By Lesroy W. Williams Observer Reporter
” (Basseterre, St. Kitts)”With the American economy in crisis, leading to a 700 billion dollar rescue bailout by the government, the Minister of Finance, Dr. the Hon. Timothy Harris said that although it is early days yet, economic fallout for St. Kitts and Nevis is quite possible. Countries in Europe and Asia are already feeling the impact of the economic meltdown in the American economy and are seeking to protect their financial markets. The Finance Minister’s comments were made at a press conference on October 2 in addressing the nation on certain matters pertaining to the economy. “As a general rule, anything that negatively affects the United States of America will not redound to our advantage and therefore whenever we see a crisis in the United States, particularly one of this financial and economic magnitude, we should all be sober,” Dr. Harris said. “We should be sober because we are intertwined as part of the global economy,” he added. The Eastern Caribbean Central Bank (ECCB) issued a statement on the recent international financial market developments on October 8. A press release stated that the Eastern Caribbean Central Bank is closely monitoring the ongoing global financial market developments and the initiatives by major central banks to stabilize global financial markets. To date, the banking system of the Eastern Caribbean Currency Union (ECCU) has not been impacted by these events. The commercial banking system remains stable and adequately capitalized.” The ECCB will continue to monitor developments in the financial sector, the press release said. Minister Harris pointed out three areas in which St.Kitts and Nevis can be significantly impacted by the economic crisis. Firstly, the tourist industry can be affected greatly because the US is still the most significant contributor of tourists to St.Kitts and Nevis as it is to most countries in the Caribbean. With the economic crisis, less Americans may travel to the Caribbean because of financial constraints. Secondly, there may be a decrease in remittances from the United States to St.Kitts and Nevis. Remittances are what many families rely on for survival. If people have less money because of the economic crisis, then they will not be able to send home as much. Thirdly, direct foreign investment could be affected because a large number of the developments which are taking place in the economy are coming with funding out of the US and once US banks begin to tighten their credit facilities and begin to make greater demands for security then these present challenges. “These are just potential points of vulnerability, probably more so for Nevis than for St.Kitts because of the important part that the financial offshore sector plays there,” Dr. Harris said. “In some sense, we have to feel a sense of satisfaction in our own oversight mechanisms in the Caribbean and more so in the Organization of Eastern Caribbean States (OECS) because our financial systems have not yet suffered these kinds of serious financial crisis which the rest of the world and sophisticated parts of the world are now undergoing. It means that we are doing something right. Probably, we have a more conservative approach to banking,” he said.
