IMF Caribbean Head Expresses Confidence in St. Kitts and Nevis Economy


BASSETERRE, ST. KITTS, NOVEMBER 22ND 2010 (CUOPM) –

The Government of St. Kitts and Nevis is trying to ensure the continued stability of the fiscal situation despite the high level of relatively high level of indebtedness.

IMF officials at Press Conference

Alfred Schipke, Division Chief in the Caribbean 1 Division, Western Hemisphere Department of the Washington-based International monetary Fund (IMF) at a news conference here on Monday revised growth projections for 2011 from 0.5 percent to 1.5 percent of GDP.

Expressing confidence in the prospects of the St. Kitts and Nevis economy in terms of macro-economic stability, Mr. Schipke said conditions were being created to generate high growth.

“The measures that have been implemented so far are important steps to reduce the fiscal burden,” said Schipke, citing the implementation on November 1st of the Value Added Tax (VAT) and other measures to increase revenues.

He said the Government has also shown a high level of responsibility on the revenue side.

“While debt levels are high – and that is not new to anybody here – the key is, whether we are on the right track and our understanding is and judging by what already has been done, and what we have heard and learned over the last couple of days, what is intended to be done, will once and for all improve and solve some of the fiscal issues in the medium term,” Schipke told the news conference.

“Without growth everything is challenging. Our ultimate objective has to be to improve the growth potential of the economy and to improve the livelihood of all citizens in this country. That is the objective that the government is pursuing,” said Schipke, who quickly pointed out the importance of taking into consideration that in the event of an adverse shock such as a hurricane, St. Kitts and Nevis has the fiscal room to react positively.

“The focus of the government is stronger economic growth, improving the living conditions of all and at the same time reducing vulnerability to deal with exogenous shocks,” said Schipke.

He said 2011 in the Caribbean will continue to be a difficult year as the major trading partners in the United States, Canada and Europe will experience relatively weak recovery.

“Our projections for the medium term will see unemployment in those countries remain relatively high. In the United States, the global economic crisis has affected the wealth of the people, people have lost a lot of resources in the stock market, housing wealth has gone down and they are in an effort to save more and consuming less and that has implications for tourism demand that comes from the United States. Given that external environment which has nothing to do with St. Kitts and Nevis, next year will continue to be a challenge,” said the IMF official, who pointed out that economic growth is expected to pick up in 2011 in St. Kitts and Nevis.