiscal consolidation through significant budgetary primary surpluses. To boost revenue, while steps are being taken to improve revenue administration, action will also be needed to broaden the tax base, in particular to streamline tax exemptions. Moreover, the fiscal performance of the Nevis Island Administration could usefully be bolstered and would benefit from improved communication between the twin-island federation
“The restructuring of public debt has continued, notably with establishing the legal framework for incremental debt/land swaps. To help buttress banks’ income, it is necessary to proceed with launching the land asset management company, according to best practices, and with land sales. Continued collaboration with the Eastern Caribbean Central Bank will be needed to monitor and address financial sector developments and implement reforms.
“Accelerating the pace of structural reforms is important to secure lasting gains in fiscal sustainability, neutralize pressures on current outlays, and promote stronger and inclusive growth. Priority should be given to pension and civil service reform and to streamline the social safety net. Implementing programs to upgrade education and training skills of job seekers to enhance their employment prospects will also be important.”