1. Mr. Speaker, I beg leave to move the second reading of the Bill shortly entitled The Appropriation (2019) Bill, 2018.
INTRODUCTION
2. Mr. Speaker, we have created a momentum for sustaining growth and prosperity. The year 2018 has been a momentous year during which our young Nation marked 35 years of independence and we can confidently declare the many blessings that God has bestowed on our country. Reflecting on our independence brings with it a feeling of pride especially when we pause to consider the achievements we have made over the past 35 years and contemplate the potential for attaining higher heights in terms of the economic and social development of this beautiful twin island Federation. My Team Unity Administration is particularly proud to reflect on the record achievements since taking the reins of Government in February 2015. The impact of the various policy initiatives, programmes and projects of this Administration has been far-reaching and is being felt throughout our communities. We have delivered solutions in many areas to improve the lives of our people. We have delivered solutions in education, health care, housing, water and sanitation, roads and other public infrastructure. No investment in our people is too great. Accordingly, we will continue to invest in these areas in order to achieve our goal of sustainable and inclusive development and our vision for a shared prosperity for all citizens.
3. The 2019 Budget is therefore being presented under the theme “Sustaining Growth and Prosperity”. This theme is rooted in my Government’s determination to deliver on the mandates given by the people. The achievements of my Administration are well known to our citizens and residents and many across the region who continue to marvel at the progress we have made to date. While I would not attempt to recall all of our achievements here, Mr. Speaker, permit me to remind the public of two of our major achievements namely, the gratuitous payment of $16 million to former sugar workers and the removal of VAT from all food and funeral expenses. We are determined to take action where possible to move our society closer to one that reflects greater equity across the population. As we continue to implement our prosperity agenda, we will continue to do all that is possible to ensure a fair share for all citizens.
4. Mr. Speaker, we have demonstrated a clear commitment to fulfilling every promise we made to the citizens of our country. We have introduced a pragmatic approach to Government business and have been forthright and honest about what we can do and what we will do. Consequently, during my last budget presentation, my Administration gave a commitment to the Government Auxiliary Employees who since 2008 lost the benefit of the payment of their holiday pay at the end of each year. We promised to restore this payment if the Government had not been successful in setting up the new Contributory Pension Scheme by December 2018. In the spirit of fairness and in keeping with our promise, all Government Auxiliary Employees would be paid holiday pay this December, for the first time in ten years. A Promise Made! A Promise Kept! Over the past twelve months, we have made good progress with our efforts to establish the Contributory Pension Scheme. Early in 2019, we hope to receive the final report from the actuary who has been contracted to assess and make recommendations, that would be critical to the final design of the new Contributory Pension Scheme. The long awaited Pension Scheme would therefore be fully implemented in 2019, relieving the anxiety of numerous Government employees. This Pension Scheme would provide sustained financial security to our workers after their retirement. As a people centered Government we would have it no other way.
5. Mr. Speaker, it gives me great pleasure to report that in June of this year, we successfully launched the Government Employees Mortgage Scheme where the Government has invested $30.0 million for the purpose of funding mortgages for employees of the Government of St. Kitts and Nevis. This Mortgage Scheme is being implemented via the Development Bank of St. Kitts and Nevis. Government Employees accessing this Facility can benefit from a mortgage loan valued up to $300,000 in the case of a single applicant, at five percent on the reducing balance for up to thirty years. Where there is a joint application, the borrowers can access a mortgage loan up to $450,000.
The Mortgage Scheme has supported qualifying Government employees with the purchase and/or construction of a first home or refurbishment of their primary residence. We continue to be a Government of solutions – improving the quality of life for all of our citizens. In addition, our housing solutions include 450 households assisted through the HELP of the National Housing Corporation (NHC), under the Hurricane Repair Housing Assistance Programme 2,034 households, under the FIRST 430 households, FREESH 80, under GRASP 30, and NHC 223 between the years 2015 to 2018. Over 3000 families have benefitted in some way by our Team Unity most expansive housing programme in history.
6. Mr. Speaker, we heard the concerns of our farmers and fishers after the passage of two category 5 hurricanes in 2017. We note that the damage sustained threatened the recent improvements in output of the Agriculture Sector. In response, we pledged to bring relief to the farmers and fishers in ways that would help to increase the contribution of Agriculture to economic growth. Here again, we made a commitment and we have fulfilled this commitment. In this regard, we established the Agriculture Support Fund in collaboration with the Development Bank to provide both grant and loan financing. I am elated to update this Honourable House that our deserving farmers and fishers have been accessing these grant and loan resources to replenish their stock, purchase inputs and fishing gear, replace livestock, repair and construct new shade houses and other infrastructure, and purchase implements for land preparation. On the 6 December 2018, the Honourable Minister of Agriculture and I participated in a grand handing over ceremony at which 230 farmers and fishers received cheques totalling in aggregate $1.0 million in grant support. We are not only interested in ensuring that farmers and fishers return to prior levels of operation but are providing a means that would enable them to achieve more, to produce more and contribute more to the economy and food security for our people.
