IMF Welcomes Growth In St Kitts and Nevis

St Kitts and Nevis is experiencing an exciting period of economic growth according the International Monetary Fund (IMF).

The IMF, who spent a week in St Kitts and Nevis assessing the country’s economy, has delivered a detailed analysis of the federation’s financial condition. While acknowledging significant economic achievements, the report emphasises that additional capital investment will be essential to fully realize the nation’s considerable potential.

The IMF report indicates positive momentum for St Kitts and Nevis, projecting medium-term economic expansion of 2%, up from 1.5% growth recorded in 2023. Price stability is also expected to continue.

A primary factor contributing to this positive trajectory, as highlighted by the IMF, is the creation of a sovereign wealth fund, demonstrating prudent fiscal management by both the Federal Government and the Nevis Island Administration.

Both governmental bodies have consistently directed resources toward durable infrastructure development over the past decade, stimulating economic activity across the federation.

The IMF specifically acknowledged the federation’s advancements in geothermal energy development and noted that securing funding for this initiative represents a significant positive indicator for the country’s economic outlook. A bidding process for a new geothermal facility on Nevis will conclude in the coming months.

However, the IMF categorised the federation’s sovereign debt risk as ‘moderate’ and forecasted rising public debt levels.

Public debt decreased from 69% in 2021 to 52% in 2024, but is projected to increase to 60.2% this year and potentially reach 68% by 2030. This anticipated rise is attributed to decreasing revenue from the Citizenship By Investment (CBI) program.

Historically, CBI programs have provided consistent investment for the region but have become domestically contentious. In 2024, the minimum investment requirement for a family of four nearly doubled, resulting in declining participation rates.

Consequently, the IMF has recommended ‘prompt and steady’ fiscal consolidation to maintain public debt below the regional threshold of 60% of Gross Domestic Product. With St. Kitts and Nevis’ current public debt at 51.7% of GDP, it’s understandable that calls for significant foreign investment to address these financial challenges have intensified across the islands.

Both Governments have therefore shifted strategy, looking for other ways to attract foreign investment. Investment in major projects is designed to generate employment opportunities, improve public services, and establish a more resilient economy, ensuring long-term prosperity for the nation and its citizens.

While St. Kitts and Nevis has made substantial progress toward economic prosperity, maintaining this momentum requires strategic growth initiatives. Declining CBI revenue has amplified calls for fiscal consolidation and foreign investment; key measures for addressing the IMF’s concerns and securing long-term economic stability.