IMF gives positive outlook over St. Kitts and Nevis economy

The International Monetary Fund (IMF) on Monday released a statement on St. Kitts and Nevis, saying its economy is at a turning point to sustainable long-term growth.

To conclude a two-week review over the twin-island nation, an IMF mission said the country's macroeconomic conditions had improved significantly in the past two years and the outlook for 2015 remains positive.

"The economy recorded two years of strong growth, averaging about 6 percent per year, the strongest in the region by far," said Judith Gold, head of the mission.

The IMF official attributed the impressive performance to a construction boom fueled by a citizenship-by-investment (CBI) program, more investment and spending in the sugar industry, and a recovering tourism sector.

Employment had increased 23 percent over the last two years while inflation remained low, but credit to the private sector was still sluggish, expanding by only 0.5 percent in 2014, according to the IMF.

Over the medium term, the IMF projected a return to more moderate growth as construction projects wind up and the tourism sector continues to expand.

"The outlook for 2015 remains positive, although the pace of expansion is expected to moderate to about 4.5 percent," Gold said.

"There is uncertainty as a result of the imposition of travel restrictions by Canada, combined with new competition on the CBI front from neighboring countries," she added.

Over the past years, St. Kitts and Nevis had also made significant progress in reducing public debt as the debt-to-GDP ratio dropped from about 160 percent in 2010 and over 100 percent in 2013, to 80 percent at the end of 2014, said the IMF.

The further improvement of the economy, however, requires "difficult decisions and careful choices," including continued fiscal discipline and the implementation of structural reforms to expand growth potential, it said. Endi