7. Mr. Speaker, it is clear that our actions are all geared towards building momentum in delivering on the mandates given by our people and by so doing we are also building momentum in moving our country to a higher level of growth and prosperity. Members of this Honourable House and indeed the public would remember that in my last Budget presentation, I spoke passionately about one of Team Unity’s primary missions, that is, to arrest poverty in all its forms in all our communities. This is the underlying impetus for my Team Unity Government’s emphasis on strengthening the social safety net and protection system. We have determined to reduce the number of our families falling through the cracks and succumbing to poverty. We have also determined that there should be more equity in the distribution of our Nation’s wealth. In this regard, my Team Unity Administration is delivering on its commitment to implement the Poverty Alleviation Programme which will provide support for households with a gross income below $3,000 per month.
8. Mr. Speaker, we thank God for the inspiration he gives us to manage the affairs of this country and to develop policies and programmes that are fit for purpose and effectively empower our people. The policies implemented over the last three (3) years are undoubtedly yielding positive results. We are building an economy with very strong fundamentals – low debt, low inflation, job creation, and fiscal surpluses. The efforts of the Government must be supported by the Private Sector to achieve the desired level of growth in the economy, to secure full employment and sustained development. The contribution of the Private Sector therefore would continue to be an essential building block for accelerating economic growth and expanding prosperity beyond the levels already attained. Our Private Sector partners must then take advantage of the myriad of opportunities for innovation and enlargement. We are optimistic that the Private Sector would seize these opportunities and contribute even more to the growth and prosperity agenda. We will continue to be creative and implement initiatives which would bring sustained economic growth as well as hope and prosperity to our people. To date, our various policies, initiatives, programmes and projects have made a positive difference in the lives of our people and can be felt throughout our communities.
9. I now take a brief look at the most recent international and regional economic developments.
INTERNATIONAL AND REGIONAL ECONOMIC DEVELOPMENTS
10. Mr. Speaker, the expansion of economic activity in the global economy continues to be steady. The International Monetary Fund (IMF) in the latest edition of the World Economic Outlook (WEO) reported that global growth is projected to expand by 3.7% for 2018 and 2019. The risks to growth in the global economy skew to the downside in an environment of policy uncertainty in regard to escalating trade tensions and the potential shift away from a multilateral, rules-based trading system. Increased risks also exist due to the possibility that the accommodating global financial conditions could tighten sharply as a result of more aggressive monetary policy tightening in advanced economies. All of these factors have the potential to affect growth as a consequence of their impact on tourism, trade and other inflows.
11. The advanced economies are projected to record an increase in economic activity expanding by 2.4% in 2018. Economic activity in the United States is projected to expand by 2.9% in 2018, a steady expansion of 0.7 percentage points when compared to 2017, while economic output in the Euro area and the United Kingdom is projected to slow to 2.0% and 1.4% respectively.
12. On the regional scene, the economies in the Eastern Caribbean Currency Union (ECCU) recorded a slowdown in Gross Value Added to 1.3% in 2017 when compared to 2.7% in 2016. This can be attributed primarily to a decline 10.0% in the Agriculture, Livestock and Forestry Sector when compared to a contraction of 0.7% in 2016 as crop production continued to be constrained among member states as a result of adverse weather events. The effect of this contraction was stymied by expansions in value added in the Construction Sector by 12.3%; the Mining and Quarrying Sector by 9.7% and; the Transport, Storage and Communications Sector by 3.7%. Growth within the member countries of the Organisation of Eastern Caribbean States (OECS) in 2017 ranged from a contraction of 10.5% to an expansion of 4.7%. Preliminary data for January to June 2018 has indicated that economic activity within the ECCU expanded by 3.3%.
13. I will now give attention to the Domestic Economy.
THE DOMESTIC ECONOMY
Output and Prices
14. Mr. Speaker, during 2017 the economy of St. Kitts and Nevis continued to demonstrate resilience amidst prevailing downside risks in the international and regional economic environment. Gross Domestic Product (GDP) in the Federation increased by 2.1% which is on par with the growth rate of 2.3% recorded by the advanced economies. This outturn also surpassed the economic output of the ECCU of 1.3% for the same period. The growth in the local economy was underpinned by expansions of 11.4% in the Agriculture Sector; 6.0% in the Transport, Storage and Communication Sector; and 4.7% in the Construction Sector. The growth trend in the economy continued in 2018 resulting in a positive outturn during the first half of the year. I am advised that the growth we are currently witnessing is attributed mainly to activities in the Tourism Sector which grew by 8.5%.
