Above: Basseterre, St Kitts (CJ Photo)

By the Caribbean Journal staff

The International Monetary Fund has downgraded its growth outlook for St Kitts and Nevis for 2012 from 0 to -0.7 percent, it said following the conclusion of a mission to the twin-island federation.

The drop was due to a sharper-than-anticipated contraction in construction receipts.

The country’s real GDP is expected to recover to 1.8 percent in 2013, however, led by foreign direct investment projects in the country.

The fund visited Basseterre from Sept. 24 to Oct. 5 to undertake the fourth review of the programme under the Stand-By Arrangement approved by the fund’s board in July 2011.

St Kitts and Nevis did meet all quantitative performance criteria and met the structural benchmarks from the end of June 2012, however, despite “continued sluggish global economic activity,” according to George Tsibouris, head of the mission.

The fund also said that weaker imports and “buoyant” receipts from the federation’s Citizenship by Investment Programme reduced the country’s external current account deficit.

The overall fiscal position for the country was also stronger than expected, and sizable non-tax revenue and direct tax receipts offset what the fund said were weaker indirect taxes.

The review included talks with Prime Minister and Finance Minister Dr Denzil Douglas, Nevis Premier Joseph Parry and other officials.