According to some reports, at present, the National Debt of St. Kitts & Nevis is one of the highest in the world, and stands at 3 Billion dollars. This poor economic situation continues to impact the country negatively, and now many Kittitians and Nevisians have started openly express their concerns regarding the dreadful state of affairs.
Speaking at press conference with the IMF on Friday 3rd June, 2011, Prime Minister and Minister of Finance for St. Kitts & Nevis, Dr. Denzil Douglas, said his Government has had to call in the IMF to provide EC$226.8 Million (US$84 million) Stand-by Arrangement.
He said that his administration is trying to create the environment for strong and sustainable growth, while attempting to reduce the debt to a manageable level and thirdly to maintain the health of the financial system at the same time while the other two are being achieved.
Dr. Douglas said that his Government initiated a number of fiscal measures to help address the poor economic performance of the economy.
Prime Minister Douglas said these measures included the introduction of the Value Added Tax (VAT) in November 2010, the increase of the Housing and Social Development Levy, the introduction of the Unincorporated Business Tax, the introduction of fees and taxes for Duty Free stores, a freeze on increments for Civil Servants and higher Electricity Rates.
Despite all these tax increases and heavier burden placed on the pockets of Kittitians and Nevisians, the Government has conceded that the efforts have failed to deliver improvements to the economic health of the country. In other words, the public debt directly entered into by the central government, and the debt chalked up by statutory corporations, like the St. Christopher Air & Seas Ports Authority, SCASPA, continue to increase and the re-payment of such, remain quite difficult.
However, the news is even worse because the Government has also admitted that its chances of closing its financial gaps are unlikely to be achieved despite these new taxes, such as the VAT.
Other measures are needed and these include asking its creditors to adjust their schedules and costs for the re-payment of the country’s loans.
The IMF is said to be willing to work with the Government to guide the process of fiscal recovery, following, not only programs that the Federal Government wishes to introduce, but also those policies that would be recommended by the IMF.