Three percent growth projected for 2009
Debt reduction, sustainable development remain high priorities

By VonDez Phipps
Reporter-SKNVibes.com

BASSETERRE, St. Kitts – “IT is clear that we have much to build on as we look to the future but in the current global environment we must pay particular attention to economic expansion in the short-term. In this regard, we are projecting a growth rate of 3.0 percent for 2009, which we expect will be accompanied by a relatively moderate rate of inflation of no more than 2.5 percent.”

This projection was made by the Minister of Finance Hon. Dr. Timothy Harris during the December 16 2009 Federal Budget Address. He said that although the anticipated growth rate is less than last year’s, it is not realistic to project a higher level of growth given the declining rates of growth and recession experienced in the countries with which the nation trades.

Harris explained that the projected level of growth is based on a “very active scenario” in which his government would expedite the processing of private and public sector capital projects under consideration and would commit more resources to growth-enhancing projects through internal re-allocations.

“The re-allocation of resources would be necessary because our public debt is already high and we cannot at this stage of our development incur additional debt to stimulate growth. Our challenge is to keep the economy on a growth path in this very difficult global environment, and at the same time attain sufficiently high primary balances to keep the debt to Gross Domestic Product (GDP) ratio on a downward trajectory.  ~~Adz:Right~~

“Hence, we expect to reduce the public debt from the projected 169 percent of GDP at the end of 2008 to 165 percent of GDP at the end of 2009.  We expect that the primary balance will be increased somewhat from a projected 7.9 percent of GDP to 10.2 percent of GDP.

We would have wished to target a much more substantial reduction in debt for 2009 but this would require a substantial contraction in the Government’s budget at a time when we need to promote growth and economic expansion to mitigate the likely impact of the global crisis on Foreign Direct Investment, on the tourism sector and on manufacturing in particular.”

Dr. Harris said since tourism receipts, manufacturing exports, Foreign Direct Investment and remittances from abroad may be significantly impacted by the global crisis, a reduction in the overall Balance of Payments surplus is expected in 2009.

Harris stressed the need to also focus on the sustainability of growth and development and not only on stimulating the economy in the short-term. He promised that the government would continue to protect the nation’s eco-system and develop alternative sources of energy that are consistent to achieving a cleaner and greener society. 

The Minister of Finance underscored that the government will enhance its democracy “through continued improvement in transparency and accountability, greater participation of our people and of our communities in policy formulation and implementation, and the minimization of political strife and tribalism through continuous bipartisan dialogue and cooperation for the good of our beloved Country”.