St. Kitts and Nevis : 2014 Article IV consultation and the seventh and eighth reviews under the stand-by arrangement and request for waivers of applicability and nonobservance of performance criterion ; staff report, press releases

KEY ISSUES Stand-By Arrangement (SBA): the 36-month SBA for SDR 52.51 million (590 percent of quota) was approved July 27, 2011. The fifth and sixth reviews were completed July 24, 2013. Context and program performance: The economy is recovering from a four-year contraction through 2012, and prospects are positive, although risks remain. All fiscal program targets were met with a large margin through end-September 2013. However, the continuous performance criterion on external arrears was missed. The amounts were minor and quickly repaid. The authorities have taken measures to prevent this recurrence. The implementation of structural reforms was slow with most end-December benchmarks delayed by capacity constraints, challenges in technical assistance and changing priorities. Article IV: The last Article IV consultation was concluded on July 27, 2011. Current discussions focused on strategies to secure sustainable growth through enhancing tourism, developing cost-effective alternative energy sources, and improving the business environment. Developing a stable macroeconomic framework conducive to growth and investment is a critical element of the strategy, including a sustainable medium-term fiscal path, use of exceptional revenues to build buffers against exogenous shocks, and strengthened safeguards for the financial system. Review: The authorities’ commitment to their program is reflected in the 2014 budget, and their plans to save the bulk of the Citizenship-by-Investment (CBI) application fees. Understandings were reached on a new timetable for the implementation of most of the structural benchmarks within the remaining program period, and a prior action on operational guidelines to facilitate land sales related to the debt restructuring. Exchange regime: St. Kitts and Nevis is part of the Eastern Caribbean Currency Union and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions. It has accepted the obligations of Article VIII, Sections 2, 3 and 4