St Kitts And Nevis Hits Fiscal Targets

by Amanda Banks, Tax-News.com, London

15 December 2011

Saint Kitts and Nevis has achieved targets set under its financing agreement with the International Monetary Fund (IMF) by boosting tax receipts despite weak growth in the Federation's economy.

On presenting his assessment of progress made by the territory under the Stand-By Arrangement (SBA), Alfred Shipke, head of the IMF mission, said that revenue enhancement measures implemented last year, including the introduction of a value-added tax regime, continue to yield increased tax receipts in line with program expectations at the time of the SBA approval. The authorities have also restrained expenditure growth in order to meet the program target on fiscal consolidation.

Significant progress was also noted on the structural reform agenda, aimed at strengthening revenue collection and Treasury management to improve budget performance, enhance financial regulation and supervision and support debt restructuring.

On managing the territory's significant debt, Shipke reported that: “Progress has been made in discussions with both external and domestic creditors over the terms on which the public debt, which remains unsustainable, will be restructured. Possible scenarios for the restructuring of the external debt have been discussed with creditors and discussions on a framework for the dealing with domestic creditors are advancing. As the government has previously indicated, Treasury Bills will be excluded from the debt restructuring exercise.”

Looking ahead, Schipke stated: “The mission and the authorities have agreed on a draft letter of intent that incorporates the policies to be presented in the 2012 Budget to continue the government’s home grown fiscal consolidation program, and reconfirms the structural benchmarks for 2012. These include, among others, the drafting and enactment of new procurement legislation, development of a medium-term expenditure framework, and strengthening of social safety nets.”

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