St Kitts, IMF Agree On Stand-By Arrangement

by Amanda Banks, Tax-News.com, London

09 June 2011

St Kitts and Nevis is taking decisive action to address the legacy of its recession, the International Monetary Fund (IMF) has said, leading to the conclusion of an agreement which could see the provision of cash support for the country, were it required.

The announcement was made by Alfred Schipke, chief of the IMF mission to St Kitts, who said that it had been agreed in principle that the IMF could offer USD84m under a Stand By Arrangement (SBA).

Schipke noted the efforts being made by the government, in response to a contraction of economic activity, largely caused by declines in tourism revenue and foreign direct investment-related construction.

While St Kitts' fiscal deficit is also expected to increase in the short-term, measures such as the introduction of VAT, increased electrical tariffs and the prioritization of capital expenditure, were welcomed.

According to the IMF, the government's economic strategy is targeted at the fostering of macroeconomic stability and the reduction of public debt. Reference is also made to the government's intention to introduce measures intended to strengthen public financial management, improve revenue collection and cut the debt-to-GDP ratio.

A further review is expected at the end of July, when the IMF’s Executive Board could consider St Kitts' SBA.

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