IMF pleased with St Kitts progress
A delegation from the International Monetary Fund (IMF) Friday ended a two week visit to St Kitts-Nevis praising the government for meeting "all quantitative performance criteria" under the US$38 million standby Agreement (SBA).
George Tsibouris, who headed the IMF mission, said that the result was achieved despite global economic headwinds continuing to hamper economic activity, particularly in construction and tourism. He said weak imports narrowed the current account deficit and inflation abated toward the end of year and that tax receipts reflected ongoing reforms.
The tax receipts "were in line with programme expectations, with buoyant non-tax revenue contributing to a better-than-expected overall fiscal balance and a reduction in budgetary arrears".
Tsibouris said that the structural benchmarks at the end-December 2011 were also met.
"The authorities completed the assessment of the borrowing capacity of public enterprise. The assessment will help minimise fiscal risks to the central government budget. Updated stress tests indicate that the banking system remains well-capitalised and liquid with sufficient buffers to make it resilient to a variety of adverse shocks."
debt restructuring under way
The IMF officials said the debt-restructuring process, planned to restore debt sustainability, is well under way and that the debt exchange tender was recently concluded with almost universal participation by both domestic and external creditors.
He said discussions on the domestic debt for land swap are progressing.
"As the authorities have previously indicated, Treasury bills are excluded from the debt restructuring exercise," he said, adding that the IMF and the authorities have agreed on a draft memorandum of economic and financial policies that reaffirms the fiscal targets set out in the 2012 budget, as well as the structural benchmarks for 2012.
These include the drafting and enactment of new procurement legislation, development of a medium term expenditure framework, Cabinet approval of a plan for civil service reform, the rationalisation of the subsidy on liquefied petroleum gas and strengthening of social safety nets.
Tsibouris said as a result of these agreements, the mission would recommend to the IMF Executive Board completion of the second review under the Stand-by Arrangement when it meets to discuss the second review of the SBA at end of May.
"The authorities remain firmly committed to the policies and objectives of their home-grown economic programme, and are keenly aware of the benefits of strong macroeconomic policies in achieving fiscal and debt sustainability.
"Nonetheless, there are still challenges ahead, including the continued weakness in the global economic environment. In these circumstances, continued vigilance and steadfast implementation of the government's policy framework will be critical to establishing the conditions for higher growth, strong employment, and improved living standards," Tsibouris said.
He said that the mission held talks with Prime Minister and Minister of Finance, Dr Denzil Douglas, Premier Joseph Parry of Nevis, as well as officials from the Eastern Caribbean Central Bank (ECCB), and representatives of the private sector.