St. Kitts and Nevis remains committed to strong economic performance in 2008

BASSETERRE, St. Kitts (CUOPM) – St. Kitts and Nevis remains committed to maintaining strong economic performance in 2008 and beyond despite the challenges of high fuel prices and soaring cost of food.

St. Kitt’s Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas told the Board of Governors of the Caribbean Development Bank at its meeting in Canada that in 2007 economic growth was attributed mainly to agriculture, construction, distributive trades, banking, wholesale and retail and government services.

“Real GDP in the economy was estimated at 3 percent for 2007. In addition the fiscal position of the Central Government improved significantly in that year. The unaudited position reflects a Current Account surplus of EC$2.7 million. The Overall Balance also showed considerable improvement recording a deficit of EC$11.2 million at the end of 2007. The Primary Balance also recorded positive improvement, ending at 6.2% of GDP,” said Dr. Douglas.

He said that the debt to GDP Ratio of the Central Government stood at 89.6 percent of GDP, while Total Public Sector debt stood at 169.1 percent of GDP.

“This commendable performance can be attributed to increased efficiency in revenue collections in particular Taxes on Corporation Income and Taxes on International Trade as well as expenditure controls some of which are outlined in our Adaptation Strategy in Response to the New EU Sugar Regime,” said Prime Minister Douglas.

He expressed thanks to the Government of Canada for its valuable assistance in financing the debt management review which is currently being undertaken in St. Kitts and Nevis. “The result of this exercise I am certain will provide us with several options for managing our debt situation more effectively,” said Dr. Douglas.

He said while the Government focuses on domestic issues it cannot ignore the very formidable challenges faced arising from events in the external environment.

“One of the most alarming of these challenges is the high cost of oil and the double whammy effect that it brings in terms of the direct impact on the cost of goods and services as a result of the transportation component of pricing; but also its indirect impact on rising global food prices produced by the Western push to use ‘bio fuels’ made from grain, especially corn, to reduce the world’s dependence on fossil fuels,” said Prime Minister Douglas.

He said that the unfavourable phenomenon has invaded all sectors of the St. Kitts and Nevis economy and its impact on the more vulnerable in the society can prove to be devastating if the effects are not monitored carefully.

Dr. Douglas said that the unfavourable phenomenon will impact the efforts at poverty reduction, undermine the outstanding social gains and prevent the attainment of the Millennium Development Goals.

“We must therefore discuss how the Bank can play its usual leading role in support of Borrowing Member Countries as we grapple with these issues,” said Dr. Douglas, the Governor for St. Kitts and Nevis on the CDB Bank’s Board of Governors.

Prime Minister Douglas said St. Kitts and Nevis has weathered many storms, the most recent being the successful closure of the sugar industry. “We are a resilient and hopeful people, we embrace challenges and we are not afraid to be pioneers,” he said, warning that if the Governors fail to come out of the meeting with at least a plan to deal with the current challenges, history will indeed condemn them as leaders in the region.

“Now is the time when we must combine all of our financial, intellectual and other resources in arriving at workable strategies to address the threats which we face in order that we may either mitigate these threats or turn them into opportunities,” said Dr. Douglas.

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