Published 27’ February 2025
Buckie Got It
St. Kitts and Nevis News Source
IMF Report Acknowledges Economic Challenges But Validates Labour Government’s Growth Strategy
The International Monetary Fund (IMF)has released its 2025 Article IV Mission Report, providing a comprehensive assessment of St. Kitts and Nevis’ economic landscape. The report confirms the fiscal deficit of 11 percent of GDP in 2024, as previously outlined by Prime Minister Dr. Terrance Drew during the presentation of the 2025 National Budget in December 2024. However, the IMF attributes this deficit to strategic and necessary investments made by the Drew administration to transform the nation’s economy and improve the standard of living for citizens.
Economic Growth and Outlook
The IMF projects economic growth to improve to 2 percent in 2025, up from 1.5 percent in 2024, with a further increase to 2.5 percent in the medium term. This positive trend is largely driven by a booming tourism sector and the advancement of renewable energy projects, including the geothermal initiative. Inflation is expected to remain steady at 2 percent, providing stability for businesses and consumers.
Fiscal Deficit and Public Debt
The current account deficit (CAD) widened to 15 percent of GDP in 2024, reflecting a sharp decline in Citizenship by Investment (CBI) revenues and a necessary increase in government spending on infrastructure and social development. Despite these challenges, the report affirms the sustainability of the CBI programme following recent reforms implemented by the Labour administration, ensuring that the programme remains transparent and internationally compliant.
The fiscal deficit is projected to decline to 9 percent of GDP in 2025, indicating the government’s proactive steps toward economic balance. Public debt is expected to rise moderately to 61 percent of GDP in 2025 but remains manageable within regional standards.
Strategic Investments Driving Economic Transformation
The IMF highlights several key investments by the Drew administrationthat, while contributing to the short-term deficit, are expected to deliver long-term economic stability and national development:
- The Construction of the new Joseph N. France (JNF) Hospital – A state-of-the-art healthcare facility designed to modernise medical services and enhance access to quality care for all citizens.
- The Basseterre High School Reconstruction – The project has entered the Environmental Impact Assessment phase, paving the way for a world-class educational facilityto strengthen human capital development.
- Geothermal Energy Development – The government has allocated USD $30 million to advance geothermal energy exploration, securing long-term energy independence and sustainability.
Comparing Transparency Under Labour vs. Harris Administration
Unlike the previous administration of former Prime Minister Dr. Timothy Harris, who notoriously concealed unfavourable economic findings from the IMF, the Drew-led government has prioritised full transparency and public accountability. The last known instance of the Harris administration withholding critical IMF data occurred in 2018, depriving the public of a clear understanding of the country’s financial position.
Prime Minister Drew’s commitment to honest and transparent governance was reaffirmed today as he formally announced the release of the IMF report in Parliament, ensuring that citizens are fully informed about the economic realities and the government’s forward-thinking policies.
Looking Ahead: Economic Stability and Growth
Despite global uncertainties and risks associated with reduced CBI revenue, fluctuating tourism markets, and climate-related challenges, the IMF report presents an optimistic outlook for St. Kitts and Nevis, provided the government continues its fiscal discipline and structural reforms.
Key policy recommendations include:
- Implementing a Sovereign Wealth Fund (SWF) to manage fluctuations in CBI revenueand create long-term financial buffers.
- Enhancing tax reforms and improving fiscal efficiency to reduce reliance on external financing.
- Strengthening financial oversight in banking and credit institutions to safeguard public funds.
- Advancing labour market reforms and upskilling programmes to align with private and public sector demands.
The IMF recognises that St. Kitts and Nevis is at a critical turning point, where sound economic planning, strategic investments, and transparent governance will drive national progress. The Drew administration remains committed to ensuring that its policies lead to economic resilience, social development, and prosperity for all citizens.
