More debt relief for St Kitts and Nevis
St Kitts and Nevis agrees to landmark debt restructuring deal with the Paris Club.
BASSETERRE, St Kitts and Nevis, Thursday May 31, 2012 – St Kitts and Nevis has successfully negotiated with the “Paris Club” creditors to wipe off close to US$4 million in debt.
According to government sources, a high level delegation led by Prime Minister and Minister of Finance, the Dr Denzil L. Douglas, has secured a landmark “stock-of-debt” restructuring deal from Paris Club creditors after an intense negotiation session held in Paris, France, on May 24. The approach to the Paris Club was part of the comprehensive debt restructuring program launched by the Government in June 2011.
After six rounds of complex negotiations, the government of St Kitts and Nevis and the Paris Club agreed at the multilateral level to restructure over 20 years the entire stock of debt outstanding to the Paris Club, including the arrears. A grace period on principal repayments of seven years will also apply. Concessional rates of interest will apply to the rescheduling.
In addition, the Paris Club confirmed during the negotiations that further concessions from the Paris Club creditors at the bilateral level are likely. The Government expects that these concessions could involve the outright cancellation of over 60% of the debt treated at the multilateral level on 24 May 2012, as well as other additional concessions.
St Kitts and Nevis’ public external debt was estimated to be USD 360 million as of end 2011, while the debt owed to Paris Club creditors was estimated to be US$ 5.7 million at May 1, 2012.
The Paris Club is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial situation, Paris Club creditors provide an appropriate debt treatment. Paris Club creditors provide debt treatments to debtor countries in the form of rescheduling, which is debt relief by postponement or, in the case of concessional rescheduling, reduction in debt service obligations during a defined period (flow treatment) or as of a set date (stock treatment).
According to the release from the St Kitts and Nevis government, the discussions with the Paris Club focused on how best to support the economic transformation initiative through the restructuring of the debts owed by St. Kitts and Nevis to the United Kingdom and the United States.
Speaking after the signing of the Agreed Minutes, Prime Minister Douglas commented: “We understand that the negotiations were tougher and took a little longer than the Paris Club had expected. This may be the case, but it was important for us to have the opportunity to explain our situation properly, and to secure the right agreement for us.”
The Prime Minister added, “Even before we take into account the additional concessions from our creditors that are expected to come at the bilateral level, the agreement signed in Paris yesterday has no precedent in the Caribbean, and is amongst the most concessional ever to have been granted by the Paris Club to an upper-middle income country anywhere in the world. We are delighted at this recognition of our efforts, and thank the Paris Club for its support.”
The Prime Minister was accompanied during the negotiations by Janet Harris, Financial Secretary at the Ministry of Finance, and by the financial advisors from White Oak Advisory LLP.
The bilateral agreements that will implement the May 24 agreement, and that are expected to incorporate the additional concessions, are scheduled to be signed later this year.