BASSETERRE, St. Kitts -- The International Monetary Fund (IMF) recently concluded its comprehensive assessment of St. Kitts and Nevis' economic landscape, culminating in the release of its Article IV report.
During its near two-week visit to the Federation, the IMF engaged with key stakeholders, including the government, to gain insights into the country's economic outlook.
The report, published on Friday (Mar. 1), highlights the continued recovery of St. Kitts and Nevis from the pandemic-induced challenges, particularly the cost of living crisis. Notably, the country achieved a budgetary surplus by the end of 2023, credited to fiscal prudence and the exceptional performance of the Citizenship-by-Investment programme (CBI).
Further, the IMF expressed optimism about the future outlook, particularly with the initiation of large-scale renewable energy projects. The resurgence of tourism and robust CBI performance contributed to an estimated 3.4 percent economic growth in 2023, following an 8.8 percent expansion in 2022. The IMF projects a GDP growth of 4.8 percent in 2024, anticipating a return to pre-pandemic levels.
However, amidst the positive indicators, challenges such as elevated commodity prices and shipping costs led to a notable increase in inflation, reaching an estimated 3.6 percent in 2023 compared to 2.7 percent in the previous year. Despite fiscal measures aimed at curbing inflation pass-through, the 2023 budget recorded a surplus of 1 percent of GDP, supported by the strong CBI performance and ongoing fiscal discipline.
The IMF cautioned against potential downside risks stemming from external factors, natural disasters, or CBI underperformance. In response, the report outlined several recommendations to fortify the country's resilience. These include enhancing government spending effectiveness, tax system improvement, establishment of a Sustainability and Resilience Fund, implementation of explicit fiscal rules, pension system reform, increased investment in renewable energy and climate adaptation, and addressing vulnerabilities in the banking sector.
Moreover, the IMF stressed the importance of accountability and transparency in managing CBI resources to bolster the programme's integrity.