15. The Manufacturing Sector also rebounded during the first six (6) months of 2018 recording an expansion in economic activity of 3.7% after declining by 10.0% during the same period in 2017. This upturn in the Sector is influenced by an increase in the production of electronic components of 5.0%. The Agriculture Sector also contributed positively to the overall performance of the economy by recording a 5.0% increase in output, in line with very good growth performance of the Livestock and Fishing Subsectors which recorded increases in output of 11.3% and 9.7%% respectively. The Real Estate, Renting and Business Activities Sector expanded by 2.7% while the Wholesale and Retail; and Financial Intermediation Sectors expanded by 1.0% respectively.
16. The average rate of inflation as measured by the Consumer Price Index (CPI) deflated by 0.6% in the first half of 2018 in line with the deceleration in prices in the Non-food and Services Indices of 1.6% and 1.2% respectively. Price levels in the Food and Beverages Index however, increased by 2.6% over the period under review as a result of the steady increase in international food prices. My Administration will continue to monitor this situation and work to improve food security in the Federation so that we could limit the negative impacts of these international trends.
The External Account
17. Mr. Speaker, I turn my attention now to the External Sector Accounts – a statistic that measures the transactions and flows of capital between the Federation of St. Kitts and Nevis and the rest of the world. In 2017, the Current Account deficit improved by 28.3% to $233.3 million or 8.9% of GDP at market prices. This improvement is mainly attributed to the decline in the net import of goods by 8.2% to $768.8 million or 29.3% of GDP. The Services Account surplus increased by 4.5% to $755.9 million or 28.8% of GDP primarily as a result of an increase of 9.2% in net tourism receipts. The receipt of capital transfers on the Capital Account is estimated to have increased by 3.5% to $91.7 million. These inflows have led to an improvement in the Balance of Payments position for the Federation in 2017.
Performance Review 2017 Fiscal Operations
18. Mr. Speaker, as the Team Unity Administration continued to build on its past achievements, we have made strides in the proper management of the public finances. You would be aware that, in my capacity as Minister of Finance, I have dutifully kept the public informed of the results of the Government’s fiscal operations which have consistently reflected surpluses for the three main fiscal indicators. For instance, for the 2017 fiscal year, a surplus of $88.2 million was realized on the Recurrent Account, a surplus of $62.8 million was recorded for the Overall Balance and the Primary Balance reflected a surplus of $86.0 million.
19. For 2017, Recurrent Revenue totalled $622.8 million. Of the total amount received for Recurrent Revenue, $401.5 million was derived from taxes while $221.3 million was generated from Non-Tax Revenue. The largest tax category was Taxes on International Trade and Transactions which represented 42.9% of Tax Revenue while inflows from the Citizenship by Investment (CBI) Programme was the most significant component of NonTax Revenue contributing 67.5%.
20. Turning to Expenditure, Recurrent Expenditure for 2017 amounted to $534.5 million. This was $25.3 million or 5.0% over the approved Estimates as Transfers exceeded the budgeted amount by $33.8 million or 25.4%. The overage was on account of the Team Unity’s continued financial support of the fiscal operations of the Nevis Island Administration and some of our State Owned Enterprises. In addition, Personal Emoluments, Wages and Allowances surpassed the budget by $8.8 million or 4.0% mainly due to the bonus salary that was paid to Civil Servants in December 2017. These overages were offset by savings on expenditure for Goods and Services and Interest Payments which were less than the budget by 11.8% and 6.7% respectively.
21. Mr. Speaker, regarding our Public Sector Investment Programme, $62.0 million was spent in 2017 on various capital projects with approximately 88.4% of what was expended being financed from the Government’s revenue. The remaining 11.6% of total Capital Expenditure was funded from Development Aid, mainly from the Republic of China (Taiwan), the Sugar Industry Diversification Foundation (SIDF), the Eastern Caribbean Telecommunications Authority (ECTEL) and the Whitegate Development Corporation. Progress was made on a number of projects including the Upgrade of Sporting Facilities, Road Improvements, the Safety and Security Improvement Programme and the Construction of the National Heroes Park.
22. Capital Grants of $18.6 million were received in 2017 to support activities such as the Cayon and Tabernacle Field Lighting Project, the Rehabilitation of the Old Road Fisheries Complex, Renovation of an Outreach Centre and the Construction of the brand new Tabernacle Health Centre. Budgetary Grants were also received, mainly from the SIDF, for budgetary support. I take this opportunity to express our appreciation and thank all of our development partners for their contributions and continued support over the years.
MEETING THE CHALLENGE OF SUSTAINING GROWTH AND PROSPERITY
ECONOMIC EXPANSION
Construction
23. Mr. Speaker, my Team Unity Government continues to champion investments in sound and resilient infrastructure to facilitate economic growth and development. As a result, in 2017 the Construction Sector contributed 18.3% to GDP, an increase of 0.5 percentage points when compared to 2016. In 2017, the Sector grew by 4.7% and this growth momentum is projected to continue with an expansion by 3.2% in 2018 and 9.9% in 2019. The projection for a strong medium term performance is indicative of increased momentum in the progression of construction activity in the Federation. Success here would depend on continued Private Sector investments and completion of the ongoing work on major development projects in the hotel industry which are all at an advanced stage of development. Likewise, the Public Sector is also playing a significant role in the performance of the Sector with the commencement of high impact investments. These include the Upgrade of the Island Main Road, the Construction of the Second Cruise Pier and the construction of the East Bus Terminal, as well as the continued expansion of the Housing Sector through the activities of the National Housing Corporation (NHC) and the Development Bank of St. Kitts and Nevis.
