Business
IMF predicts economic growth for St Kitts & Nevis in 2014
The International Monetary Fund (IMF) is predicting economic growth as high as three percent for St Kitts-Nevis in 2014.
An IMF mission Friday ended a three-day visit to the twin island federation after conducting reviews of the three-year US$84 million Stand-By Arrangement (SBA) the country has with the Washington-based financial lending institution.
The IMF team, headed by Judith Gold, said that there has been considerable progress under the authorities’ economic reform program and noted that after a four-year contraction of economic activity there were firm signs of a recovery in 2013.
The review indicated that Real Gross Domestic Product (GDP) is estimated to have grown by 1.7 percent with a pickup in tourism and construction, notwithstanding declines in the manufacturing and communications sectors. Employment also showed signs of improvement with the total number of employees up by 10.2 percent and wages increased by 5.1 percent in the first half of 2013. Inflation has remained low at 0.6 percent.
Gold said that despite the challenges associated with the prolonged recession and the debt restructuring, the financial system has remained stable. She also went on to say the recovery in tourism receipts and strong increase in Citizenship by Investment (CBI) application fees contributed to a narrowing of the current account deficit from over 20 percent prior to 2011 to about 11-12 percent in 2012 and 2013.
“The improved current account, together with strong capital inflows has significantly strengthened the external position. International reserves have increased since the start of the SBA from five-months-of-imports to over eight months at end-November 2013.” she said.
Gold also went on to say, “The fiscal position has substantially improved, from a deficit of 7.8 percent of GDP in 2010 to a projected surplus of 8.6 percent in 2013. The stronger fiscal performance reflects policy efforts to contain expenditures, strengthen revenues, including the introduction of the Value Added Tax (VAT), interest cost savings from debt restructuring, as well as substantial CBI inflows”
Gold said the improved fiscal situation allowed for the 13th month wage payment in September 2013 after a nominal wage freeze since 2010. She added, “Consequently, performance under the SBA remains broadly on track. The fiscal targets for end-June and end-September 2013 have been met, although there are delays in the implementation of structural reforms through end-2013.”
