St Kitts and Nevis clears IMF fiscal target
Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund said the September quantitative fiscal target was met by a comfortable margin.
WASHINGTON, D.C., United States, Friday January 27, 2012 - The International Monetary Fund (IMF) Executive Board this week approved the release of an additional US$17.6 million to St Kitts and Nevis after the administration met its end of September quantitative targets.
The funds were released on the completion of the first review of St. Kitts and Nevis’ economic performance under a 36-month Stand-by Arrangement (SBA) with the IMF.
This brings the total released so far to approximately US$51.6 million. The Fund approved the US$80.7 million SBA on July 27, 2011.
While the country experienced slower-than-expected economic growth, IMF Deputy Managing Director Naoyuki Shinohara, said, the fiscal target was met by a comfortable margin.
Shinohara pointed out that the government successfully reduced 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, the IMF representative stated.
“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.
“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 IMF Deputy Managing Director said progress had been made on structural reforms such as the valuation of 600 acres of land, as well as updating existing stress tests of financial institutions.
He further noted that additional reforms should focus on public financial management, the civil service, the social security system, and the strengthening of the social safety net to ensure fiscal sustainability.
“The authorities are making progress on negotiations with their creditors for the comprehensive restructuring of the public debt,” Shinohara said.
“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.”