St Kitts trying to restructure US$1 billion debt
BASSETERRE, St Kitts, Thursday June 2, 2011 – The Government of St Kitts and Nevis announced yesterday that it is to seek the cooperation of its creditors in the restructuring of its public debt stock, which is approximately US$1 billion.
It said the exercise will address the severe payment challenges associated with servicing this debt and will seek to place the country’s high debt burden firmly on a sustainable footing along with a series of economic measures being introduced by the authorities.
At almost 200 percent of GDP, the public debt burden of St Kitts and Nevis is among the highest Debt to GDP Ratio in the world, and it is expected that the majority of this debt will be affected by the restructuring.
Treasury bills, however, will be excluded from this exercise and Treasury Bill holders have been assured that their investments will not be affected.
As a small, tourism-dependent economy, St Kitts and Nevis has been severely affected by the global financial crisis. Sharp declines in tourism revenue and Foreign Direct Investment dependent activities triggered a contraction in government revenue, and a deep, economy-wide recession in 2009-2010. These adverse economic conditions contributed to a further deterioration of the country’s public debt levels in 2010.
“Over the last 12 months, the Government has responded to a very difficult external environment by introducing a series of corrective measures designed to stabilise the public finances,” said Prime Minister and Minister of Finance, Dr Denzil Douglas.
“We will soon be unveiling a set of comprehensive reforms aimed at improving our medium-term outlook, but it has become clear to us that the magnitude of our debt burden is such that reforms alone cannot restore long-term sustainability to our public finances. We must therefore now work closely with our creditors to identify and implement credible and definitive solutions to our debt difficulties with their support,” he added.
The Government has appointed White Oak Advisory to act as its financial advisor in its consultations with affected creditors. It said those consultations will begin immediately.
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