St. Kitts looks to domestic sources to reduce high public debt
L.K. Hewlett
Editor- SKNVibes.com
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| Prime Minister of St.Kitts & Nevis, Hon. Dr. Denzil Douglas |
BASSETERRE, St. Kitts – IN a statement issued Wednesday April 2nd, the International Monetary Fund (IMF) said that St. Kitts’ public debt was “way too high” and said that the Dr. Denzil Douglas Administration has “turned to domestic sources” to meet its financing needs.
According to the international lending agency, St. Kitts’ public debt stands at “about 185 percent of its gross domestic product”, a situation that creates unfavorable conditions for maneuvering in the event of adverse economic shock.
The IMF report also stated that “tightened external borrowing conditions made it more difficult for the [St. Kitts Government] to borrow on the international market”, a condition that has contributed to the high public debt.
"Sustained fiscal consolidation, backed up with the development of a contingency plan to respond to economic shocks, would help mitigate the risks associated with the high debt stock," the release read.
IMF officials encouraged the St. Kitts government to continue on its efforts aimed towards debt reduction including focusing on expenditure restraint and the inclusion of comprehensive civil service reform which could play a key role in achieving this goal.
“Authorities should seek to explore options for a more rapid debt reduction, including accelerating the pace of asset sales, which could also promote private sector-led growth.”
Directors noted that risk mitigation through enhanced supervision of vulnerable banks was necessary in the financial sector and in reducing the large government exposure.
The Washington-based agency did however commend the St. Kitts federal government for strengthening the country’s economic performance saying that the “medium-term prospects look promising, with a number of high-end foreign investment tourism projects in the pipeline”.
In November 2007 the St. Kitts Federal Cabinet was reported to have debated on legislation authorizing the federal government of St. Kitts and Nevis to borrow some EC$150 million to re-finance existing short term demand debt held with commercial banks. The National debt rose from 178.3 percent of the GDP in 2005 to 180.5 percent of the GDP in 2006 and has continued to rise to the present 185 percent of the GDP.
