ST. KITTS-ECONOMY – IMF welcomes Government’s commitment to establishing growth resilience fund

BASSETERRE,St. Kitts, May 14, CMC – The International Monetary Fund (IMF) has welcomed the government’s commitment to establishing a Growth and Resilience Fund (GRF).
The international lending agency in its concluding statement of the 2017 Article IV Mission says once the GRF is established the government should consider transferring revenue from Citizenship by Investment inflows and resulting SIDF deposits.
The IMF says the SIDF fiscal spending should be contained including streamlining its activities and integrating governments consolidated accounts to facilitate more comprehensive fiscal planning and cash management.
The SIDF, a mechanism in the CBI (Citizenship by Investment) programme which accepts granting starting at US$250,000 dollars from applicants seeking economic citizenship.
The statement from the international lending agency, noted that the authorities have accepted the need to enhance the oversight of public corporations by enforcing timely reporting of financial statements.
It added that overall public financial management would also benefit from the strengthening of the NIA’s debt and cash management frameworks.
The sale of lands under the debt-land swap arrangement must be completed urgently to limit fiscal and financial risks, the IMF warned.
The lending agency also stated that the economy posted a modest 3.2 percent in 2016, compared to 4.9 percent in 2015 and 5.12 percent in 2014.
“The agency says the medium-term outlook incorporates conservative assumptions on future CBI flows.
While the Eastern Caribbean Central Bank is projecting a growth rate of 3.82 percent in 2017, the IMF said its assessment indicates that growth is projected to be 2.7 percent for 2017 and is expected to average around 3 percent in the medium term.
“The projected slowdown in construction would be offset by public investment on infrastructure and higher tourism growth as source market growth accelerates and new tourism facilities come on stream in 2017-19.
Other negative risks include a stronger U.S. dollar, a tighter financial environment, a more severe Zika epidemic, and a major natural disaster,” said the IMF.
It also said that loss of correspondent banking relationships (CBRs) could add to challenges.
“Softer global climate change policy may exacerbate natural-disaster risks. On the upside, stronger CBI inflows (from ongoing program reforms and tougher immigration policies in the United States on other countries) and weaker oil-prices could support faster growth,” the IMF said.