WASHINGTON, DC - “SAVE them in a rainy-day fund” are the words being reiterated by the International Monetary Fund to St. Kitts-Nevis and other countries in the Caribbean involved in the Citizenship By Investment (CBI) programme, as external shocks are possible.
For many years, countries in the region have been urged to curb the spendings from their respective CBI funds, but they have been using the funds as part of their budgetary allocations where there are often shortfalls, as in the case of St. Kitts and Nevis, to fund a number of social programme.
Just recently, SKNVIbes News posed a question to the Acting Director of Western Hemisphere, Nigel Chalk, over the level of spending by governments to up their fledgling economies and a large swat to social programme, to which he noted: “We prefer a system where the CBI revenues are basically saved and some spending is derived to be a stream of income.”
It has been highlighted by numerous economists that the CBI programmes are playing critical roles in the development of small island states in the region. But equally as they are important to the development of members of the OECS, they are volatile under the growing threats from global forces.
According to officials of the former government, Russia is one of the Federation’s major source markets in the CBI programme, and that country's continued unnecessary war with Ukraine has resulted in a number of blacklisting and challenges from the European Union and the United States of America.
Last year, the European Parliament had threatened CBI countries to drop the ‘Golden Passport’ schemes or face visa imposition, prompting leaders from territories offering the programme to find solutions to stave off challenges to their economies from the stringent position.
Following a round table discussion between all regional players and the United States, a six-point plan was agreed to with the intent of bolstering safety and security within the programme.
With volatility in the programme remaining high and countries, including St. Kitts and Nevis, still funding social programmes to the tune of millions of dollars annually, there remains the concern that the economies could collapse.
Against that backdrop and also the growing concern in Basseterre over the level of spending from the proceeds of the CBI programme by successive governments was brought to the IMF, and in a written comment, the Mission Chief noted:
“Our advice is to make prudent use of CBI revenues. Save them in a rainy-day fund so that future spending to mitigate external shocks is derived from a stream of income, rather than from depleting the fiscal buffer.”
But what does this really mean?
“CBI revenues not saved or used for immediate debt reduction can be channeled towards common good projects - such as disaster resilient infrastructure and energy transition - to support climate change adaptation and promote sustainable economic development,” the IMF added in its statement to SKNVibes News.
The IMF further noted: “A high level of transparency and accountability in CBI programs is also essential for their sustainability. For these reasons the IMF welcomed the announcements made on March 6 by ECCU Finance Ministers together with the ECCB on a set of measures taken to boost the integrity of these programs.”
In its March 6 press release following the conclusion of the round talk discussions, six principles were agreed upon:
1. Collective agreement on the treatment of denials: Not to process applications from persons whose applications have been denied in another CBI jurisdiction by proactively sharing information on denials.
2. Interviews: Conduct interviews with applicants, whether virtual or in person.
3. Additional checks: Each jurisdiction will run checks on each application with the Financial Intelligence Unit of its respective country.
4. Audits: Audit the Programme annually or every two years in accordance with internationally accepted standards.
5. Retrieval of passports: Request law enforcement assistance to retrieve revoked/recalled passports.
6. Treatment of Russians and Belarusians: Suspend processing applications from Russians and Belarusians. Four jurisdictions have already suspended applications, and Grenada, which processes applications from Russians and Belarusians with enhanced due diligence, will suspend processing new applications from Russia and Belarus from March 31, 2023.
