{
  "title": "IMF Survey: Caribbean’s St. Kitts Gets Opportunity for Transformation",
  "publication": "IMF News, September 2, 2011",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar090211a",
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  "summary": "The IMF’s Executive Board approves a three-year Stand-By Arrangement with the Caribbean islands of St Kitts and Nevis amounting to about $84 million to help boost growth and reduce its high public debt levels, indirectly also strengthening the regional currency union.",
  "publishDate": "2011-09-02",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The IMF’s Executive Board approved a three-year Stand-By Arrangement with St. Kitts and Nevis amounting to about $84 million (EC $228 million).\n- Program objectives: boost growth, reduce high public debt levels, and indirectly strengthen the regional currency union."
    },
    {
      "heading": "Background and fiscal situation",
      "content": "- Impact of shocks and decline in activity:\n  - Hit hard by the 2008–09 global financial crisis.\n  - Further affected by recent international food and fuel price increases.\n  - Significant drop in tourism, slowdown in tourism-related construction and foreign direct investment.\n  - Closure of the largest tourism resort in Nevis following Hurricane Omar.\n- Fiscal outcomes and vulnerabilities:\n  - Tax revenue declined 13.5 percent in 2010.\n  - The deficit widened to 9.4 percent of GDP in 2010.\n  - At end 2010, St. Kitts and Nevis had a debt of almost 200 percent of GDP—the highest public debt level among all emerging markets and developing countries.\n  - Population: about 50,000 people.\n  - Member of the Eastern Caribbean Currency Union (ECCU); solvency issues in one country can spill over to other members."
    },
    {
      "heading": "IMF-supported reform program — three-pronged approach",
      "content": "- Fiscal consolidation\n  - Allow revenue to rise up front and contain spending increases while protecting the most vulnerable groups.\n  - Implemented measures already yielding results: introduced a value-added tax and increasing electricity tariffs.\n  - Public sector wage bill frozen until 2013—implying a notable reduction in real wages over the period.\n  - Capital spending has been prioritized.\n- Comprehensive debt restructuring\n  - Process launched to negotiate a comprehensive and substantive public debt restructuring to ensure the burden of adjustment is shared by all.\n  - Authorities expect that debt restructuring will put public debt on a sustainable trajectory over the medium term.\n- Strengthening the financial sector\n  - The banking sector is described as very well capitalized.\n  - Government established a Banking Sector Reserve Fund—managed by the Eastern Caribbean Central Bank—as a backstopping mechanism for temporary liquidity support for solvent banks, if needed.\n- IMF financial support\n  - The IMF loan also provides financial support in the form of an “insurance policy” via the banking sector support fund.\n  - Quote: “The economic program is a real paradigm change for St. Kitts and Nevis, laying the foundations for strong economic growth and reduced vulnerabilities,” — Alfred Schipke, mission chief for St. Kitts and Nevis, after the IMF Board’s July 27 approval of the loan."
    },
    {
      "heading": "Structural measures and social protection",
      "content": "- Structural reforms to strengthen public spending efficiency and effectiveness include:\n  - Improving public financial management.\n  - Pension reform.\n  - Civil service reform.\n  - Social safety net reforms.\n- Protection of vulnerable groups:\n  - An essential priority throughout the program period and beyond.\n  - Ultimate medium-term goal: a coherent social protection strategy that will rationalize programs and better link social assistance to actions aimed at building human capital."
    },
    {
      "heading": "Regional implications and potential model for other countries",
      "content": "- Because St. Kitts and Nevis is an important member of the ECCU, the reform measures are expected to benefit the ECCU as a whole.\n- Elements of the program could serve as a model for other countries in the region—for example, the Banking Sector Reserve Fund.\n- The IMF has engaged with various stakeholders in the country to explain the program and its implications.\n\nIMF Survey: Caribbean’s St. Kitts Gets Opportunity for Transformation.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- Press release\n- St. Kitts and Nevis the IMF\n- Caribbean’s high debt levels\n- Caribbean needs fresh ideas\n- Latam, Caribbean outlook\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar090211a"
    }
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    "Published: September 2, 2011",
    "The IMF’s Executive Board approved a three-year Stand-By Arrangement with St. Kitts and Nevis amounting to about $84 million (EC $228 million).",
    "Program objectives: boost growth, reduce high public debt levels, and indirectly strengthen the regional currency union.",
    "Impact of shocks and decline in activity:",
    "Fiscal outcomes and vulnerabilities:",
    "Fiscal consolidation",
    "Comprehensive debt restructuring",
    "Strengthening the financial sector",
    "IMF financial support",
    "Structural reforms to strengthen public spending efficiency and effectiveness include:",
    "Protection of vulnerable groups:",
    "Because St. Kitts and Nevis is an important member of the ECCU, the reform measures are expected to benefit the ECCU as a whole.",
    "Elements of the program could serve as a model for other countries in the region—for example, the Banking Sector Reserve Fund.",
    "The IMF has engaged with various stakeholders in the country to explain the program and its implications.",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[Press release](https://www.imf.org/external/np/sec/pr/2011/pr11295.htm)",
    "[St. Kitts and Nevis the IMF](https://www.imf.org/external/country/kna/index.htm)",
    "[Caribbean’s high debt levels](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR020311A.htm)",
    "[Caribbean needs fresh ideas](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR021111A.htm)",
    "[Latam, Caribbean outlook](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR061711A.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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