BASSETERRE, St. Kitts - THE St. Kitts-Nevis Labour Party Government is currently in the process of reforming one of the country’s significant sources of revenue, the Citizenship By Investment programe, to make it more robust in light of the growing challenges being faced.
That comes against the backdrop of the programe - referred to as the ‘Golden Passport’ scheme by the European Union and the United States - coming under a major threat with calls for it to be disbanded all together.
Such a move would be detrimental to small states such as St. Kitts and Nevis where, in 2020, it was said to account for 40 percent of the Federation’s revenue stream.
Now, with the country seeking to rebound and staring down the barrel of slow economic growth for 2023 due to the inflation challenges, bolstering the programme is critical.
In delivering the Throne Speech, the Governor-General’s Deputy, Marcella Liburd, acknowledged the importance of the programme and posited that the Government would do all in its power to protect it for the benefit of the people of St. Kitts and Nevis.
“Our Citizenship by Investment (CBI) programme has served us well over the years and we will do everything that is necessary to protect it so that it can continue to yield positive results for our country. There are, however, certain reforms that we must implement in order for it to be strengthened and placed in a position to remain a significant industry in our economy,” she emphasized.
She continued: “Since taking office, our Labour Government has prioritised reform of the CBI programme and important administrative changes will be implemented in the coming weeks. While we are committed to working to strengthen the CBI programme, we are steadfast in the belief that we must also advance an agenda for economic diversification. Our vision of a diversified economy incorporates the CBI programme as one of the main pillars of development. This vision also incorporates the development of existing and emerging sectors that are showing potential for steady growth over the medium to long term.”
In 2021, the Federation raked in more than $500 million under the programme, which was a significant contributor to the economy last year when factoring the challenges posed by the COVID-19 pandemic.
But just as the programme was raking in revenue, it was used to prop-up the fledgling economy that was adversely affected by the COVID-19 pandemic, which saw the then Governmebnt injecting more than EC$40 million to help citizens and businesses during the challenging period.
Now, the spending has caught the attention of the International Monetary Fund (IMF), which has called for the Federation and other CBI countries to stop spending and seek to build on their buffers.
While speaking at the recently-concluded Annual Meeting of the International Monetary Fund and World Bank Meeting, the Director of the IMF's Western Hemisphere Department, Ilan Goldfan, had made the call for countries to make the change as it was revealed that a grim economic outlook is expected for St. Kitts and Nevis due to the rising inflation and recession threat for the United States.
The Labour Government is cognizant of the difficult road ahead and is seeking “prudent fiscal and debt management”.
“Notwithstanding the existing and emerging economic challenges of the day, our Government is committed to the principles of prudent fiscal and debt management. We will collaborate with our international and regional partners, including the International Monetary Fund and the Eastern Caribbean Central Bank to develop and legislate fiscal rules to guide the implementation of Government’s fiscal policy over the next five years and beyond. We will employ strategies for strengthening public finances by improving tax administration and strengthening revenue collection. This would help to provide the fiscal space necessary to meet the demand for spending as we recover and simultaneously transform the economy in a sustainable way,” tLiburd said in her Throne Speech.
She added: “Given the current realities on the ground where our economy is struggling to rebound and many of our people still unemployed, the Government is cognisant of the role it must play to stimulate economic activity. Our Government will take concrete actions to make timely injections into the economy to boost growth. Our Government will make the necessary investments to support the creation of jobs, sustain growth and transform our economy over the short, medium and long term. This means that the Government’s spending will be strategic, calculated and intentional.”
