## Press Release: Statement by an IMF Mission to St. Kitts and Nevis

_IMF News, June 26, 2012_

## Source details

**Canonical URL:** [Press Release: Statement by an IMF Mission to St. Kitts and Nevis](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr12228)

## Other formats

- [Markdown version](/en/news/articles/2015/09/14/01/49/pr12228/index.md)
- [Structured JSON version](/en/news/articles/2015/09/14/01/49/pr12228/index.json)
- [Bundle manifest](/en/news/articles/2015/09/14/01/49/pr12228/bundle-manifest.json)

## Bibliographic details
- Published: June 26, 2012

---

### Mission purpose and timing
- IMF staff mission to St. Kitts and Nevis visited Basseterre during June 4-18 to undertake the third review of the program under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on July 27, 2011.
- The mission’s focus:
  - assess the quantitative performance at end-March 2012 under the SBA;
  - review the ongoing macroeconomic and structural policies;
  - examine the prospects for the remainder of the year.

### Macroeconomic assessment and growth outlook
- All quantitative performance criteria were met at end-March 2012 despite weaker first-quarter economic activity.
- Economic growth for 2012 has been revised downward to zero percent, reflecting the impact of the uncertain global economic environment and a still declining construction sector.
- Modest growth in tourist arrivals noted, but domestic economic activity recovery described as hesitant and worrisome.

### External sector and inflation
- Softer-than-expected domestic demand resulted in lower imports that contributed to a narrowing of the external current account deficit.
- Inflationary pressures abated during the first quarter reflecting lower international commodity prices.

### Fiscal performance and revenue composition
- Buoyant non-tax revenue and higher-than expected income tax receipts more than offset a slight decline in taxes on international trade.
- Expenditure restraint, particularly on capital outlays, contributed to:
  - a better-than-expected overall fiscal balance;
  - a reduction in budgetary arrears.

### Structural benchmarks and social protection reforms
- Structural benchmarks at end-March 2012 were met.
- Proposals presented to Cabinet:
  - reform of the social safety nets;
  - rationalization of the liquefied petroleum gas subsidies.
- These proposals are described as important first steps toward consolidating the variety of social assistance and better targeting programs to the most vulnerable.

### Debt restructuring progress
- Notable progress with debt restructuring aimed at restoring debt sustainability:
  - new bonds to complete the debt exchange have been issued and are being serviced as scheduled;
  - an agreement to reschedule the debt owed to members of the Paris Club was reached in May 2012, which would extend the repayment period to twenty years with a seven-year grace period;
  - the shareholders’ agreement for the special purpose vehicle (SPV) to facilitate the domestic debt for land swap has been signed and the company incorporated;
  - negotiations with other domestic creditors are underway.
- Treasury bills are excluded from the debt restructuring exercise.

### Program review, recommendations, and risks
- The mission and the authorities agreed on a draft memorandum of economic and financial policies that maintains the fiscal targets and structural benchmarks for 2012.
- The mission would recommend to the IMF Executive Board completion of the third review under the Stand-by Arrangement.
- The IMF Board is expected to discuss the third review under the SBA in early August 2012.
- The authorities reiterated strong commitment to the home-grown economic program aimed at restoring fiscal and debt sustainability.
- Identified risks and policy discussion points:
  - risks related to the uncertain global economy;
  - the hesitant recovery in domestic economic activity;
  - macroeconomic policies to spur growth discussed, including expenditure management to secure fiscal space for priority infrastructure and social projects; tax policy; and the environment for doing business.

### Meetings and acknowledgments
- During the review, the mission met with:
  - Prime Minister and Minister of Finance the Rt. Hon. Denzil Douglas;
  - Premier Joseph Parry of Nevis;
  - members of the Federal Cabinet and of the Cabinet of the Nevis Island Administration;
  - senior officials of the Ministries of Finance and Sustainable Development;
  - the Eastern Caribbean Central Bank (ECCB);
  - representatives of the private sector.
- The mission thanked the authorities for their excellent cooperation.

*IMF Press Release No. 12/228, June 26, 2012.*

---


## References

- [St. Kitts and Nevis and the IMF](http://www.imf.org/external/country/KNA/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr12228_