St Kitts And Nevis Economy Making Headway In Turbulent Seas

by Amanda Banks, Tax-News.com, London

31 May 2006

The Caribbean Development Bank has calculated that economic growth remained at a healthy level in St Kitts and Nevis in 2005 as several sectors of the economy contributed to growth.

“Economic performance in St. Kitts and Nevis in 2005 improved relative to the previous year, with continued economic growth; a smaller current account balance on the external accounts; and moderate improvement in the fiscal accounts. Real economic growth is estimated at 4.8 percent in 2005 compared to 6.4 percent in 2004,” the CDB stated in its annual report released at the recent Board of Governors Meeting in Jamaica.

The Barbados institution reported that tourism and related services and construction contributed most to economic growth last year, while banking and insurance services also expanded.

However, agriculture continued to decline; the CDB noted that the sugar industry, once the lifeblood of the twin island economy, ceased at the end of July.

“In recent years, the sugar industry has accumulated unsustainable losses with annual losses of 3 to 4 percent of GDP and an accumulated debt of over 30 percent of GDP,” the report stated.

The loss of the sugar industry will present a challenge to the jurisdiction's government as it attempts to diversify its economy, the CDB noted.

However, the report also noted that the country sustained economic growth even during a climate of historically high oil prices, maintaining relatively low inflation at 3.6% in 2005.

The bank also noted that the government's fiscal position strengthened last year in spite of a rise in expenditure.

“The continuation of administrative improvements at both the Customs and IRDs together with increased economic activity resulted in higher revenue collections in 2005," the report stated.

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