Private Sector entities take a more active role, do more
By Loshaun Dixon
Private Sector entities were urged to do more to drive the growth of St. Kitts and Nevis and transform the economy by Prime Minister of St Kitts and Nevis Hon. Dr. Timothy Harris during his 2017 budget presentation.
The call came as Dr. Harris, who is also the Minister of Finance, delivered a $712.9 million 2017 budget. Dr. Harris said the government worked assiduously to provide reliable basic infrastructure and other incentives to create a healthy environment for businesses to develop and challenged the Private Sector to help accelerate growth.
“My government therefore challenges the members of the Chamber of Industry and Commerce and the business community at large to seriously consider the role of the Private Sector in accelerating growth and building a resilient St. Kitts and Nevis.”
Dr. Harris called for a change to the status quo, explaining it is no longer possible to rely on building the economy through wholesale and retail trades, or replace sugar production with the narrow traditional form of tourism
“The business community must rise to the challenge of mobilising the resources necessary to invest in key sectors such as Non-traditional Services, Agriculture, Manufacturing, Renewable Energy, and Information Communication Technology, Dr. Harris stated. “Opportunities are knocking for people to invest in areas that hold the promise of good business returns and wider economic impacts.”
He added that Medical and Wellness Services; Organic Farming and Agro Processing; various Technology-based Service Areas are prime target for investments.
“Let us, for example, stop and think for a minute about the possibilities of an established business or a group of our nationals joining together to create small or medium sized businesses (SMEs) capable of mobilising resources to provide medical services that are in high demand by residents and visitors, or to create added attractions for scaling up our tourism product.”
The Prime Minister recalled the National Consultation on the Economy in October where some ideas between the government and Private Sector were shared and said now is the ideal time “to work together to ensure that the most feasible concepts move to the planning and implementation stages.”
“This is where the rubber meets the road, and signals our best chance to contribute to the common goals of accelerating growth and building resilience for current and future citizens of the Federation,” Dr. Harris urged.
The Finance Minister pressed businesses and individuals to think outside the box, and start to take advantage of the opportunities that emerge.
Economic activity shows strength
Dr Harris noted that economic activity in St. Kitts and Nevis continues to show strength despite an uninspiring global and regional economic environment.
“In 2015, Gross Domestic Product (GDP) grew by around 5 per cent underpinned by expansions in the construction and tourism sectors which recorded growth rates of 6.7 per cent and 7 3.5 per cent, respectively, and had a multiplier effect across the other sectors in the economy.
He stated that the first half of 2016, saw moderate pace of growth for the economy relative to 2015.
Construction Sector at the forefront
“The Construction Sector was at the forefront of this expansion, recording an output of 4.9 per cent and further solidifying its contribution to GDP at 17.8 per cent as of June 2016. This sustained growth in the sector is attributed to investments related to the Citizenship by Investment (CBI) Programme, specifically, the construction of a number of Private Sector hotel and condominium developments in the Federation.”
He further disclosed that the performance of the Construction Sector was strengthened by private home construction and Public Sector investments in infrastructure and positively influenced the out-turn in the wholesale and retail sectors which expanded by 3.8 per cent.
Other growth sectors
“The Real Estate, Rental and Business Activities, and the Financial Intermediation sectors recorded a growth rate of 2.4 per cent.” Dr. Harris said. “The transport, Storage and Communication Sector also recorded a positive out-turn of 1.3 per cent as a result of the expansion in cruise related tour operating services.”
The official reported, however, that the Tourism Sector only grew by 0.1 per cent for the first half of 2016.
“The sector continues to make an important contribution to GDP in the region of 8.3 per cent. Further, the Cruise Sector continued to grow at a significant pace with arrivals expanding by 8.9 per cent to 546,291 passengers during that period — a direct result of a 2.7 per cent increase in cruise calls.”
Dr. Harris stated that it is expected that the sector will accomplish a 4.0 per cent expansion in economic activity by the end of 2016 due to added airlift.
2016 had overall growth
The Prime Minister disclosed that overall growth in the first half of 2016 was due to the out-turn in the Manufacturing and Agriculture sectors.
“Activity in the Manufacturing Sector was impacted by lower demand for electronic components produced at the industrial estates,” Dr. Harris explained. “On the other hand, the Agriculture Sector continued to be impacted by the effects of the prolonged drought conditions experienced in the Federation over the last couple of years.”
$200m Recurrent Account surplus
He also announced that the government’s fiscal actions for 2015 resulted in a Recurrent Account Surplus of over $200m.
“As we reflect on the performance of the previous year, I am happy to report that the Government’s fiscal operations for 2015 resulted in a Recurrent Account Surplus of $238.0 million, an Overall Surplus of $127.4 million and a Primary Surplus of $161.0 million.”
Budget division explained
Dr. Harris also broke down how the $712.9M budget will be divided with just over 30 per cent dedicated to the Ministry of Finance which usually receives the bulk of the sum.
The Ministry of National Security will also receive a large quantity of $71.2M that represents 10 per cent of budget.
Other ministries with major budgetary cuts include Ministry of Health $62.6 million; the Office of the Prime Minister $45.4 million; and the Ministry of Education $70.9 million.
The Ministry of Public Infrastructure, Urban Development and Transport will receive $44.7 million, while the Ministry of Youth, Sports and Culture will get $18.1 million.
The Office of the Attorney General and the Ministry of Justice, Legal Affairs and Communication will each get $12.2 million and 13.7 million, respectively.
Ministry of Sustainable Development ($19.4 million), Ministry of Foreign Affairs and Aviation ($19.3 million), Ministry of Labour, Social Security, Ecclesiastical Affairs, and Nevis Affairs ($7.8 million) are some of the other shares of the budget.