St Kitts Nevis gets over US$4 million from IMF

Completion of second review of IMF Stand-by Arrangement with St Kitts and Nevis paves way for island to get about US $4.83 million.

BASSETERRE, St Kitts and Nevis, Monday June 11, 2012 – St Kitts and Nevis have now benefited from over US $56 million from the International Monetary Fund (IMF) through its Stand-by Arrangement (SBA) with the Washington-based institution.

The Executive Board of the IMF recently completed its second review of St Kitts and Nevis’ economic performance under a program supported by a 36-month SBA. According to a media release from the monetary authority, this then paved the way for an immediate disbursement of an amount equivalent to SDR 3.161 million (about US $4.83 million), bringing total disbursements under the arrangement to SDR 36.781 million (about US $56.21 million).

According to the release, the Executive Board also approved a request for waivers of applicability for three end-March 2012 performance criteria. These waivers were necessary because the Executive Board meeting was scheduled to take place after end-March but before the data for the overall balance of the central government, the central government budget expenditure arrears, and the stock of short-term external debt becomes available.

The SBA was approved on July 27, 2011, for an amount equivalent to SDR 52.51 million (about US $80.25 million), or 590 percent of St. Kitts and Nevis’ IMF quota.

Naoyuki Shinohara, deputy IMF managing director and acting chair of the executive board commended the federal administration for its “strong implementation of [its] home-grown [IMF] supported program”.

“Notwithstanding an adverse global setting, the fiscal target was met by a comfortable margin, and the authorities’ structural reforms progressed as planned. Following three consecutive years of decline, the domestic economic outlook is positive, supported by FDIrelated construction and an improvement in tourism activities, although the global environment continues to present downside risks,” Shinohara state following the Executive Board’s discussion.

“The authorities successfully concluded a debt exchange with bondholders and external commercial creditors, the first phase of the comprehensive restructuring of the public debt. They have also made further progress in the resolution of domestic loans, including on the conversion of loans secured with land. It will be important to minimize the impact of debt restructuring on banks’ balance sheets to preserve financial sector stability. The Special Purpose Vehicle should be implemented according to international best practices,” he added.

“The success of the program hinges on a proactive policy response to safeguard achievement of the fiscal targets and strict adherence to the planned pace of structural reforms. In this regard, the authorities are proceeding with efforts to enhance tax revenue, maintain tight control over expenditure, and prepare contingency measures. It will be important to continue to make progress on other fiscal reforms to expand space for growth-promoting spending,” Shinohara concluded. Click here to receive free news bulletins via email from Caribbean360. (View sample)