IMF: St Kitts and Nevis Makes “Significant Progress” on Debt Restructuring

Above: Nevis (CJ Photo)

By the Caribbean Journal staff

St Kitts and Nevis has made “significant progress” on restructuring the country’s public debt, according to the International Monetary Fund, which recently completed its fourth review of the country’s economic performance under a programme supported by a 36-month Stand-by arrangement.

The completion allows the immediate disbursement of $4.9 million, bringing total disbursements under the programme to $66.15 million.

“The St Kitts and Nevis authorities have continued steadfast implementation of their Fund-supported programme, despite the sluggish global environment and economic contraction,” said Naoyuki Shinohara, deputy managing director and Acting Chair of the Fund’s Executive Board, in a statement. “The near-term outlook for the economy is for a modest recovery.”

“Significant progress has been made in restructuring the public debt. An important milestone was reached in terms of the debt-land swap with domestic creditors with the recent transfer of land to the land asset management company,” Shinohara said. “In order to limit the impact on the financial sector and to further buttress the fiscal position through lower interest payments, it will be important to swiftly complete the restructuring of public debt, including with the rapid implementation and entry into operations of the land asset management company, and by finalizing negotiations with remaining domestic and external creditors.”
St Kitts and Nevis is currently elaborating its budget for 2013, and the IMF said emphasis needed to be given to bolstering the tax base, containing current outlays, and increasing capital spending as well as the capacity to buffer shocks.
“Over the near-to medium-term, it will be important to accelerate the pace of structural reforms to further boost revenue and promote growth-enhancing public expenditure,” he said. “The financial system has remained resilient, with adequate capitalization and continued deposit growth. Continued monitoring of the financial sector will be needed, in close collaboration with the ECCB, including in the context of addressing the impact of the restructuring of public debt on banks’ NPLs, liquidity, and profitability.”