BASSETERRE, St. Kitts – ST. KITTS-NEVIS Prime Minister Dr. the Hon. Denzil Douglas has explained why his government could not seek normal debt-reduction methods such as debt forgiveness or debt reconciliation.
According to the Kittitian Leader, the Federation’s classification as a middle-income nation has inhibited its ability to pursue the full breadth of debt relief measures. The public debt currently stands at over EC$2B, a figure he acknowledged as being “too high” during his weekly ‘Ask the PM’ radio show on Tuesday (Aug 18).
“The Federation is not included in the highly indebted countries of the world. Due to our high per capita income, we have been classified as a middle-income country; a country that should really be making contributions to the international financial system rather than one to receive handouts and gifts from the international community,” Douglas stressed.
“Guyana, for instance, can benefit from debt initiatives because it is highly indebted and less developed. Our country is not classified in that way so we do not have the opportunity to benefit. When we borrow money to rebuild our infrastructure from hurricanes, etcetera, we are not borrowing it at relatively low interest rates. We are forced to borrow at higher rates.”
The Prime Minister noted he had often lobbied in the international community for the Federation’s re-classification. However, he said these claims were rejected due to its high per-capita income.
Douglas gave insight into the nature of the country’s debt burden, revealing that the majority of debt was to local and regional financial institutions instead of large developed countries.
“We do not owe a lot to metropolitan countries. In fact, we don’t owe any money at all to the US. A lot of our debt is domestic debt – money we have been able to organise from the regional community, from friendly countries like Taiwan or the money we’re trying to organise from Venezuela – the non-traditional donor countries, and our own domestic and regional financial institutions.”
“So we can’t lobby the developed countries of the world for debt relief. But we do negotiate with them for grants. However, because we fall into the middle-income category, we are told to borrow and we do not have the access to aid that low-income countries do,” he added.
Despite the gloomy situation, Douglas pledged that his government would continue its debt alleviation measures. These include increasing government revenue, lowering expenditure and seeking more favourable terms from financial lending institutions.
