BASSETERRE, St. Kitts - THE International Monetary Fund (IMF) has said that St. Kitts and Nevis has done well under its home-grown austerity programme that was implemented two years ago to bring about fiscal discipline and economic growth in the face of a very high public debt.
Although the multilateral lending agency said there was a surplus this year and the debt is coming down, it cautions that it is still very high and that the government should “continue on this very good track of maintaining prudent fiscal policies”, Ms. Adrienne Cheasty, Deputy Director of the IMF’s Western Hemisphere Department, said at a press briefing of Western Hemisphere Regional Economic Outlook Update on October 11, 2013.
Opposition parties in St. Kitts and Nevis have charged that fiscal recklessness on the part of the government has been the reason for the introduction of an IMF programme that has brought some measure of economic hardship to citizens with the implementation of a 17 percent value added tax, 85 percent increase in electricity rates and the streamlining of government social programmes.
The introduction of the St. Kitts and Nevis IMF programme came at a time when the world has been experiencing one of the worst recessions in recent history and is only now sluggishly getting over it.
However, a recent shutdown of the US government, where Congress cannot agree on the passing of a budget and raising the debt ceiling to avoid default, threatens to plunge the world into another economic crisis if the economic and political impasse is not resolved before Thursday (Oct.17).
This could spell more economic disaster for Latin America and the Caribbean region.
IMF officials, speaking on the economic outlook for Latin America and the Caribbean in Washington D.C., said that growth remains in low gear for this region, “held back by a less supportive external environment and, in some countries, domestic supply side constraints”.
“In the Caribbean, we find a more complex situation because they entered the global crisis with a much compromised fiscal situation, and many of those economies have grown very little or nothing at all, and the fiscal situation continues to be as complex as before,” said IMF officials, including Alejandro Werner, Director, Western Hemisphere Department; Jose Lizondo, Associate Director, Western Hemisphere Department; Miguel Savastano, Deputy Director Western Hemisphere Department; Adrienne Cheasty, Deputy Director Western Hemisphere Department; and Gian Maria Milesi-Ferretti, Deputy Director Western Hemisphere Department.
The IMF officials have said that the Caribbean’s “fiscal, external and financial vulnerabilities remain significant in a number of economies, especially those that are highly dependent on tourism. What is needed is a comprehensive growth agenda built around structural reforms to increase competitiveness. Fiscal consolidation is essential to put these countries' debt in a sustainable and declining path”.
According to the IMF, the Caribbean and Latin American region is expected to grow by 2.75 by 2013, the lowest rate in four years, with domestic demand remaining the main driver.
They have also predicted that growth is projected to pick up in 2014 to three percent and would remain well below the cyclical rates seen in the aftermath of the global financial crisis.