24. Mr. Speaker, please allow me to say a little more about the Upgrade of the Island Main Road Project because it is to my mind a special Project that gives particular emphasis to my Administration’s approach to inclusive growth and prosperity. The main purpose for pursuing this Project is well established. It is to provide a safe and resilient main carriageway for both pedestrian and vehicular traffic while ensuring adequate drainage to reduce the possibility of flooding and road degradation. Phase I of the works undertaken in 2018 commenced in March with a focus on the resurfacing and realignment of the road network and the construction of sidewalks extending east from the Robert L. Bradshaw International Airport round-about to Keys Village and extending west from the Camps round-about to Challengers. For the first time, local contractors are engaged to provide significant input into road construction works of this magnitude. A total of five (5) local construction companies have been awarded contracts to construct drains and sidewalks. This approach has fulfilled a promise of this Team Unity Government to empower our local businesses to be key players in the advancement of the national development agenda. A competitive tendering process was undertaken to select the contractor for the resurfacing of the road, and to this end, Surrey Paving and Aggregate Company Limited submitted the most economically advantageous tender. As at November 2018, approximately $15.0 million had been expended and work was substantially complete. Citizens are already praising the efficiency and the quality of the work being undertaken. This Phase is on schedule to be completed by the end of this year, after which the second Phase of construction of the remainder of the road will begin.
25. In keeping with another promise of this Administration to provide an appropriate facility for the passengers and operators on the eastern bus route, our local experts within the Public Works Department were assigned the responsibility of designing the East Bus Terminal. In order to facilitate the construction phase of the initiative, the Vehicle Maintenance Section of the Public Works Department was relocated to the former St. Kitts Sugar Manufacturing Corporation compound at Kittstodart. Construction of the bus terminal commenced in earnest in June of this year under contractual arrangements with a small local construction business. As at November, an estimated $3.5 million had been expended to facilitate the construction of a two (2) lane bus terminal, vendor booths to accommodate a number of small businesses and other amenities for the patrons of the facility. The construction works on Phase I of the Terminal have been completed and yesterday afternoon we had the distinct pleasure in participating in the official opening. Another promise delivered.
26. Mr. Speaker, we all have to admit that a lot of positive things are happening here in the Federation. As promised, this Team Unity Government commenced the construction of the second cruise pier in May of this year with the breaking of the seabed rock at Port Zante. The Project is scheduled to take eighteen (18) months for completion of construction works. Since initiating construction, the Project has advanced at a good pace with Phase I, which involved dredging of the site, being completed in June. The Project has since successfully moved to Phase II which includes the driving of construction piles. Given the intricacy and expertise needed for this process, American Bridge, an American based company that is renowned worldwide for the development of this type of infrastructure, was contracted to perform the task. A significant number of piles have already been erected and work is progressing on schedule. In addition, work has commenced to facilitate the joining of the new pier to Port Zante with the clearing of the designated area. In keeping with our efforts to ensure local technicians are involved in the development process, approximately fifty (50) of our nationals are currently employed on this Project with the potential for an additional fifty (50) persons to obtain employment as the work progresses.
27. The Construction Sector is also being bolstered by investments being made by the St. Christopher Air and Sea Ports Authority (SCASPA). In August of this year, work commenced on the resurfacing of the main runway at the Robert L. Bradshaw (RLB) International Airport. This important project is scheduled for completion by the end of this year. SCASPA is also investing in the resurfacing of the Taxi Ways and Apron. These initiatives would be implemented at a cost of approximately $34.0 million. The completion of this work would greatly improve operations at the RLB International Airport which in turn would help to build momentum for the expansion in airlift thus contributing to positive gains in terms of economic growth. It is our expectation that these and other projects of our Administration would contribute significantly to sustaining growth and prosperity in our Federation.
Agriculture
28. Mr. Speaker, international experts have already confirmed that global warming is a key contributor to the decline in agriculture production experienced in several economies across the globe. In our Federation, recent data from our MET office for the past few years has shown that we have experienced below average rainfall, long dry seasons and high night time temperatures. These factors have presented challenges which have resulted in mixed results within the Sector. We count it a blessing when, in spite of adverse weather conditions in 2017, the Sector showed resilience and recorded an increase of 11.4%. Had it not been for the hurricanes, the growth would have been higher. This expansion was primarily as a result of increased output within the Crops and Fishing Subsectors which recorded growth rates of 25.1% and 31.1% respectively.
