St.Kitts & Nevis’s 2013 Budget passed

"Nation must be rooted in our bond of love for our fellowmen & our bond of love for our country," says PM Douglas

BASSETERRE, ST. KITTSCUOPM) – The St. Kitts and Nevis National Assembly Tuesday night unanimously approved an EC$528.1 million (One EC dollar = US$0.37 cents) tax free budget presented to Parliament earlier in the day by Prime Minister and Minister of Finance, the Rt. Hon. Dr. Denzil L. Douglas.


The measure which ensures the payment of salaries to thousands of civil servants and auxiliary workers and pensioners as well as the upkeep of hospitals, clinics, police stations, day care centres and other government run institutions was passed despite eight parliamentarians despite the absence of seven opposition parliamentarians.

Prime Minister Douglas told Parliament, that while it is clear that the economy of the twin-island federation is still not out of the woods in terms of the dangers that still loom in the global and National economies, it is still quite possible that the local economy can suffer repercussions if economic and financial turbulence resurfaces, particularly, events that may affect its major international trade and donor partners.

"Even as we contemplate such possibilities we must press forward with the job of building our Nation for the benefit of all citizens and residents," said Dr. Douglas noting that he has given an account of the state of affairs in the economy, summarized the fiscal and debt dynamics as well as provided a preview of the major policy issues, programmes and projects to be pursued by his Government for the rest of the year.

"There are some early signs that our fiscal discipline has created a little headroom for us to continue to support the main functions of the Government service and to promote important policies planned for implementation in 2013," Dr. Douglas said.

"Our strategic actions are being crafted in line with our budgetary limitations and commitments to our reform agenda. As our systems evolve, we must take time for assessing our actions so that we can have continuous improvements. In this regard, we are working on several fronts with bilateral and international partners to accomplish a number of reforms in tax administration, public financial management and the civil service. We have recently worked with the Fiscal Affairs Department at the IMF to evaluate the performance of the VAT since its launch in 2010. With assistance from the European Union, we have developed a robust Public Financial Management Action Plan to guide reforms over the medium term. In addition, in 2012, we signed a Grant Agreement with the World Bank to implement a project for the enhancement of public sector governance and efficiency. We will continue to implement this important project in 2013," he told a packed gallery and the Nation listening to the Budget presentation on several radio stations.

Finance Minister Douglas said the nation’s tax regime is growing from strength to strength in terms of its overall admin capability, customer service orientation and technical expertise.

"It is our expectation that continuous improvements will serve to boost business confidence and enhance competitiveness of businesses operating in the Federation. With elevated business confidence and the real opportunity to create financial space for increased investment, our policies and actions can ultimately lead to job creation, lifting of real income, economic growth and increased revenues," he said.

Dr. Douglas said the negative effect of the contraction in the Construction Sector must now be treated with renewed energy as policies are put in motion for direct actions that will get it moving again.

"This will be critical to the achievement of the positive growth levels which we seek. The Government cannot do the transformative work that is required all by itself neither is there any intention to try to go it alone. In fact, we expect that much of the growth in the economy will be generated by the private sector. We also expect that the private sector will take hold of the opportunities that have been created as a result of the resounding success of the Government in crafting a more sustainable outlook for the country," the Prime Minister and Finance Minister said.

He disclosed that in an effort to foster sustained growth the Government has approved six (6) investment projects that will be executed in the Federation over the next five (5) to seven (7) years.

"Taking a combination of these projects, we expect that in excess of US$300 million will be injected into the economy. They have the potential to stimulate growth within and between various sectors such as Construction, Tourism, Wholesale and Retail, and Information and Communication Technology. These projects will also provide well-needed long-term job opportunities for persons in various fields of expertise such as landscape architects, web developers, graphic designers and mechanics. I again emphasise to our people that this Government will continue to do its part but each of you should prepare yourselves to capitalize on the opportunities when they become available," said Dr. Douglas.

He said St. Kitts and Nevis can expect acceleration in the ongoing recovery in the Tourism Sector as indicated by recent data on advanced bookings and tourist arrivals.

"We expect more positive outcome in construction activity and imports combining to produce stronger growth in 2013. In addition to generating economic activity, the Government’s Capital Programme, particularly the infrastructure component of the Special Land Distribution Initiative, will increase the value of the lands. This will translate to greater equity enabling the beneficiary households to negotiate mortgage financing, education facilities and arrange financing for business purposes. As far as possible, all capital projects will be designed to create jobs," said Prime Minister Douglas.

He said it was important to put the policies and programmes in the context of the challenge of maintaining high investment levels.

"Investment levels are a significant driver of economic activity and growth in the small economies of the OECS. Indeed, in the case of our Federation, the evidence over the last decade is that investment levels have played an even more important role in GDP than in the rest of the OECS region. As a percentage of GDP, our investment levels have consistently exceeded those recorded in the rest of the region. Moreover, although there is still great uncertainty about the acceleration of the global recovery, one thing that we can be sure about is that the recovery will usher in a much more competitive environment as countries and firms struggle to recover lost ground. It is therefore important that we focus on positioning our economy to compete in this environment. In order to meet this challenge, infrastructure investments by the public sector and product development investments by the private sector will need to complement each other," said the St. Kitts and Nevis leader.

Dr. Douglas reiterated that the initiatives planned for this fiscal year will target the three (3) main actors in the investment environment – the public sector, the domestic private sector and the foreign investors.

"In the public sector, as I have outlined, the emphasis will be on using available fiscal space to re-energize infrastructure investment. Alongside these investments, we will intensify efforts to strengthen our public investment management systems within the framework of the ongoing public finance management action plan and the recently enacted public procurement legislation. Business climate enhancement issues will be the focus of interventions in the private sector and these will include the planned migration to the ASYCUDA system at the Customs Department and Exercise Department, the introduction of online filing systems at the Inland Revenue Department and, of course, the adjustment in corporate tax levels. In addition, we plan to use the information gleaned from the annual World Bank Doing Business Indicators publication as part of the framework for identifying and prioritizing actions designed to improve the competitiveness of our business climate," he said.

In 2013, work should be completed on the design of a new investment code and this will be followed by a comprehensive review of our tax incentive policies. This review will inform the re-engineering of policies in this area as we seek to align them with the requirements of the restructured tax system, the country’s accession to the World Trade Organization (WTO) and the European Partnership Agreement (EPA) and the continuing growth in the relative importance of tourism and other service industries.

"It is important for our people to understand that this Government is proactive and we cannot wait for anyone else to determine our destiny. We must study the facts, identify our resources and opportunities, choose our path and follow the Leader with full confidence. In the end, our journey as a Nation must be rooted in our bond of love for our fellowmen and our bond of love for our country," Prime Minister Douglas concluded.

Photos of properties under construction (Photos & Story by Erasmus Williams)