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IMF pleased with St Kitts recovery


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IMF pleased with St Kitts recovery

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WASHINGTON, Jul 26, CMC – St. Kitts-Nevis will receive US$6.4 million from the International Monetary Fund (IMF) after the Washington-based financial institution said it had completed an economic performance of the twin island federation under a 36 month Stand by Agreement (SBA).
The IMF said that the total funds now disbursed to the island is US$71.5 million and that it had also approved waivers of applicability for the end-June 2013 performance criteria, waiver of non-observance of the continuous performance criterion on the ceiling of external arrears accumulated on debt contracted or guaranteed by the central government, and re-phased disbursements under the SBA.
In 2011, the IMF approved the US$79.35 million SBA for St. Kitts-Nevis and according to the Fund’s managing director, Min Zhu, the local authorities “have continued the successful implementation of their Fund-supported programme, in particular making progress toward achieving fiscal objectives and debt restructuring.
“Following a four-year contraction in economic activity, signs of an economic recovery are emerging. Sustained commitment to prudent macroeconomic policies and reforms will be necessary to address remaining risks and vulnerabilities and to support stronger and inclusive growth.”
The IMF official said the 2013 budget is aligned with the authorities’ dual objectives of redeploying resources towards growth-enhancing outlays and continuing fiscal consolidation through significant budgetary primary surpluses.
He said to boost revenue, while steps are being taken to improve revenue administration, action will also be needed to broaden the tax base, in particular to streamline tax exemptions.
“Moreover, the fiscal performance of the Nevis Island Administration could usefully be bolstered and would benefit from improved communication between the twin-island federation
“The restructuring of public debt has continued, notably with establishing the legal framework for incremental debt/land swaps. To help buttress banks’ income, it is necessary to proceed with launching the land asset management company, according to best practices, and with land sales.
“Continued collaboration with the Eastern Caribbean Central Bank will be needed to monitor and address financial sector developments and implement reforms,” Zhu said, adding that accelerating the pace of structural reforms is important to secure lasting gains in fiscal sustainability, neutralize pressures on current outlays, and promote stronger and inclusive growth.
“Priority should be given to pension and civil service reform and to streamline the social safety net. Implementing programs to upgrade education and training skills of job seekers to enhance their employment prospects will also be important,” he added.
Meanwhile, Prime Minister Denzil Douglas has welcome the IMF report saying “ the IMF has given us a passing grade”.
He said the report shows that the “economy continues to show the signs of improvement which were anticipated when the planned new economic program was being designed.
“I said to them (IMF Team) when they were here, that I believe as things turn around, we really have to thank our public servants, because they, to a large extent displayed understanding and patience and if things are improving then they should be the first to benefit from the improvement,” said Dr. Douglas, who announced plans to review the salaries for public workers, pensioners on the island.. 
“I really firmly believe that the salaries should be reviewed and I hope that there is no impediment to this. I know we have to do it slowly and carefully, but I really think the public servants should have a review in their wages and salaries,” he added.
 

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