29. It is against this backdrop that my Government approached the Republic of China (Taiwan) to develop a mechanism to mitigate the effects of climate change on agriculture production. An initial assessment of the Sector’s vulnerability revealed the core problem as the lack of capacity to respond and adapt to early warning information on climate variability. Three (3) recommendations were made to increase the resilience of the agricultural system: (i) establish a data collection mechanism for early warnings; (ii) develop and/or introduce crop disaster mitigation and prevention techniques; and (iii) increase the availability of agricultural information. In 2019, we will begin work to address these three (3) programmatic areas to link agricultural activity with weather data, and provide crop and livestock farmers with early warnings of weather variations. The information and data derived from the mechanisms established will enable farmers to immediately receive technical information and recommendations to facilitate adjustments to their cultivation models. It is envisaged that improved information would also help to reduce damage and losses in the Agriculture Sector over time.
30. Mr. Speaker, in our continued efforts to combat the effects of climate change in the Sector, the Ministry of Agriculture et. al. created twenty-three (23) maps in 2017 that specifically pinpoint the ideal locations where crops can be produced. Building on this foundation, in 2018, a grid using data from the Geographical Information System was created and technical officers are now sampling the soil in nine (9) parishes on St Kitts and five (5) on Nevis. The analysis is being conducted by the St. Kitts and Nevis Bureau of Standards and the Needsmust Laboratories. Field trials have already commenced to determine which crops will grow best in the different locations on both islands. Nevis has already established one sweet pepper trial at the Prospect Field Station while the technicians on St. Kitts have selected carrots and tomato. Preparations are being made to establish three (3) experimental areas at the Department of Agriculture Field Station at La Guerite, the Caribbean Agricultural Research and Development Institute Field Station in Mansion and the Tabernacle Outreach Centre to test the cultivation of carrots.
31. My Government is cognisant of the fact that if we are to excel in agriculture production, we must change how it is viewed among our people particularly the very young. Consequently, in 2017, the Ministry of Agriculture et. al. and the Ministry of Education undertook a consultative process to develop an Agriculture Science syllabus geared towards inculcating an interest, among young persons at the primary school level in a career in agriculture. The aim of this course of learning is to create a new cadre of farmers that will take the Sector forward, increase agricultural contribution to GDP and enhance our food security. The new curriculum was piloted in four schools namely: Beach Allen, Joshua Obadiah Williams, Saddlers and St. Pauls Primary Schools during the period January to July 2018. The Programme was a success and the new curriculum was fully included in the timetables for these schools for the 2018/2019 school year for grades two to six. Mr. Speaker, this Administration thinks of the long term impact of our decisions, not merely along a five year time line. We are committed to sustaining growth and prosperity in our Federation. In fact, we want to create a framework to ensure that this objective in relation to food security is achieved and, in this regard, we wish to foster more effective teaching of Agriculture and Agriculture Science in our schools.
Tourism
32. Mr. Speaker, the strategies are being implemented by this Team Unity Government to improve our tourism infrastructure, product development and marketing, are yielding positive results. The resources invested in the development of the Sector have not gone
unnoticed by our colleagues in the industry, both regionally and internationally, as evidenced by the accolades that continue to be bestowed upon the destination. During 2018, a number of reputable media publications including the Robb Report, Caribbean Journal, and Conde Nast Traveler acknowledged St. Kitts and Nevis as a destination with natural appeal ideal for a getaway. Most notable is the recognition of St. Kitts on the 2018 Bloomberg list of twenty-two (22) highly recommended luxurious getaways, the only Caribbean island to receive that distinction.
33. Additionally, last December, the Caribbean Tourism Organisation (CTO) recognised St. Kitts and Nevis as a destination with outstanding achievements in Tourism. The Federation distinguished itself by the CTO’s top prize – the Excellence in Sustainable Tourism Award. To be celebrated by our Caribbean colleagues is a distinct honour which will help to boost our image and reputation as a leader in holistic destination management. Following this achievement, the St. Kitts Tourism Authority’s website was recognized by Travel Weekly in September of this year receiving the coveted Magellan Award and was the only Gold Award winner in its category for 2018. The website, which was launched in 2017, features a mobile-first design, and presents a userfriendly virtual experience of what potential visitors can expect when they follow their heart to our shores. As one of the smallest destinations worldwide, capturing such an award is indeed a remarkable accomplishment. Our efforts to expand and market our airlift have also garnered recognition from the fraternity of decision makers in the airline industry. In February, St. Kitts became the proud recipient of the ‘Highly Commended Award’ in the Destination category of the Routes Americas 2018 Marketing Awards by the votes of Airline Network Planners for the Americas region. The annual Routes Marketing Awards recognise excellence in airport and destination marketing. It is considered the most prestigious award in the aviation industry. I use this opportunity to commend the Ministry of Tourism, the St. Kitts Tourism Authority, SCASPA, Ministry of Aviation and our industry partners in the Private Sector for their commitment to excellence in the Sector.
