The federation would have recorded the strongest growth in the region for the 2013-2015 period, but despite that fact, [economic] growth will moderate to 3.5 percent in 2016 and 3 percent, on average, over the medium term; a decline from the 5 percent growth recorded last year.
Additionally, even though the fiscal position remained in surplus, it weakened compared to previous years, owing to a slowdown in CBI receipts to the budget, delays in grants, and the impact of the 2014-2015 VAT and Import Duty exemptions.
However, the debt-to-GDP ratio continued its impressive downward trajectory and is projected to reach the Eastern Caribbean Currency Union’s (ECCU) 60 percent target in 2017, well ahead of peers in the Caribbean.
In order to preserve macro-financial stability and hard-earned gains in debt sustainability, the Executive Board of the IMF – at the recently concluded Article IV consultation with St. Kitts-Nevis on 8th July – indicated that the federation should incorporate a multi-pronged strategy. The elements of such strategy should include, strengthening the fiscal framework to reduce reliance on CBI inflows,while preserving the accumulated savings from the CBI program; resolving the debt-land swap to safeguard financial stability, while mitigating emerging financial sector risks; and enhancing competitiveness, diversification, and resilience to shocks, including from natural disasters.
These elements, the Board indicates, will help to build resilience to negative surprises in future CBI inflows, provide a contingency buffer for future shocks, such as costly natural disasters, preserve the credibility of debt restructuring and strengthen public financial management.
In October 2015, St. Kitts and Nevis successfully exited the Post-Program Monitoring Framework maintaining favorable macroeconomic performance and a broadly stable financial system.