Moving from what many financial and economic experts had estimated as over 3 Billion Dollars (EC), to what the Finance Minister of St. Kitts and Nevis, Dr. Denzil Douglas, on Tuesday, 10th December, 2013, stated was now at 2.1 Billion Dollars, there is still much concern over what remains a huge financial burden to this small developing Caribbean state.
“Today Mr. Speaker I can report with pride that as from September, 2013, the total public sector debt was 2.1 Billion Dollars or 103% of GDP”, said the minister.
He said the total debt stock at the end of September, 2013 was reduced by 0.6 million dollars or 21% from where it stood at the end of December, 2012.
Dr. Douglas explained that this “significant reduction in the debt stock was primarily at the result of the land for debt swap that took place between the central government and the St. Kitts-Nevis-Anguilla National Bank, at the beginning of July 2013.”
Though Douglas described the reduction as “a major achievement for the government and the country as a whole,” it is clear that St. Kitts and Nevis remains saddled with a public debt that is of serious concern, not only to the 50,000 citizens of the country, but also international financial agencies.
In a list published in October, 2013, the CIA World Fact Book recorded St. Kitts and Nevis as the third most indebted nation, with 185.00%….behind Zimbabwe (234.10%) and Japan, (197.50).
The CIA World Factbook added that, “As far as measuring which nations are struggling, the debt to GDP is an excellent measure.
As agreed by the World Factbook report, there are many different ways to measure debt as a factor in a nation’s economic health.
One of the most popular, measures is debt as a percentage of GDP. This tells you how likely it is that a nation is going to be able to pay its bills. In this sense, GDP is income, so the more GDP you have, the more debt you can service, explained the report.
The top 10, based on 2009-2010 data includes:
1. Zimbabwe 234.10%
2. Japan 197.50%
3. Saint Kitts and Nevis 185.00%
4. Greece 142.80%
5. Lebanon 133.80%
6. Jamaica 126.50%
7. Iceland 126.10%
8. Italy 119.10%
9. Singapore 105.80%
10. Barbados 102.10%
While making the presentation of his 2014 budget in parliament this week, Finance Minister
Douglas was however positive in his outlook when he opined that “The restructuring exercise was long and challenging but we are almost at the end of the road.” He was referring to an IMF supported austerity program that was introduced three years ago.
He was also hopeful that his government will be able to have even more success in debt reduction, perhaps lowering it to 80% of GDP by the end of 2016. This he said will be accomplished “even while we meet our debt repayment obligations which are expected to peak between 2014 and 2015,” said Prime Minister Douglas.
“Firstly, expansion of expenditure must be moderate and measured. This principle applies particularly to recurrent expenditure and, as such, we plan to keep any growth in this area in line with the growth of tax revenues. The second fiscal management principle that we propose to adopt is linked very closely to the first and it is that the use of the surplus resources being generated by the Citizenship by Investment programme will be heavily biased towards investment spending on programmes and projects that are carefully designed to strengthen the country’s productive capacity,” said Douglas.
He added that the third principle commits the country to accelerating the implementation of a number of structural reforms that they have identified as being critical elements of the institutional infrastructure required to support sustainable growth and the enhancement of the economy’s competitiveness. This agenda includes continuation of the public financial management improvement programme, business climate enhancement, pension reform, public sector modernization and the re-engineering of our social service delivery system,” said Prime Minister Douglas.