Another IMF test passed

On July 24, the executive board of the International Monetary Fund (IMF) completed the fifth and sixth reviews of St Kitts and Nevis' economic performance under a programme supported by a 36-month standby arrangement (SBA).

The completion of the reviews allowed the immediate disbursement of about US$6.45 million to the government of the twin-island state.

This moved total disbursements under the arrangement to about US$71.58 million.

In completing the reviews, the IMF Executive Board approved waivers of applicability for the end-June 2013 performance criteria and a waiver of non-observance of the continuous performance criterion on the ceiling of external arrears accumulated on debt contracted or guaranteed by the central government.

The SBA was originally approved for St Kitts and Nevis on July 27, 2011 for an amount equivalent to about US$79.35 million, or 590 per cent of the country's IMF quota.

Min Zhu, deputy managing director and acting chairman of the IMF Executive Board, said, "The St Kitts and Nevis authorities have continued the successful implementation of their Fund-supported programme, in particular making progress toward achieving fiscal objectives and debt restructuring."

According to Zhu, "Following a four-year contraction in economic activity, signs of an economic recovery are emerging.

"Sustained commitment to prudent macroeconomic policies and reforms will be necessary to address remaining risks and vulnerabilities and to support stronger and inclusive growth."

Zhu said the 2013 budget is aligned with the dual objectives of redeploying resources towards growth-enhancing outlays and continuing fiscal consolidation through significant budgetary primary surpluses.

CONTINUED COLLABORATION

"The restructuring of public debt has continued, notably with establishing the legal framework for incremental debt/land swaps. To help buttress banks' income, it is necessary to proceed with launching the land asset management company, according to best practices, and with land sales.

"Continued collaboration with the Eastern Caribbean Central Bank will be needed to monitor and address financial sector developments and implement reforms," said Zhu.

He said accelerating the pace of structural reforms is important to secure lasting gains in fiscal sustainability, neutralise pressures on current outlays, and promote stronger and inclusive growth.

"Priority should be given to pension and civil service reform and to streamline the social safety net. Implementing programmes to upgrade education and training skills of job seekers to enhance their employment prospects will also be important."