“Their advice, basically,…is that our debt is unsustainable and we’ve been saying that ourselves. They have been able to compile in a highly reliable way, what is the total stock of debt that the country has and this of course is not only the debt of the central government of St. Kitts and Nevis and the Nevis Island Administration debt but also the debt that has been incurred by our statutory corporations, SSMC of the past, SCASPA, NEVCO and so forth… And several other organisations that have been by law, established as statutory bodies. And the stock of debt has been well documented and having brought to our attention the stock of debt, our advisors have now worked out a plan and they are saying certain things that we need to do here,” Dr. Douglas expressed during Tuesday, 31st May, 2011’s edition of his radio programme, “Ask the PM”.
Dr. Douglas, Minister of Finance, explained that even though the federation has never defaulted on paying back the debt, doing so is burdensome.
“So basically, what the report is saying is that we need to begin to speak with our creditors. We need to re-examine some of the terms and conditions under which those loans were first advanced and see if it is possible to have them revisited so that in the payment schedule of these debts, it will be less burdensome on the people of St. Kitts and Nevis and infact asking some of those same creditors to help to share the burden that the people of St. Kitts and Nevis are carrying because it needs…to be revisited under the circumstances where there is a tremendous global recession where there’s a global financial crisis and economic crisis that started several years ago, 2008.
“It has affected us in a negative way, there is no sign of this really improving globally, regionally and in our situation in St. Kitts and Nevis within the short time and so it has become very very important and necessary to speak with our creditors, to seek their cooperation and to a large extent, looking again at the public debt stock, which as I said is high, unsustainable. And this…will address severe payment challenges that are associated with the servicing of the debt. It will seek to place the country’s high debt burden firmly on what has been described as a sustainable footing along with a series of new economic measures that are being introduced by us. In fact some of the things that our advisors have advised is that we need to make sure – for example – that the VAT is sustained, that we improve on areas where they have been some areas of failures. We want to improve on those areas.”
The Prime Minister noted however, that consultation with creditors would only be necessary at the regional and local levels.
“We also now have to begin to look at others who may not have given sovereign debts. Of course we’ve had creditors in the Caribbean region, we’ve had creditors locally and for example…70 percent of national debt is domestically derived and 30 percent is regionally derived. A very small portion of our national debt involves the usual Paris Club entities and so in talking to or creditors, there is no need at all to speak to the Paris Club group because, as I said, most of our debt is regionally and domestically owned. And so we will be confining our discussions, our talks and so forth with our creditors to those at the domestic level and those at the regional level.”