The economy of St. Kitts and Nevis, buffeted by the impact of the global financial crisis and economic downturn, contracted by more than 5 percent in 2009, as a result of declines in tourism and construction.
“However, it is worthy of note that due to tremendous efforts at fiscal discipline, we were able to achieve a primary surplus of more than 8 percent of GDP in 2009,” St. Kitts and Nevis Prime Minister and Minister of Finance, Dr. Denzil L. Douglas, told the Plenary Session of the 40th Annual Meeting of the Board of Governors of the Caribbean Development Bank (CDB) in the Bahamian capital.
Dr. Douglas said St. Kitts and Nevis have achieved a fiscal primary surplus over the past five years. However, this has not been sufficient to place the twin-island federation in the fiscal position that is resilient and that provides room to maneuver when crises occur.
“The government has recognized the need for even stronger fiscal adjustment in order to ensure the sustainability of our fiscal and debt position and secure the environment to foster economic growth. Therefore, in our 2010 budget address, we announced a series of measures aimed at closing the financing gap on the budget,” said Prime Minister Douglas.
He said that the measures include the implementation of a Value Added Tax on November 1, 2010, a wage freeze in the context of wider public sector reform, the curtailment of expenditure on goods and services, and the rationalization of tax concessions.
“I wish to emphasize that each country must, at this time, consider its strategic options in light of its own vision for its people and the need for sustained growth and come up with a solution that is workable in its own context,” said Dr. Douglas.
“This is what St. Kitts and Nevis is seeking to do at this time. We have been creating several internal vehicles aimed at ensuring the engagement and inclusion of all citizens in the continuing process of nation building, recognizing that it cannot be business as usual,” Prime Minister Douglas told delegates from all CARICOM member states, as well as non-borrowing members from Canada, the United Kingdom, Italy, Germany, Mexico, China, Venezuela, and Colombia, and financial institutions such as the World Bank and the International Monetary Fund (IMF).
Prime Minister Douglas is of the view that developing small economies can learn from each other, “As we seek to navigate these treacherous waters of crisis, which was triggered by the malfunction of the financial sectors in the advanced economies.”
He said he was certain that the Caribbean Development Bank, given its position and role as a highly-recognized and respected regional institution, “Can help to devise a home-grown formula for cooperation and collaboration at this time and one that can serve as a benchmark for response to similar events in the years ahead.”
Dr. Douglas encouraged optimism in the region’s ability to recover from this period of extreme financial and economic difficulty and to come together to protect the people from the ravages of these crises.
“I would like to stress the need for urgency, as there are real people in our countries who will become innocent casualties if we do not act speedily. I, therefore, urge all regional and international institutions represented here at this auspicious fortieth meeting of the board of governors of the Caribbean Development Bank to make the necessary resources available to assist our countries at this time and to devise a way forward for assisting our developing countries dealing with these issues, as they will continue to arise in the future,” said Prime Minister Douglas who serves as governor on the CDB’s board.