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IMF predicts economic growth for St Kitts & Nevis in 2014
Furthermore, she said, “Growth in 2014 is expected to accelerate to 2.5 to three percent, with the continued recovery in tourism, supported by an increase in air lift capacity, and ongoing construction activity fuelled by CBI related inflows and other Foreign Direct Investment (FDI) projects.”
Gold said over the medium-term, the economy is expected to continue to recover and reach its potential growth rate of about three to 3.5 percent. She stated, “After being subdued in 2013 and 2014, inflation is expected to pick up slightly, mirroring the recovery of domestic demand. The external position is projected to remain strong bolstered by tourism receipts, CBI inflows and other FDI.”
She went on to add, “Continued fiscal discipline will be needed over the medium-term to achieve the authorities’ public debt target of 60 percent of GDP by 2020. While CBI receipts could support a more expansionary fiscal stance, relying on these windfall flows for recurrent spending could lead to an unsustainable fiscal position in the future.”
However, Gold said, instead, the inflows provide a unique opportunity to build fiscal buffers, including to provide for humanitarian assistance and reconstruction after natural disasters, increase public investment in infrastructure stabilize the economy during downturns, and repay expensive debt. She added, “Moreover, careful management is needed to sustain the inflows, ensure that they contribute to increasing productive capacity and that they do not undermine the “St Kitts and Nevis brand.”
Gold pointed out that the IMF and the St Kitts-Nevis government have reached staff-level agreement on the quantitative targets and on policies for the completion of the seventh and eighth review under the SBA, noting that discussions and understandings centered on policies to safeguard achievements so far and continue with the fiscal reform efforts.
“To support this goal while boosting fiscal space for social and development spending, the authorities will continue to contain expenditures, including limiting new contingent liabilities, strengthening public financial management, and improving the oversight of government enterprises,” she said.
“The government will also continue with reforms to strengthen tax administration, strengthening audit and enforcement process, and containing tax exemptions. The government also is committed to complete the debt restructuring,” she added.
Source: Caribbean360
