WASHINGTON, DC – THE International Monetary Fund (IMF) has advised the government of St. Kitts and Nevis to shift its economic dependence away from the Citizenship By Investment (CBI) programme due to its susceptibility to external shocks. The country's economy has relied heavily on the CBI programme in recent years, especially during the COVID-19 pandemic, when the global economy slowed down.
During the recent IMF and World Bank Spring Meetings in Washington, DC, Rodrigo Valdés, Director of the Western Hemisphere Department, recommended this transition. He confirmed that the Federation’s economy is projected to grow by 3% this year, outpacing all other territories in the region.
“In particular, St. Kitts has been growing very well,” Valdés said at the Western Hemisphere press briefing on Friday, April 19. "We expect that the economy will continue to grow by 3% on average in the medium run. Three percent in the medium run is higher than the average of the region."
Valdés emphasized the importance of enhancing reforms, specifically in transitioning to renewable energy, increasing capital expenditure on water infrastructure and climate adaptation, and better targeting current expenditures.
Prime Minister Drew recently presented the findings to the National Assembly, acknowledging the Federal Government's heavy reliance on the CBI program. He stated that between 2008 and 2022, the CBI generated 43% of the government's total cash revenue, providing EC $5.678 billion at an average of EC $378 million per year.
Drew noted that in the last five years of the previous administration, the CBI program accounted for 50% of the government’s total cash revenue. In the last two years, the program's share rose to 57%, reaching an unsustainable level of 60% in 2022.
Meanwhile, the IMF called for an emphasis on tax reforms and revenue mobilization to reduce reliance on the CBI program, emphasizing that while it is a welcome source of income, it should not be considered a permanent fixture.
