BASSETERRE, St. Kitts – IN the face of economic crisis severely testing the technical capacity of the Federation’s financial sector, Prime Minister and Minister of Finance Hon. Dr. Denzil Douglas has put his plan forward to return the nation to a path of sustained growth.
Almost every nation has been affected by the global economic and financial crisis and in St. Kitts and Nevis the impact has hindered the tourism and construction sectors. An unpromising 7.4 % contraction was felt throughout the currency union in 2009 according to the Eastern Caribbean Central Bank’s Economic Review, and domestically a contraction of roughly 5% has given an equally gloomy outlook.
Though a shimmer of hope came from the nation being able to achieve a primary surplus of about 8% of GDP in 2009, PM Douglas noted that this does not provide enough room to manoeuvre in this time of crisis.
“The Government has recognized the need for even stronger fiscal adjustment in order to ensure the sustainability of our fiscal and debt position and secure the environment to foster economic growth,” he said in a Plenary Session of the 40th Annual Meeting of the Board of Governors of the Caribbean Development Bank (CDB) held last week.
As outlined by the Minister of Finance, the implementation of a Value Added Tax, a wage freeze, further public sector reform, the curtailment of expenditure on goods and services and the rationalization of tax concessions are some of the short-term plans expected to have a lasting economic effect.
Dr. Douglas is quoted as being optimistic about the nations of the region coming together to protect the people from the ravages of these crises.
“I would like to stress the need for urgency, as there are real people in our countries who will become innocent casualties if we do not act speedily. I therefore urge all regional and international institutions represented here…to make the necessary resources available to assist our countries at this time,” Douglas urged.
At the same time, he called upon all the heads of government to consider their strategic options in light of their own vision for their people and the need for sustained growth. As the region seeks to navigate what PM Douglas described as “treacherous waters of crisis”, he urged each member country to come up with a solution that is workable in its own context.
In the short to medium term, Douglas called upon the CDB to help design a formula for cooperation and collaboration, including a regional response plan for similar economic shocks that may come in the future.
