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St Kitts And Nevis Completes Debt Restructuring

by Amanda Banks,, London

18 July 2012

Saint Kitts and Nevis has welcomed a number of agreements with international creditors for eased terms in relation to the repayment of its debts, under a comprehensive debt-restructuring programme aimed at restoring sustainable finances.

Prime Minister Denzil Douglas has in particular lauded the decision of the United Kingdom to cancel the debt owed by the twin-island federation to Britain. Douglas further said he had extended his gratitude to the United States, at a meeting in London, for agreeing to extend the period of repayment on debt to the nation at a very low interest rate, "thus making it possible to manage the outstanding debt with the United States government," and further thanked domestic and regional creditors for their support.

Announcing the completion of the program, Douglas stated: “I commend the members of the Paris Club who cooperated and collaborated with us, especially the British government who has officially informed me that they have given complete debt forgiveness for the balance debt that we owed them.”

“With all that has been achieved, we are seeing the continuing increase in confidence returning to the economy of St Kitts and Nevis, where we should now be doing everything that we can, not only to stimulate domestic investment to St Kitts and Nevis, but also to attract foreign direct investment."

The completion of the debt restructuring programme is a significant milestone for St Kitts and Nevis, which has endeavoured during the past three years to significantly reduce its debt. In 2009, St Kitts and Nevis had the most significant public debt among its Caribbean peers, at 185% of gross domestic product, and the third largest in the world as a percentage of the economy. Following the introduction of a value-added tax and excise tax reforms in November 2010, and the streamlining of import duty exemptions and the introduction of an environmental levy, the government has managed to make inroads into the debt problem and the International Monetary Fund has consistently reported that the territory is making significant strides towards fiscal consolidation under a 36-month financial assistance programme.

TAGS: tax | economics | fiscal policy | gross domestic product (GDP) | international financial centres (IFC) | offshore | agreements | Saint Kitts and Nevis | import duty | tax reform

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