BASSETERRE, St. Kitts – AS global institutions prepare countries for an exit from “crisis intervention policies”, an official from the Federation’s Ministry of Finance noted that caution must be observed before local measures are pulled.
Economist in the Ministry of Finance Gary Thomas in a recent interview with SKNVibes informed that the Ministry has to be cautious as it relates to exit strategies and would begin to withdraw stimulus measures only when sustained growth is realized.
“The Ministry of Finance and by extension the Government will continue to maintain stimulus initiatives put in place to minimize the negative effects of the global financial and economic crisis. These will remain in place until such time that we begin to see concrete and sustained signs that recovery has taken hold,” he said.
Phasing out crisis-response stimulus measures was one recommendation made by the International Monetary Fund (IMF) in its February 23 paper ‘Exiting from Crisis Intervention Policies’.
“Most advanced economies should maintain stimulus in 2010, and begin tightening in 2011 if the recovery proceeds as currently projected. Fast-growing emerging markets can start tightening now. In some cases, market concerns imply that tightening is needed ahead of recovery,” the report reads.
Thomas believes that policymakers and relevant authorities in the Federation must “err on the side of caution” and not withdraw the stimulus initiatives too soon even though there may be some improvement in the economic lay of the land.
He noted that while the glow of a recovery becomes brighter, the nation and the region are still a “long way off” from the level of economic comfort that would give policymakers the confidence to withdraw such initiatives.
As a matter of urgency, the IMF has advised that policymakers and the relevant authorities must formulate and/or implement strategies to exit intervention policies.
Among the stimulus packages launched by the Government of St. Kitts-Nevis, standalone restaurants were allowed to receive duty free importation of food, wine, kitchenware and appliances and furniture and local ice cream manufacturers were given special concessions.
