We publish below, without further comment, the full statement.
Statement by the IMF Mission to St. Kitts and Nevis:
Mr. George Tsibouris, head of an International Monetary Fund (IMF) staff mission to St. Kitts and Nevis, issued the following statement today at the conclusion of the mission:
“An IMF team visited Basseterre during March 5-16 to undertake the second review of the program under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on July 29, 2011.
“The mission reviewed the government’s macroeconomic and structural policies, assessed program performance, and found that all quantitative performance criteria were met at end-December 2011. This was accomplished despite global economic headwinds continuing to hamper economic activity, particularly in construction and tourism. Weak imports narrowed the current account deficit and inflation abated toward the end of year. Reflecting ongoing reforms, tax receipts were in line with program expectations, with buoyant non-tax revenue contributing to a better-than-expected overall fiscal balance and a reduction in budgetary arrears.
“The structural benchmarks at the end-December 2011 were also met. The authorities completed the assessment of the borrowing capacity of public enterprise. The assessment will help minimize fiscal risks to the central government budget. Updated stress tests indicate that the banking system remains well-capitalized and liquid with sufficient buffers to make it resilient to a variety of adverse shocks.
“The debt restructuring process, planned to restore debt sustainability, is well underway. The debt exchange tender was recently concluded with almost universal participation by both domestic and external creditors. Discussions on the domestic debt for land swap are progressing. As the authorities have previously indicated, Treasury bills are excluded from the exercise.
“The mission and the authorities have agreed on a draft memorandum of economic and financial policies that reaffirms the fiscal targets set out in the 2012 Budget, as well as the structural benchmarks for 2012. These include the drafting and enactment of new procurement legislation, development of a medium term expenditure framework, Cabinet approval of a plan for civil service reform, the rationalization of the subsidy on liquefied petroleum gas and strengthening of social safety nets. In light of the above, the mission would recommend to the IMF Executive Board completion of the second review under the Stand-by Arrangement. The IMF Board is expected to discuss the second review of the SBA at end-May 2012.
“The authorities remain firmly committed to the policies and objectives of their home-grown economic program, and are keenly aware of the benefits of strong macroeconomic policies in achieving fiscal and debt sustainability. Nonetheless, there are still challenges ahead, including the continued weakness in the global economic environment. In these circumstances, continued vigilance and steadfast implementation of the government’s policy framework will be critical to establishing the conditions for higher growth, strong employment, and improved living standards.”
“During the review, the mission held meetings with Prime Minister and Minister of Finance the Rt. Hon. Denzil Douglas, Premier Joseph Parry of Nevis, members of the Federal Cabinet and of the Cabinet of the Nevis Island Administration, senior officials of the Ministries of Finance and Sustainable Development, the Eastern Caribbean Central Bank (ECCB), and representatives of the private sector. The mission would like to thank the authorities for their excellent cooperation.”