BASSETERRE, St. Kitts – St. Kitts and Nevis came in for negative regional attention and scathing assessments when it announced on Wednesday its “inability to make payments for a bond which became due on November 25”.
“The credit rating of St Kitts and Nevis, the smallest independent state in the hemisphere, took a hit when it defaulted on a bond payment the end of November,” says Mark Lee of Abeng Newsmagazine.
Lee takes a hard, analytic look at the dismal fiscal situation in St. Kitts and opines that its “inability to make payments for a bond which became due on November 25” will cause “watchers of Caribbean regional integration (to) be concerned about the evolution of the Organisation of Eastern Caribbean States (OECS), which shares a common currency and is deepening economic and financial ties among its eight members that include the federated islands of St Kitts and Nevis”.
He expands on the effect this situation will have on the credit rating of St. Kitts and quotes Head of Ratings and Research, Arjoon Harripaul, at the Caribbean and Credit Rating Services Ltd (CariCRIS), the region’s credit ratings agency based in Port of Spain, Trinidad. Harripaul states:
“As one of the most heavily indebted countries in the world (public debt around 200 per cent of GDP), the credit rating for SKN was pretty low before this credit event took place.”
“Wednesday’s development means that the rating for (the) Government of SKN would now be D – Default,” he said, explaining that CariCRIS does not have a public rating on the Government of St Kitts and Nevis. “However, as part of our benchmarking and monitoring of developments in the Caribbean, we do maintain a private rating on each Government in the Region,”
Although most OECS countries are heavily in debt, even the SKN government website (Financial Update) acknowledges that St. Kitts Nevis is doing far worse than the others when it states “St Kitts and Nevis’s public debt burden as measured by debt/GDP and interest/revenues is now a multiple of the average for the other countries in the ECCU”
For example, when debt is calculated as a percentage of GDP, St. Kitts Nevis stands at 199, Dominica 83, St. Vincent and the Grenadines 80 and St. Lucia 75. Only Grenada and Antigua and Barbuda come anywhere close to SKN at 119 and 117 respectively. The average for the ECCU countries excluding St. Kitts Nevis is 95.
After many years of having millions of dollars ‘deficits’ in its annual budget (according to the Auditor’s reports) and repeated warnings by the Auditors, SKN has now hired the services of London-based consultants, White Oak Advisory to help them with a debt rescheduling package.
In addition, Government is said to be in “advanced discussions” with the Caribbean Developing Bank to in some way alleviate these dire financial conditions.
Mark Lee goes on to speculate “Maybe because there isn’t an Occupy movement in Basseterre, or because the people of one of the most indebted nations in the world aren’t like Greeks ‘behaving badly’, the news didn’t cause a stir in the region.”
With global conditions having a stifling effect on the economies of these small OECS and Caricom states, Lee predicts “an immediate future of debt, default and economic death before any glorious resurrection.” We can only hope and pray that he will be proved wrong.
ABENG, the news magazine which ran the article “Debt Before Dishonour – St Kitts Defaults as it Restructures”(which is being quoted in this article) is a Caribbean-centric electronic publication with a global focus that targets a community of discerning readers on every continent. It boasts a writing team located in the Caribbean, Canada, the United States, Africa and Japan,
