By Loshaun Dixon
Basseterre, St. Kitts – The International Monetary Fund (IMF) has called for the sale of land under the land-for-debt swap to be completed in a matter of urgency to limit financial risk in St. Kitts and Nevis.
In a staff-concluding statement of the 2017 Article IV Mission to St. Kitts and Nevis, the IMF indicated that a clear action plan and timetable as it relates to the land-for-debt swap with concrete milestones are needed:
“Completing existing purchase proposals and stepped up marketing to generate sales, including through real-estate agents and the SLSC website, will help establish momentum and remove the policy uncertainty.
“The global financial institution indicated that cooperation with Citizenship by Investment Unit and SKIPA is welcomed and should support these efforts.
“We welcome the ongoing discussions on the renewal of the dividend-guarantee agreement with banks at renegotiated terms.”
The statement added that further delays in in the land-debt swap parlayed with a sharp drop in CBI inflows due to more acute competition and global security concerns are risks that can affect the medium-term outlook.
“Other negative risks include a stronger U.S. dollar, a tighter financial environment, a more severe Zika epidemic and a major natural disaster. Loss of correspondent banking relationships (CBRs) could add to challenges. Softer global climate change policy may exacerbate natural-disaster risks. On the upside, stronger CBI inflows (from ongoing program reforms and tougher immigration policies in the United States on other countries) and weaker oil-prices could support faster growth.”
The IMF also reported that despite a challenging international environment the federation’s economy is expected to grow again in 2017 for the fifth consecutive year
“St. Kitts and Nevis’ strong macroeconomic performance owes much to the robust Citizenship-by-Investment (CBI) inflows and their spill-over to the economy, as well as overall prudent macroeconomic policies.”
They, however, indicated that the economic performance in the federation weakened slightly in 2016 compared to the recent years.
“The economy grew at a modest 3.2 percent in 2016, compared to 4.9 percent in 2015, while still exceeding the average growth rate in the ECCU region. The overall fiscal surplus, at 4.2 percent of GDP, deteriorated compared to 2015, owing mainly to lower CBI receipts.”
It was also revealed that the public debt fell further and projected to reach the 60 percent ECCU debt-to-GDP target by 2018, ahead of ECCU peers.
The statement also mentioned efforts made to strengthen the CBI programme in a difficult global environment.
“They have strengthened the due-diligence process with dedicated resources and global collaboration, as this is essential to reduce integrity and security risks, preserve the program’s credibility, and avoid a race-to-the-bottom.”
The report also states that growth is projected to be 2.7 percent for 2017 and is anticipated to average about 3 percent in the medium term.
“The projected slowdown in construction would be offset by public investment on infrastructure and higher tourism. The external current account deficit should remain large with CBI inflows tapering off.”
The IMF Mission visited St. Kitts from April 14 to May 4.