BASSETERRE, ST KITTS, December 14, 2022 – St Kitts and Nevis Prime Minister and Minister of Finance Hon. Dr. Terrance Drew informed the twin-island Nation that the Total Public Sector Debt at the end of December 2021 “stood at $1.6 billion or 69.2 percent of GDP.”
Presenting his first Budget Address since assuming office in August 2022, the Federation’s Fifth Minister of Finance since political independence, Hon. Dr. Terrance Drew, told the Budget Session of the National Assembly on Wednesday 14th December 2022, that all should be aware of the economic prospects. He stated that this small island open economy is heavily dependent on what is happening at the global level, particularly the economic situation of its major trading partners.
The Prime Minister pointed out that the global economy is expected to increase in 2023 and that there is a looming threat of a global recession in 2023 accompanied by downside risks which include inflation, tightening global financial conditions, continued supply chain disruptions, the ongoing war in Ukraine and other geopolitical tensions, and the potential negative impacts of climate change.
“Against this backdrop, the economies in the Eastern Caribbean Currency Union are expected to record growth in real GDP of 6.4 percent in 2022 and 5.9 percent in 2023.
“On the domestic front, a review of the Government’s 2021 fiscal performance highlighted how heavily the former [Team Unity] Administration relied on the proceeds from the Citizenship by Investment (CBI) Programme to fund the operations of the Government. This is not a sustainable practice. During that year, inflows from the CBI Programme accounted for 54.9 percent of Total Revenue and Grants and funded 63.5 percent of the Government’s Total Expenditure. Total Revenue and Grants for the 2021 fiscal year therefore amounted to EC$988.8 million, of which Recurrent Revenue was EC$970.4 million and Grants were EC$18.4 million,” said Finance Minister Drew.
He added: “While Non-Tax Revenue exceeded the budget by 106.9 percent, mainly on account of the proceeds from the CBI Programme, Tax Revenue was 19.8 percent lower than anticipated. The low level of Tax Revenue highlights the prolonged negative effects that the pandemic and country lockdowns have had on individuals and businesses.”
With respect to expenditure, Prime Minister and Minister of Finance, Hon. Dr. Terrance Drew stated that the total amount that was expended for the 2021 fiscal year was EC$855 million.
“Of this amount, EC$701.8 million was related to Recurrent Expenditure and EC$153.2 million was for Capital Expenditure and Net Lending. Outlays for Recurrent Expenditure were 10.0 percent more than the budget while Capital Expenditure and Net Lending was 20.7 percent below the Estimates,” said Dr. Drew.
He also disclosed that the over expenditure for Recurrent Expenditure was primarily related to financial support that was granted to a few Government Entities and Agencies as well as additional transfers to the Nevis Island Administration to assist with the extra month’s salary payments in December of that year. “The cost associated with the implementation of the Income Support, Disabilities Support and Fuel Subsidy Programmes as well as expenditure beyond that which was budgeted for the Poverty Alleviation Programme (PAP) and conducting due diligence on CBI applicants also contributed to the excess expenditure,” said Prime Minister Hon. Dr. Terrance Drew.
On the debt situation, at the end of December 2021, the Prime Minister of St. Kitts and Nevis said the Total Public Sector Debt stood at $1.6 billion or 69.2 percent of GDP, which represented a decline of 1.2 percent in absolute terms but an increase of 1.1 percentage points in the Debt-to-GDP ratio.