{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with St. Kitts and Nevis",
  "publication": "IMF News, March 31, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/03/31/pr2399-imf-concludes-2023-article-iv-consultation-with-st-kitts-and-nevis",
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  "summary": "St. Kitts and Nevis’ economic growth rebounded strongly in 2022 despite global headwinds. GDP is estimated to have grown by 9 percent in 2022 after contracting 14.5 percent in 2020 and 0.9 percent in 2021.",
  "publishDate": "2023-03-31",
  "sections": [
    {
      "heading": "2022 economic rebound and near-term drivers",
      "content": "- GDP is estimated to have grown by 9 percent in 2022 after contracting 14.5 percent in 2020 and 0.9 percent in 2021.\n- The lifting of all COVID-related travel restrictions in August 2022 sparked a strong rebound in the tourism sector and across the economy.\n- The authorities’ proactive policy response, facilitated by fiscal buffers accumulated from a decade of prudent fiscal policy, helped shelter domestic prices from high global energy and food prices.\n- These measures took a heavy toll on fiscal accounts in 2022; the primary balance ex-CBI revenue and land buybacks deteriorated to a deficit of 17 percent of GDP (vs. 15 percent in 2021).\n- Large CBI inflows in 2022 helped finance the fiscal expansion, keeping public debt below the ECCU regional target of 60 percent of GDP."
    },
    {
      "heading": "Outlook, projections, and risks",
      "content": "- Return to the pre-pandemic activity level is expected by end-2024, with growth converging towards its medium-term path thereafter.\n- The budget is expected to be broadly balanced through 2025 and then go into deficits—predicated on current policies.\n- Risks to the outlook:\n  - Tilted to the downside in the short term (primary sources: global slowdown, particularly in the United States; global inflation; sustained commodity price volatility from lingering geopolitical uncertainty).\n  - Upside potential in the medium term from an acceleration of the transition to renewable energy and increased public-sector investment in resilience.\n  - The growing dependence on volatile and uncertain CBI revenue is identified as a major source of vulnerability."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors encouraged the authorities to pursue prudent fiscal policies, ensure financial stability, and implement ambitious structural reforms to boost sustainable and inclusive growth.\n- Fiscal policy:\n  - Fiscal stance should be tightened to entrench debt sustainability.\n  - Support for planned phasing-out of electricity price subsidies and other crisis-era support measures.\n  - Contain current expenditures, notably the wage bill, to create space for sustainable investment.\n  - Reduce dependence on CBI revenue through an overhaul of the taxation framework: reduce tax expenditures, streamline VAT, reform property taxes, and introduce a progressive personal income tax.\n- Structural and resilience policies:\n  - Strengthen competitiveness, labor market development, and diversification.\n  - Increase resilient infrastructure spending and adopt an optimal insurance framework against natural disaster risks.\n  - Support transition toward renewable energy and establish a sovereign wealth fund to finance resilient investment and ensure adequate fiscal buffers.\n  - Improve delivery and access to education and vocational training, complemented by active labor market policies to reduce skills mismatches.\n- Financial sector and governance:\n  - Re-assess the business model of the systemically important bank; further progress needed to de-risk its investment portfolio and reduce NPLs.\n  - Ring-fence public sector deposits from risks in any single bank.\n  - Closely monitor credit unions and continue advancing the AML/CFT agenda."
