Recently, during a joint press conference held between the representatives of the International Monetary Fund (IMF) and the Ministry of Finance, Dr. Douglas informed that both parties had agreed – in principle – to a US$84 million stand-by agreement. Dr. Douglas also indicated that no conditions were attacked to the agreement.
“Here the Labour Government tries to feed the media that the IMF loan is without conditions. This is false. First of all, the IMF is known by the conditions it imposes upon countries that come to it for funds. It has a notorious reputation in the developing world for its structural adjustment programmes. But common sense will tell you that USD $84 Million will not be given without conditions. Remember the IMF is a lender of last resort, which means that a desperate country will go to the IMF because it cannot get a loan anywhere else.”
Mr. Grant suggested that the stand-by agreement, however, has pre-conditions attached which the Federation had to meet before being considered for such an arrangement.
“Pre-conditions are the steps that a country in desperate financial need has to take to even be considered for the IMF loan. This is why we say today that the VAT introduced at 17% to be the highest in the OECS, was one step towards the IMF loan. Indeed the truth of the matter is that the pre-conditions for the IMF loan are evident in what has been done quite recently, in the Prime Minister’s very words. Prime Minister Douglas stated “The VAT was introduced in November of 2010, the Housing and Social Development levy it was modified; we also introduced the unincorporated business tax; and the system of fees and taxes for duty free stores was adjusted, there were increments for civil servants that were frozen; the electricity tariff was increased, and the corporatization of the electricity department has been accelerated.” Already, these very actions have caused enormous burden to ordinary Kittitians and Nevisians who now struggle to buy groceries and pay their electricity bills due to the high Cost of Living.
“Yet these same actions are the IMF’s pre-conditions to the USD $84 Million to St. Kitts-Nevis. At the same time, this is why they can say there are no conditions, for the IMF loan has not been approved. The worst is yet to come for St. Kitts-Nevis, with our Federation now in the kitchen of the IMF for USD $84 Million. We see here that the IMF favours the steps taken by the Labour Government to increase taxes such that the USD $84 million loan is in ‘principle’ and requires approval by the IMF Board. It is at this stage that the IMF will impose conditions upon St. Kitts and Nevis.”
The PAM leader made an appeal to the government to either reveal the conditions of the loan so that the people of St. Kitts Nevis would not be walking blindly into the agreement.