Published 7 June 2018
Buckie Got It, St. Kitts and Nevis News Source
By: Media Source
St. Kitts and Nevis economy continues to slow down, public debt rose in 2017, says ECCB
Basseterre, St. Kitts, June 6, 2018 – The St. Kitts and Nevis economy continues to slow down for the third consecutive year under Prime Minister Dr. Timothy Harris’ PLP/CCM/PAM administration.
The St. Kitts and Nevis economy registered a GDP of 1.7 percent in 2017, according to the Eastern Caribbean Central Bank (ECCB) Annual Economic and Financial Review, which predicted n its outlook for 2018, a narrowing of the Federal Government’s fiscal surplus, further slowing in receipts from the Citizenship by Investment Programme and increase inflationary pressures in the domestic economy.
Available data indicate that the economy of St. Kitts and Nevis decelerated to 1.7 in 2017 compared to 2.2 percent in 2016, 3.9 in 2015, 6.0 in 2014 and 6.2 in 2013.
The ECCB said the fiscal operations of the Federal Government resulted in a “smaller overall surplus, driven by a fall in non-tax revenue supplemented by a rise in capital expenditure. The total outstanding public sector debt rose during the period under review.”
“In the banking system, monetary liabilities, and net foreign assets fell while domestic credit increased. The commercial banking system remained liquid and the spread between the weighted average interest rates on loans and deposits narrowed,” said the ECCB.
Stating that the economy is expected to expand at an accelerated pace in 2018, compared with developments in 2017, the ECCB said economic activity fuelling the improved outlook include higher value added contributions from the construction, hotels and restaurants and agricultural sectors. An increase in construction will reflect continued work on a number of public sector projects as well as intensified activity on private sector projects some of which will near completion in 2018.
The ECCB said increased investment in enhancing the room stock in St. Kitts and Nevis as well as a number of other service-related private investments will buttress the service options and enhance the number of luxury accommodations that appeal to high net worth visitors.
The performance of the tourism industry will also be strengthened by additional investments in the cruise industry. Associated with projected increases in the major productive sectors are positive knock-on effects on other major sectors including real estate, renting and business activities; financial intermediation; transport, storage and communications and the wholesale and retail trade sectors.
Higher real sector activity is also likely to increase inflationary pressures in the domestic economy.
The ECCB said the overall fiscal surplus of the Federal Government is anticipated to narrow.
“Increases in capital expenditure are likely to further constrain the size of the overall surplus. Nevertheless, tax revenue is estimated to increase buoyed by a pick-up in real sector activity. A higher level of current expenditure is also estimated reflecting increased public investment,” the ECCB said.
Looking at the downside, the ECCB said risks to the economic outlook in St. Kitts and Nevis reflect a possible strengthening in commodity prices with associated negative implications on the overall fiscal balance and the domestic cost of doing business.
“Other financial risks reflect increased credit costs in the Federation’s major trading partners, the USA, as the Federal Reserve Bank gradually unwinds asset purchases and seeks to contain inflation through interest rate increases in anticipation of robust economic growth,” as well as “a further slowing in receipts from the Citizenship by Investment programme as well as possible disruption to economic activity posed by weather related threats from hurricanes and flooding,” the Central Bank said in its Annual Economic and Financial Review for 2017.
Photo – Prime Minister and Minister of Finance, Dr. Timothy Harris
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