    },
    {
      "heading": "Key social, geographic, demographic indicators (selected)",
      "content": "- Area (sq. km): 269.4\n- Population, Total (thousands, 2021 est.): 53.5\n- Density (per sq. km., 2021): 198.8\n- Rate of growth (percent per year, 2021): 0.66\n- Life expectancy at birth (years, 2021): 71.7\n- Adult literacy rate (percent, 2009): 97.8\n- GDP (millions of U.S. dollars, 2021): 860.8\n- GDP (millions of E.C. dollars, 2021): 2,324\n- US$ per capita (2021): 16,076.7\n- Headcount Poverty (percent, 2008): 23.7\n- Income inequality (Gini coefficient, 2008): 0.38"
    },
    {
      "heading": "Selected economic and fiscal indicators (2019–28) — notable figures and projections",
      "content": "- Real GDP (market prices):\n  - 2019: 4.0\n  - 2020: -14.5\n  - 2021: -0.9\n  - 2022: 9.0\n  - 2023 (Proj.): 4.5\n  - 2024 (Proj.): 3.8\n  - 2025 (Proj.): 3.0\n  - 2026 (Proj.): 2.7\n- Real GDP (factor cost) 2022: 11.2\n- Consumer prices, end-of-period:\n  - 2019: -0.8\n  - 2020: -1.2\n  - 2021: 1.9\n  - 2022: 2.6\n- Broad money (annual percentage change):\n  - 2019: 5.6\n  - 2020: -8.1\n  - 2021: 8.9\n  - 2022: 6.9\n  - 2028 (Proj.): 8.2\n- Nonperforming loans to total gross loans:\n  - 2019: 24.0\n  - 2020: 23.5\n  - 2021: 20.9\n  - 2022: 22.0\n- Public sector (percent of GDP):\n  - Total revenue and grants:\n    - 2019: 37.4\n    - 2020: 35.0\n    - 2021: 50.4\n    - 2022: 51.5\n    - 2023 (Proj.): 43.6\n    - 2024 (Proj.): 41.5\n    - 2025 (Proj.): 39.1\n    - 2026 (Proj.): 37.0\n    - 2027 (Proj.): 35.4\n    - 2028 (Proj.): 33.8\n  - o/w Tax revenue:\n    - 2019: 18.5\n    - 2020: 18.8\n    - 2021: 19.0\n    - 2022: 18.7\n  - o/w CBI revenue:\n    - 2019: 14.8\n    - 2020: 11.3\n    - 2021: 23.3\n    - 2022: 25.8\n    - 2023 (Proj.): 17.0\n    - 2024 (Proj.): 13.0\n    - 2025 (Proj.): 11.5\n    - 2026 (Proj.): 10.0\n  - Total expenditure and net lending:\n    - 2019: 38.1\n    - 2020: 44.8\n    - 2021: 54.8\n    - 2022: 43.0\n  - Current expenditure 2022: 39.9\n  - Capital expenditure and net lending 2022: 14.9\n  - Primary balance:\n    - 2019: 0.5\n    - 2020: -1.7\n    - 2021: 6.8\n    - 2022: -2.1\n    - 2023 (Proj.): 2.1\n  - Overall balance:\n    - 2019: -3.1\n    - 2020: -3.3\n    - 2021: 0.6\n    - 2022: 0.3\n    - 2023 (Proj.): -0.5\n  - Overall balance (less CBI revenue):\n    - 2019: -19.2\n    - 2020: -21.8\n    - 2021: -22.3\n    - 2022: -18.1\n    - 2023 (Proj.): -18.0\n    - 2024 (Proj.): -17.9\n    - 2025 (Proj.): -18.7\n    - 2026 (Proj.): -19.7\n    - 2027 (Proj.): -21.1\n  - Total public debt (end-of-period):\n    - 2019: 54.3\n    - 2020: 68.0\n    - 2021: 68.9\n    - 2022: 58.4\n    - 2023 (Proj.): 55.3\n    - 2024 (Proj.): 53.3\n    - 2025 (Proj.): 51.7\n    - 2026 (Proj.): 50.9\n    - 2027 (Proj.): 51.4\n    - 2028 (Proj.): 53.4\n- External sector (percent of GDP or exports where specified):\n  - External current account balance (percent of GDP):\n    - 2019: -5.8\n    - 2020: -10.9\n    - 2021: -5.0\n    - 2022: -3.6\n    - 2023 (Proj.): -2.8\n    - 2024 (Proj.): -1.9\n    - 2025 (Proj.): -1.3\n  - Trade balance (percent of GDP):\n    - 2019: -28.4\n    - 2020: -26.2\n    - 2021: -31.5\n    - 2022: -30.1\n  - Services, net (percent of GDP):\n    - 2019: 24.2\n    - 2020: 19.4\n    - 2021: 29.5\n    - 2022: 29.7\n  - Tourism receipts (percent of GDP):\n    - 2019: 32.6\n    - 2020: 12.1\n    - 2021: 17.8\n    - 2022: 21.5\n    - 2023 (Proj.): 24.6\n    - 2024 (Proj.): 26.6\n    - 2025 (Proj.): 27.4\n    - 2026 (Proj.): 26.8\n    - 2027 (Proj.): 26.3\n  - FDI (net) 2019: 3.3\n  - External public debt (end-of-period, percent of exports of goods and nonfactor services):\n    - 