34. Mr. Speaker, our marketing strategies and strong business relationships developed over time with several airlines have translated into an expansion in stay-over arrivals by 15.6% during the first half of 2018 when compared to the same period in 2017. An increase of 16.5% was also recorded for stay-over arrivals from North America which is our largest source market. This improved outturn can be attributed to the expanded airlift capacity provided by Delta Airlines during the 2017/2018 peak season with the addition of nonstop service to St. Kitts from John F. Kennedy (JFK) International Airport on Saturdays and a second weekly non-stop flight from its Atlanta hub. For the first time in the island’s history, Air Canada will serve St. Kitts for a full six (6) months for the upcoming peak season accommodating an additional six (6) weeks of service compared to the previous arrangement. United Airlines will also increase its flight offerings with a second weekly non-stop flight from its New York hub to St. Kitts on Wednesdays during the period 9 January to 6 March 2019. In addition, we are pleased to welcome Sun Country Airlines which is based in Minneapolis as it commences operations of a non-stop service from the Upper Midwestern region of the United States to St. Kitts. This service will operate once per week on Saturdays commencing on 22 December 2018 and concluding on 20 April 2019.
35. The Cruise Sector remains buoyant recording an increase in cruise ship calls of 35.7% during the peak period of October 2017 to June 2018 when compared to the corresponding period of October 2016 to June 2017. The actual number of cruise ship calls increased from 358 to 486 calls. In July of this year, St. Kitts and Nevis stood tall when our captivating destination achieved a historic milestone of welcoming our one millionth cruise visitor to our shores. This achievement has gained the Federation the coveted international status of being designated as a marquee port. The profile of the Federation has changed as we are now placed in the same elite port category as much larger destinations in the region and across the world. Now that our port has attained the marquee status, it is vital that we remain competitive and that is why we need to complete our investment in upgrading our port facilities and other tourism related amenities. Our strong relationship within the cruise industry and continued partnership with key stakeholders in the Private Sector continue to pay dividends and have placed us on the path to become the best cruise destination in the region.
36. Mr. Speaker, the Yachting Sector also continues to gain momentum which is evidenced by the good performance recorded over the last year. The Christophe Harbour marina alone recorded over 5,000 overnight stays in the marina, an increase of 20.0% in the average length of stay and the arrival of the largest yacht to date, the M/Y Limitless. Christophe Harbour continues to be a major partner as we keep on working diligently to attract increased interest in our destination as a yachting port of call. The Yachting Sector remains a source of relatively untapped potential for socio-economic growth and development, with a myriad of opportunities for the launch of new careers in service businesses and industries.
37. Increased investor confidence in our stable economy, a platinum Citizenship by Investment Programme and a world-class tourism product have resulted in an increased number of hotel and condominium developers showing keen interest and establishing properties in St. Kitts and Nevis. The Ritz Carlton has chosen to expand its brand in the region to the shores of St. Kitts on the lush South-East Peninsula with a one hundred and twenty-five (125) suite resort which will include twenty-five (25) branded villas and residences, a luxury spa, swimming pools and, in-door and out-door dining facilities. It is expected to generate significant employment during the construction phase. Upon completion, there will be opportunities for permanent employment as well as individuals and businesses providing ancillary goods and services. The new developments will serve to complement the expanding room stock which will be provided by more advanced investments such as the Ramada Hotel, Koi Resort, the Kings Pavilion Hotel located in the heart of Basseterre and the Royal Mist Hotel in Sea View Gardens. The successful completion of these projects would ensure that the destination is ready to welcome the increased number of stay-over visitors as we continue to expand our airlift and marketing campaigns.
38. Our people will remain the most vital element in the development of the tourism industry as we rely on their skills, charm, ideas and efforts to gain momentum in building a more sustainable and competitive tourism industry. As such, we continue to promote training and certification of all persons who are responsible for the delivery of services in the industry. To this end, a series of training workshops in customer service delivery were held throughout the year for all front-line workers, from the traditional services such as taxi operators to the non-traditional such as primate-petting and aloe-rub vendors. Mr. Speaker, it is clear that my Administration is taking a holistic approach to the development of the Tourism Sector. We believe that our Team Unity approach is the best option for building momentum in expanding our country’s share in a globally competitive tourism market. This Team Unity Administration will continue to improve our tourism product so that our people can continue to enjoy the fruits of this endeavour.
Information Communication Technology (ICT)
39. Mr. Speaker, my Team Unity Government believes that innovations in the area of Information and Communication Technology (ICT) can help to build momentum in achieving our growth and prosperity agenda. ICT can enhance efficiency, effectiveness, competitiveness and transparency within the Public and Private Sectors. It is against this backdrop that the Government, in March of this year, took the bold move by becoming the first country in the Caribbean to have its own Autonomous System Number. This is a unique identifier on the global internet assigned by the American Registry for Internet Numbers that enables the identification of a computer network and the exchange of data between the various networks worldwide. The designation of the Autonomous System Number resolves the need for the Government to connect to the internet utilising a number assigned by a commercial internet service provider. This is an important step forward as we strive to establish our Government Wide Area Network (GWAN). It would help tremendously in building resilience and independence into the GWAN and can facilitate alternative international connectivity in the event that there are interruptions to the traditional connections to the outside world.
