Basseterre, St Kitts: 1st June 2011
The Government of St Kitts and Nevis announced today that it is to seek the cooperation of its creditors in the restructuring of its public debt stock, which is approximately US$1 billion. This 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% of GDP, the public debt burden of St Kitts and Nevis is amongst 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, the Hon Dr Denzil L 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.”
The Government of St. Kitts and Nevis has appointed White Oak Advisory to act as its financial advisor in its consultations with affected creditors. These consultations will begin immediately. Clifford Chance will be acting as legal advisor to the authorities.
Information on the debt restructuring process will be posted periodically on the website of the Ministry of Finance, which can be accessed using the following link: http://sknmof.com/creditors.htm
Creditors may also contact the Government’s financial advisors at firstname.lastname@example.org