Above: St Kitts (Photo: SKT)
By the Caribbean Journal staff
The International Monetary Fund has lowered its economic outlook for St Kitts and Nevis’ economy in 2012, with a projected growth of zero percent, although the country did meet all of its quantitative performance criteria at the end of March.
An IMF team visited Basseterre June 4 to 18 to undertake the third review of the programme under the country’s Stand-By Arrangement approved in 2011.
The revised growth outlook reflected “the impact of of the uncertain global economic environment which continues to weigh on economic activity, particularly in the still-declining construction sector,” according to George Tsibouris, head of the mission to St Kitts and Nevis. “The hesitant recovery in domestic economic activity, despite modest growth in tourist arrivals, is worrisome.”
Softer-than-expected domestic demand resulted in lower imports, contributing to what the fund called “a narrowing of the external current account deficit.”
The IMF also praised the country’s “notable” progress on debt restructuring, with new bonds having been issued to complete the recently-agreed debt exchange.
In May, the country reached an agreement to reschedule the debt owed to members of the Paris Club which would extend the repayment period to 20 years with a seven-year grace period.
Tsibouris said authorities had “reiterated their strong commitment to the policies and objectives of their home-grown economic programme aimed at restoring fiscal and debt sustainability.”
He urged the country’s government to consider macroeconomic policies that could help spur growth, includgin in expenditure management, tax policy and the environment for doing business.
The IMF mission and St Kitts and Nevis authorities have agreed on a draft memorandum of economic and financial policies that “maintains the fiscal targets and structural benchmarks for 2012,” he said.
The mission held meetings with Prime Minister Dr Denzil Douglas, Nevis Premier Joseph Parry and other government officials during the mission.