Press Release: IMF Executive Board Approves US$3.4 Million in Emergency Natural Disaster Assistance for St. Kitts and Nevis
IMF News, May 15, 2009
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- Published: May 15, 2009
Executive Board approval and financing
- The Executive Board of the International Monetary Fund approved a request for SDR 2.225 million (about US$3.4 million) in Emergency Natural Disaster Assistance for St. Kitts and Nevis.
- Fund emergency assistance is intended to help member countries with urgent balance of payments financing needs in the wake of natural disasters or armed conflicts.
Damage and macroeconomic impact
- Hurricane Omar hit St. Kitts and Nevis in October 2008.
- The damage from the hurricane has greatly aggravated the economic slowdown, with significant impacts on unemployment, fiscal revenues, and tourism receipts, particularly on the island of Nevis.
- The balance of payments impact of the hurricane is estimated at US$19 million (about 3½ percent of GDP).
- Nevis experienced the temporary closure of its largest tourism resort.
Purpose and expected use of Fund financing
- Fund financing will help offset the balance of payments impact of the hurricane.
- Emergency assistance will support the authorities’ efforts to address immediate financing needs while they implement broader economic measures.
Authorities’ program and reform priorities (as described by the IMF)
- The authorities are responding with a comprehensive economic program to deal with the effects of the natural disaster within the context of the difficult economic situation facing the country.
- Program aims include:
- Strengthening public finances to reduce public debt ratios.
- Undertaking structural reforms.
- Developing a growth and poverty reduction strategy with development partners to guide the medium-term reform agenda.
- Enhancing the investment climate for private sector development, including through privatization and sale of public land and assets.
- Strengthening oversight of the financial sector.
Contextual challenges and outlook (statement by Mr. Murilo Portugal, Deputy Managing Director and Acting Chair)
- The adverse balance of payments impact of the hurricane has been compounded by the global recession and the collapse of the Trinidad and Tobago-based CL Financial Group.
- “The damage caused by Hurricane Omar has resulted in substantial loss of employment and great hardship to St. Kitts and Nevis.”
- While the global downturn and the heavy debt burden of St. Kitts and Nevis are likely to weigh heavily on near-term growth, the authorities’ implementation of prudent policies and their reform agenda, together with support from the international community, should help St. Kitts and Nevis recover from the setbacks caused by the hurricane and place the economy on a path of sustainable, strong growth.
Press Release No. 09/167 — May 15, 2009