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Hon. Dr. Denzil Douglas |
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St. Kitts and Nevis Prime Minister and Minister of Finance Hon. Dr. Denzil Douglas, along with a number of regional counterparts, met with IMF officials recently to discuss debt management and the financial stability of Eastern Caribbean Currency Union (ECCU) member countries.
The two-day session took place in St. Kitts from June 24 – 25, and saw in attendance regional Prime Ministers, Ministers of Finance, the ECCB Governor, and Financial Secretaries. The core group held discussions with Deputy Managing Director, Murilo Portugal, and staff members of the IMF on fiscal and financial sector issues affecting the ECCU, and on charting a course forward for managing the economic challenges that member countries are facing.
Hon. Dr. Ralph Gonsalves, Prime Minister and Minister for Finance of St. Vincent and the Grenadines, who is also Chairman of the Joint Committee of the OECS Authority and the ECCB Monetary Council, chaired the meeting, themed, “Growth, Adjustment and Integration in the ECCU/OECS”.
According to Dr. Gonsalves, “Member countries are seeking to advance two sets of policy initiatives – those related to the operationalization of the OECS Economic Union Treaty and those related to the Eight Point Stabilization and Growth Program”.
He stressed the need for countries to be as creative as possible in finding practical solutions to the financial issues being faced.
The IMF consultation came on the heels of the June 18 signing of the OECS Economic Union Treaty, which sets out to create a single economic and financial space, as well as collectively addressing regional challenges.
Murilo said that the IMF is acutely aware of the ECCU members’ economic and financial status and expressed the Fund’s “willingness to bring to the table its experience from the lessons learnt from dealing with its broader membership”.
He also conveyed the Fund’s support of the ECCU’s approach to dealing with regional challenges and said, “The IMF looks forward to being a creative partner in developing the approach to be taken in seeking to increase the economic growth and living standards of member countries.”
The roundtable discussion also sought to map out the way forward for the ECCU member countries against the backdrop of global economic instability. According to a communiqué issued after the event, “attention was focused on the region’s near-term economic and financial prospects, and the scale and scope of the adjustment necessary to overcome the fiscal, debt and financial stability challenges, and set the countries on the path to sustainable growth in the medium to long-term”.
It was agreed that member countries should focus on improving competitiveness in the tourism industry, as well as seeking to develop new economic activities.
In matters relating to debt and fiscal management, most of the eight ECCU member countries have already implemented programs and policies that are expected to show improvement in the noted areas for the short- and medium-term.
St. Kitts and Nevis has embarked on a tax reform system that will see the introduction of a Value Added Tax system as of November 1, 2010, which is projected to increase government revenues. An aggressive plan to reduce expenditure is already underway, as the federal government has ceased new hires and enforced civil service retirement policies.
In delivering his address at 78th Annual Labour Party Convention in May, Dr. Douglas warned that if action to accelerate the reduction of public debt and strengthen the public finances was not immediately undertaken, the Federation could be faced with borrowing from the IMF.
Since the roundtable discussion there has been no indication whether any dialogue has taken place on St. Kitts and Nevis’ position on committing to an IMF program.
The group is scheduled to meet again in St. Kitts in October of this year. |