40. Mr. Speaker, it is the objective of my Team Unity Government to promote the use and development of ICT solutions to enable the people of St. Kitts and Nevis to unlock and achieve their potential. In February of this year, we re-launched the National ICT Centre at the C. A. Paul Southwell Industrial Park which now includes a Technology Innovation Hub. The Hub is designed as a vehicle to assist with the development of the creative skills of our citizens and residents in the ever evolving field of information technology. In addition, the Centre has now been re-authorized as a Pearson Vue Test Centre, which provides nationals and residents with computer-based testing facilities for several internationally recognized certification examinations from vendors such as Microsoft, CISCO and CompTIA. For some time, these examinations were only accessible by our residents through travel to other jurisdictions at significant cost to the perspective candidates. The re-authorisation now provides a more economical avenue to acquire these highly marketable qualifications. Moreover, we believe that in order to sustain growth and prosperity, we must invest more in ICT.
41. Notably, the most recent ICT Development Index compiled in 2017 ranked St. Kitts and Nevis 37th among one hundred and seventy-six (176) countries, placing the Federation second in the Caribbean, second to Barbados which ranked 34th. This performance can be attributed to the continued investment in modern infrastructure and growth in the penetration of ICTs in public and private enterprise. In the Public Sector, our continued investment and integration of ICTs underscores an important factor in our plans to modernize Government operations and service delivery to the public.
42. The Republic of China (Taiwan), a longstanding development partner, has agreed to support two (2) very important ICT driven initiatives in partnership with the Government. The improved Hospital Information System was handed over to my Government in December 2017 and is expected to be fully implemented by the end of 2018. The project aims to establish digitalized medical record storage at the Joseph N France General Hospital in St. Kitts and the Alexandra Hospital in Nevis with provisions being made to facilitate the issuance of medical ID cards to patients. The updated system allows for real time updates, remote access by doctors and is designed with a high level of security to protect patients’ confidential information. Complimentary efforts are ongoing to have all of our health centres fully computerized. Similarly, an agreement was signed in July of this year for the implementation of a dedicated Land Administration Information System at a cost of approximately US$2.0 million. The digitisation of land documents such as Certificates of Title will enable persons to conduct business more efficiently and effectively with the Land Registry. The System will facilitate e-filing and online searches and it will also be designed with enhanced security features to enable safe storage and retrieval of information. The development of such a System is an important part of the Government’s commitment to improving how we do business in the Federation. This will also help the Federation to improve its ranking in the World Bank’s Doing Business Index.
Micro, Small and Medium Sized Enterprise Development
43. Mr. Speaker, with an aim to increase economic growth and improve the socio-economic conditions in the country, my Government continues to painstakingly work to empower more of our citizens to establish and sustain micro, small and medium sized enterprises. To advance this goal, the Ministry of International Trade, Industry, and Commerce launched its new interactive website and continues to facilitate the creation of new enterprises and the expansion of existing businesses. In this regard, the National Entrepreneurial Development Division has now transitioned into the Small Business Development Centre St. Kitts (SBDC St. Kitts) following its official launch in November of this year. The Centre will provide valuable network support, management, and technical assistance through extensive one–on–one long-term professional business advice, training, and other specialized interventions. The Small Business Development Centre is also the avenue through which the Ministry of Youth, Sports and Culture has sought to restructure and implement its ongoing Youth Entrepreneurship Programme. The initiative seeks to facilitate the mentoring of approximately twenty-five (25) young prospective business owners. An incubation phase is being proposed for a thirty (30) month duration after which the business ventures should be ready for operation in the regular business environment. It is also envisioned that this Programme will provide the motivation for non-registered youth operated businesses to become formalized under this structured support system.
SUSTAINING GROWTH AND PROSPERITY
Challenges and Opportunities
44. Mr. Speaker, since taking office we have implemented a mix of domestic policies with the objective of improving the lives of our people. We have made special efforts to improve the lives of the most vulnerable of our population. We will continue to put our people first and ensure that every citizen and resident experience an improved quality of life that is sustainable. As we seek to operationalize our plans, we are prepared to confront the numerous challenges to raising growth levels and increasing wealth and prosperity for all. We recognize that these challenges demand the concerted efforts of the Public and Private Sectors to do more to consolidate our past efforts that are bearing fruit. Moreover, these Sectors should unite to tackle emerging challenges in a more proactive way. In order to sustain growth and prosperity, we must evaluate and improve our current business models, financial regulatory framework, our ICT infrastructure and capabilities, and rise to the challenges of the ever increasing threats of climate change.