2019: 12.7\n    - 2020: 15.2\n    - 2021: 14.6\n    - 2022: 9.5\n- Memorandum items:\n  - Net international reserves, end-of-period (in millions of U.S. dollars):\n    - 2019: 346.3\n    - 2020: 365.4\n    - 2021: 312.8\n    - 2022: 250.5\n    - 2023 (Proj.): 247.1\n    - 2024 (Proj.): 244.9\n    - 2025 (Proj.): 243.1\n    - 2026 (Proj.): 241.4\n    - 2027 (Proj.): 239.6\n    - 2028 (Proj.): 251.6\n  - Net international reserves (in percent of broad money):\n    - 2019: 32.2\n    - 2020: 35.6\n    - 2021: 21.0\n    - 2022: 19.6\n    - 2023 (Proj.): 18.4\n    - 2024 (Proj.): 17.4\n    - 2025 (Proj.): 16.4\n    - 2026 (Proj.): 15.4\n  - Holdings of SDRs, in millions of U.S. dollars:\n    - 2019: 16.8\n    - 2020: 28.8\n  - Nominal GDP at market prices (in millions of EC$):\n    - 2019: 2,991\n    - 2020: 2,388\n    - 2021: 2,628\n    - 2022: 2,837\n    - 2023 (Proj.): 2,973\n    - 2024 (Proj.): 3,115\n    - 2025 (Proj.): 3,265\n    - 2026 (Proj.): 3,421\n    - 2027 (Proj.): 3,586\n\nIMF Communications Department; Press Release No. 23/99; March 31, 2023.\n\n---\n\n\n References\n\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/03/31/pr2399-imf-concludes-2023-article-iv-consultation-with-st-kitts-and-nevis"
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    "Published: March 31, 2023",
    "GDP is estimated to have grown by 9 percent in 2022 after contracting 14.5 percent in 2020 and 0.9 percent in 2021.",
    "The lifting of all COVID-related travel restrictions in August 2022 sparked a strong rebound in the tourism sector and across the economy.",
    "The authorities’ proactive policy response, facilitated by fiscal buffers accumulated from a decade of prudent fiscal policy, helped shelter domestic prices from high global energy and food prices.",
    "These measures took a heavy toll on fiscal accounts in 2022; the primary balance ex-CBI revenue and land buybacks deteriorated to a deficit of 17 percent of GDP (vs. 15 percent in 2021).",
    "Large CBI inflows in 2022 helped finance the fiscal expansion, keeping public debt below the ECCU regional target of 60 percent of GDP.",
    "Return to the pre-pandemic activity level is expected by end-2024, with growth converging towards its medium-term path thereafter.",
    "The budget is expected to be broadly balanced through 2025 and then go into deficits—predicated on current policies.",
    "Risks to the outlook:",
    "Directors encouraged the authorities to pursue prudent fiscal policies, ensure financial stability, and implement ambitious structural reforms to boost sustainable and inclusive growth.",
    "Fiscal policy:",
    "Structural and resilience policies:",
    "Financial sector and governance:",
    "Area (sq. km): 269.4",
    "Population, Total (thousands, 2021 est.): 53.5",
    "Density (per sq. km., 2021): 198.8",
    "Rate of growth (percent per year, 2021): 0.66",
    "Life expectancy at birth (years, 2021): 71.7",
    "Adult literacy rate (percent, 2009): 97.8",
    "GDP (millions of U.S. dollars, 2021): 860.8",
    "GDP (millions of E.C. dollars, 2021): 2,324",
    "US$ per capita (2021): 16,076.7",
    "Headcount Poverty (percent, 2008): 23.7",
    "Income inequality (Gini coefficient, 2008): 0.38",
    "Real GDP (market prices):",
    "Real GDP (factor cost) 2022: 11.2",
    "Consumer prices, end-of-period:",
    "Broad money (annual percentage change):",
    "Nonperforming loans to total gross loans:",
    "Public sector (percent of GDP):",
    "External sector (percent of GDP or exports where specified):",
    "Memorandum items:",
    "[PRESS CENTER](http://presscenter.imf.org/)",
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