News of the agreement circulated yesterday (3rd June) after Prime Minister and Minister of Finance, Dr. Denzil L. Douglas and his team met with Chief of the IMF’s mission to St. Kitts and Nevis, Mr. Alfred Schipke.
An official statement was disseminated which explained that the SBA could be considered by the IMF’s Executive Board at the end of July, “following review by the IMF management”.
The release suggests that “a shape contraction in economic activity, deterioration in the fiscal position and a significant increase in the public debt levels” were triggered by “declines in tourism revenue and foreign direct invest-related construction.”
The IMF, via the press release, expressed its prediction that the “current account deficit is expected to widen due to the dual impact of a nascent economic recovery and an increase in food and fuel prices.”
Prime Minister Douglas, during a press conference on Friday, 3rd June, 2011, held at the Parliamentary Lounge, Government Headquarters, Basseterre, said the move became necessary after – despite measures implemented for fiscal adjustment – a number of gaps were left which must be filed.
“The fiscal measures that we have introduced…they have been successful in bringing the necessary revenues that we had anticipated. What continues to be challenging is the continued and high cost of servicing the debt which, then, has left some gaps which have to be filled and that’s why the debt restructuring is one way of filling those gaps to make sure that in the development of a new development debt management strategy, we would be able to pay those debts.”
The IMF press release noted that the expectation is that the SBA programme with be a catalyst for “additional financing from other international institutions. Given the broad-based nature of the reform agenda, the support of other development partners over the medium term is essential to the success of the government’s program, including through the provision of technical assistance in priority areas.”