Caribbean & Central America - June 2014 (ISSN 1741-4458)

*** IMF HAPPY WITH ST KITTS. An International Monetary Fund (IMF) team visited St Kitts & Nevis from 12-21 May for the fifth and final review under the country’s three-year Stand-By Arrangement (SBA). At the conclusion of the visit, team leader Judith Gold said:

“The economic recovery in St Kitts and Nevis has gathered momentum, with real GDP growth at an estimated 3.8% in 2013 reflecting a pickup in tourism, a strong expansion in construction activity related to large Citizenship-by-Investment (CBI) inflows, a substantial increase in public sector investment, and impetus from the People Employment Program (PEP)”.

The purpose of the mission was to assess SKN’s performance under the IMF programme as at the end of March 2014, and the report card was relatively clean. The IMF noted that “the fiscal out turn for March 2014 was in line with program targets” and that fiscal targets for 2014 “are achievable”. However, it added the caveat that this would require “continued policy efforts to contain government employment, and consequently the public sector wage bill, as well as spending, while continue to strengthen revenue collections”.

SKN’s public debt, which stood at 164% of GDP in 2010, was now down to 104% of GDP as at end-2013 and “is on the path to reach” the 2020 target of 60% of GDP. The fiscal balance went from a deficit of 7.8% of GDP to a surplus of 12.2% in 2013.

*** JACK WARNER DROPS OUT OF LEADERSHIP RACE. Perhaps not surprisingly given the renewed focus on the bidding for the World Cup in Qatar, in which the role of West Indian football chief and Trinidadian politician Jack Warner has attracted particular attention, Warner has decided not to seek re-election as leader of the party he founded, the Independent Liberal Party (ILP). He founded the ILP in 2013 after having been ousted from the People’s Partnership government over the long-standing corruption allegations, and he subsequently won the Chaguanas West by-election. The ILP will now elect a new executive to lead the party into next year’s general election.

*** ANTIGUA VOTE-BUYING ALLEGATIONS. The run-up to the 12 June general election in Antigua & Barbuda has been marred by allegations of vote-buying by the ruling United Progressive Party (UPP) led by Prime Minister Baldwin Spencer.

In particular, the UPP, which is in search of a third five-year term, is said to have been bribing voters in Spencer’s constituency after being told by pollsters that the prime minister was within two percentage points of losing his seat. The UPP is thought to have spent US$3m on its election campaign, and there have been some questions as to where this money is coming from – and its purpose given that there are only 50,000 voters in the twin island state. The opposition Antigua and Barbuda Labour Party (ABLP) says that much of the money has come from companies to which the UPP government has done favours.

The economic background is not favourable to the UPP – and would be a headache to the ABLP should it win the election. The economy contracted by 10.7% in 2009 and by a further 8.6% in 2010. In 2011 the contraction was a less severe 2.1%, and this was followed by growth of 2.8% in 2012. However, 2013 was again slow, with just 0.5% growth. For 2014, the International Monetary Fund (IMF) is expecting growth of 1.6%, but on 3 May, the IMF reported that “risks to this outlook are high” due to the country’s “unsustainable fiscal situation” and the large amounts of nonperforming loans in the banking sector.