BASSETERRE, ST. Kitts – St. Kitts and Nevis has passed the first review of economic performance under the Stand By Arrangement with the International Monetary Fund (IMF).
“All end-September 2011 quantitative targets have been met, despite slower-than-expected economic growth. The fiscal target was met by a comfortable margin, and the authorities were successful in reducing budget expenditure arrears to below the levels at the end of December 2010. No external arrears were accumulated except for debt service payments, which are part of the debt restructuring. Also, the authorities approved the 2012 budget consistent with the program objectives,” said Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair in a statement on Wednesday.
The IMF statement said the completion of the review allows the immediate disbursement of an amount equivalent to SDR 11.47 million (about US$17.6 million), bringing total disbursements under the arrangements to SDR 33.62 million (about US$51.6 million).
The SBA was approved on July 27, 2011 for an amount equivalent to SDR 52.51 million (about US$80.7 million), or 590 percent of St. Kitts and Nevis’ IMF quota.
Following the Executive Board’s discussion, Mr. Shinohara said the St. Kitts and Nevis economy is estimated to have remained flat in 2011 after two years of contraction, but the outlook remains favorable supported by Foreign Direct Investment-related construction projects and an improvement in tourism activities.
He said while uncertainty regarding the global economic recovery, however, highlights increasing downside risks, steadfast implementation of policies under the Fund-supported program will be important going forward.
“The authorities have made progress on structural reforms, including by updating the registry and undertaking the valuation of 600 acres of land, as well as updating existing stress tests of financial institutions. To ensure fiscal sustainability, further reforms will focus on public financial management, the civil service, the social security system, and the strengthening of the social safety net,” he said.
Mr. Shinohara said the authorities are making progress on negotiations with their creditors for the comprehensive restructuring of the public debt.
“Early implementation of the debt restructuring will be critical for the success of the program. Continued commitment to ensuring the stability and health of the financial sector will be important to reduce vulnerabilities,” Mr. Shinohara said.
