St. Kitts and Nevis Eyes Fiscal Discipline, Infrastructure Boost, and Social Assistance Expansion

The International Monetary Fund (IMF) has outlined a comprehensive roadmap for tax reform and infrastructure development to help St. Kitts and Nevis achieve firm control of its wage bill and goods and services expenditures, while phasing out electricity subsidies.

Tax Reform and Fiscal Discipline

The IMF’s roadmap aims to increase progressivity and reduce distortions in the tax system, while consolidating public sector investment policy and planning across government agencies. The plan includes introducing a Sustainability and Resilience Fund (SRF) and an explicit fiscal rule to ensure long-term sustainability of the country’s finances.

• Increase capital expenditures on infrastructure projects, particularly those designed to improve resilience to natural disasters
• Provide a buffer against potential shocks to the economy
• Implement a two-tier increase in the minimum wage from 2024 to 2025

Infrastructure Development and Investment

The IMF recommends upgrading infrastructure, including:

• Roads
• Ports
• Energy systems
• Increasing investment in renewable energy sources such as solar and geothermal power

Additionally, the country’s financial system should be strengthened by:

• Ensuring that banks meet regulatory minimums
• Addressing non-performing loans

Social Assistance Expansion and Public Services

The plan aims to expand targeted social assistance programs and improve public services, including:

• Education
• Healthcare

To achieve this, the government is expected to increase its revenue collection efforts and reduce wasteful spending.

Social Security System Review

The IMF recommends reviewing and updating the country’s social security system to ensure long-term sustainability and protect intergenerational equity. This includes:

• Increasing contribution rates
• Expanding pension coverage
• Diversifying investment portfolios

Utility Pricing and Public Services

The pricing of water and electricity services should be revised to reflect production costs, with more progressive utility rate structures encouraging investments in conservation and providing resources for these investments.

Conclusion

The IMF mission has expressed gratitude for the warm hospitality extended during their visit and looks forward to continuing to work with St. Kitts and Nevis to achieve its development goals.

Contact: Rosa Hernandez Phone: +1 202 623-7100 Email: MEDIA@IMF.org @IMFSpokesperson