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Director of Audit Reveals Financial Strain: Indebtedness of Statutory Entities Unveiled in St. Kitts and Nevis

In a revealing report on the financial state of St. Kitts and Nevis for the year ending December 31, 2022, Director of Audit, Carla Berridge Pike CPA, has brought attention to the substantial indebtedness of various statutory entities. The report underscores the contingent liabilities for which the Federal Government is contingently liable, painting a concerning picture of the nation’s financial landscape.

Key Findings:

• Nevis Island Administration: Contingent liabilities amount to $459.4 million.
• SCASPA (St. Christopher Air and Sea Ports Authority): Contingent liabilities stand at $169.4 million.
• NHC (National Housing Corporation): Contingent liabilities reach $146.5 million.
• Development Bank: Contingent liabilities total $101 million.
• Nevis Housing: Contingent liabilities amount to $41.2 million.
• Frigate Bay Corp: Contingent liabilities stand at $36.5 million.
• Nevis Tourism: Contingent liabilities are reported at $0.6 million.
• Nevis Air and Sea Ports Authority: Contingent liabilities reach $2.1 million.
• Nevis Electricity Company: Contingent liabilities are reported at $0.3 million.

In her statement, Director Carla Berridge Pike emphasizes the gravity of the situation, revealing that the total contingent liabilities now amount to a staggering $957 million, surpassing the Central Government’s debt by $320 million.

Comparative Analysis:

• The Federal Government’s public sector debt as of December 31, 2022, stands at $1.6 billion.
• Under the leadership of Dr. the Hon Timothy Harris, the Team Unity government significantly reduced public debt by paying off the remaining $117 million IMF debt left by the Douglas administration.
• An additional $408 million was paid down on the notorious debt for land swap between the preceding Labour government and the National Bank.
• Dr. Harris’s administration also addressed indebtedness to Petro Caribe and other entities, contributing to the reduction of the overall public debt.

Under Dr. Harris’s leadership, St. Kitts and Nevis achieved a historic milestone, becoming the first independent member state to achieve a debt to GDP ratio of 60 percent, achieving this goal 13 years ahead of the target date set for 2030.

In contrast, the report highlights the challenges faced by the previous Labour Government, which grappled with the second-highest debt to GDP ratio of around 178 percent in 2008. This financial strain led to an IMF program in 2011, marked by austerity measures, including the introduction of a 17% VAT, an 85% increase in electricity rates, a 400% surge in water rates, raised duty service charges, and forced retirements of civil servants.

The current Third Prime Minister, Dr. The Honorable Timothy Harris, is acknowledged for being the first to provide annual budgetary support to Nevis while funding various products and services for the Nevis Island Administration. In 2022, direct budgetary support was increased to $66 million, serving as the main revenue source for the NIA. As the nation absorbs this financial information, policymakers face the challenging task of addressing and mitigating the substantial contingent liabilities to ensure the long-term economic stability of St. Kitts and Nevis.