45. Mr. Speaker, the Paris Agreement, to which St. Kitts and Nevis is a signatory, has the central aim to strengthen the global response to the threat of climate change by keeping global temperature rise well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit temperature increase even further to 1.5 degrees Celsius. The latest Report by the United Nations Intergovernmental Panel on Climate Change revealed that human activities are estimated to have caused an increase of approximately 1.0 degree Celsius of global warming above pre-industrial levels. Given this trajectory, the targets established in the Paris Agreement will not be attainable by 2030, resulting in a global temperature rise above 1.5 degrees Celsius. This increase can be damaging to communities, economies and ecosystems across the world with the most severe impacts being experienced by Small Island Developing States (SIDS) such as St. Kitts and Nevis, which do not contribute significantly to climate change. For this reason, we must make significant strides towards transforming St. Kitts and Nevis into a climate resilient state. In 2019, our main focus would be to build resilience in the Agriculture, Transportation, Energy and Water Sectors.
46. Mr. Speaker, the Financial Services Sector continues to be a mainstay in the national economy and represents an important pillar in the development agenda of my Team Unity Administration. We know that the Sector is impacted by relentless requirements for change and shifting goal posts in terms of the international standards to be met. We consider the Sector as a viable area to generate lucrative economic activity. Based on the developing trends in the world of finance, the development of Fintech is widely viewed as the solution to many of the challenges currently being encountered in the Financial Services Sector. In St. Kitts and Nevis, we need to adapt quickly in order to capitalise on the opportunities to revitalize the Financial Services Sector so that our economy and citizens may benefit from the transformational developments that are rapidly unfolding internationally.
47. Across the Caribbean region, banking institutions continue to deal with the threat of derisking and the withdrawal of correspondent banking relationships and our financial architecture needs to be better equipped to assimilate Fintech innovations such as block chain technology, crypto currencies and other technology based financial services and solutions. My Team Unity Government recognizes the integration of Fintech as a possible alternative solution to address some of the challenges being encountered in the Financial Services Sector. We believe that St. Kitts and Nevis must make the right decisions at this critical juncture to avoid being left behind. The Government will therefore intensify its efforts to create an enabling environment for the development of financial technology to support innovation in financial services and the introduction of new and innovative products. This will be done in line with international standards.
48. Mr. Speaker, while we push ahead with the reform agenda set for the enhancement of the Financial Services Sector we are also ensuring that St. Kitts and Nevis remains a responsible jurisdiction that stays engaged with the relevant major regional and international financial services regulatory bodies. That being so, the Financial Services Regulatory Commission (FSRC) continues to prepare for the Caribbean Financial Action Task Force’s Fourth Round of Mutual Evaluations. St. Kitts and Nevis would be subjected to this very robust evaluation process during the first quarter of 2020. This evaluation will assess our Federation’s level of compliance with the forty (40) recommendations of the Financial Action Task Force. We have come a long way in overcoming the multiplicity of challenges in our compliance regime which were revealed in an earlier assessment of the Federation that took place over a decade ago. This Team Unity Government continues to take the necessary steps in order for our jurisdiction to operate in line with the increasingly rigorous international standards. As part of our preparations for this evaluation, a Working Group consisting of members from the FSRC and other competent authorities has initiated a National Risk Assessment exercise. This internal assessment seeks to identify the strengths and weaknesses of our systems to detect and prevent money laundering and terrorist financing. As the process intensifies, my Government will continue to seek the full cooperation of stakeholder entities to provide the information required by the members of the National Risk Assessment Working Group. The outcome of this exercise is expected to identify any areas in our Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime which are in need of strengthening to ensure a high level of compliance.
Tax Transparency and Exchange of Information for Tax Purposes
49. Mr. Speaker, as it relates to our international commitments to promote tax transparency, the Federation of St. Kitts and Nevis has risen to the many challenges put before it and has demonstrated time and time again that our laws, regulatory framework and practices are indeed credible. This was the conclusion of the Organization for Economic Cooperation and Development’s (OECD’s) Global Forum on Transparency and Exchange of Information for Tax Purposes that once again assigned St. Kitts and Nevis a rating of Largely Compliant following a second round of peer reviews earlier this year. St Kitts and Nevis, the smallest country in our hemisphere received the same rating as the USA, UK, Australia and Canada. This is a monumental achievement. Something good is happening in our Country! The review assessed our legal and regulatory frameworks and practical implementation of the international standards on Exchange of Information on Request. We are proud of this achievement, but we cannot rest on our laurels. In the near future, our implementation of the recently developed standard for Automatic Exchange of Information, the Common Reporting Standard (CRS), will also be evaluated. The CRS is a new Standard for which we made a commitment to exchange the first set of information in 2018. This is a commitment that we upheld, thanks to the staff of the Inland Revenue Department who worked assiduously to make it happen. The process will continue with future exchange
