PM Douglas tells local business community priority and preference will be given to the nationals and enterprises of St. Kitts and Nevis in land for debt swap sale
Members of the St. Kitts and Nevis Chamber of Industry and Commerce have been told the debt for land swap will reduce the Federation’s debt to GDP ratio to well under 100% and create even more fiscal space to accelerate growth-related development initiatives while modernising and strengthening the federation’s social safety net programmes.
"This significant debt reduction exercise is putting us in the higher echelons of the ranking of countries based on debt to GDP criterion," said Prime Minister Douglas at the Chamber’s Annual Christmas Luncheon on Tuesday.
Invited to deliver the feature address, Dr. Douglas, who is also the Minister of Finance pointed out that there has been much misinformation communicated in relation to the debt for land swap and welcomed the opportunity of clarify the issues that have been the subject of some public discussion.
Dr. Douglas said that the portion of lands that are identified for inclusion in the debt for land swap, were carefully selected to ensure that the sale of such land would not adversely affect the Government’s programmes for expanding existing communities and for empowering people in our various communities through land ownership.
"For instance, the Government Special Land Distribution Initiative continues to function and make land available to first time land owners in our Federation and this would not be affected in any way by the debt for land swap initiative. Similarly, the Government will continue to implement its housing and land policy with a view to fostering growth, reducing poverty, facilitating industrial, agricultural and tourism development, and achieving a range of social and economic objectives," he told the gathering.
He also stated that the Government, either directly or indirectly through enterprises that it owns, will play the critical role in establishing the policies adopted by the Special Purpose Vehicles that will be created to manage or own the lands to be exchanged for debt.
"Priority and preference will be given to the nationals and enterprises of St. Kitts and Nevis in any decisions or policies in relation to the sale of the lands. Indeed, not a square foot of the lands will be sold to non-nationals until nationals have been given a fair chance to acquire the lands. In addition, in allocating the lands, due regard will be taken of the intended use of the land with a view to ensuring that our people enjoy maximum benefits and advantages from the allocation of such lands," said Prime Minister Douglas.
He stated clearly that any sale of the lands would be based on clear and transparent rules and criteria that would minimize unnecessary and time-consuming bureaucratic involvement in the allocation process and would ensure that there can be no perception of political or other unjustifiable biases affecting the decision making process.
"This would be supported and bolstered by introduction of a new comprehensive investment code that would ensure that duty and tax incentives are also based on clear and transparent rules that would eliminate any perception of bias in favour for foreign investors or any other group of investors," Dr. Douglas said.
The Prime Minister said that the lands in the debt swap will be sold at fair market value and all proceeds of sales in excess of the outstanding debt would be paid into the Consolidated Revenue Fund of the Government.
"Alternatively, the Government may decide to resume direct ownership of the lands remaining after the relevant debts have been paid off. We have the right to decide that we don’t want to sell anymore and so we can take them from the special purpose vehicle," he said.
Prime Minister Douglas reiterated that the debt for land swap will reduce the Government debt by $900 million, or just under a billion dollars.
"In other words, our people of this generation and future generations would be spared this massive burden and would avoid the additional taxes that would have become necessary to service such debt," he said.
The Prime Minister stressed that this is an issue which is often ignored in the public discussion surround the debt for land swap.
"I have not heard any views expressed in relation to how the debt would be repaid without the implementation of the debt for land swap initiative. We do not believe that increased direct or indirect tax is a feasible alternative because the adoption of such an alternative will stifle growth well into the future and would put a very onerous burden on our people and our enterprises," Dr. Douglas said.
Prime Minister Douglas emphasised that with the reduction in debt made possible, the debt for land swap, "we could begin to look forward to future reduction in taxes, including corporation taxes, with a view to enhancing our competitiveness and promoting enhanced economic activity."
He also pointed out that the Bank involved in the swap is the St. Kitts – Nevis – Anguilla National Bank, which has over 5000 local shareholders, including the Government which is the majority owner.
"National Bank has a proud record of serving the needs of our local economy and our local people. The land for debt strategy was also carefully designed to strengthen National Bank so it can serve our country even better in the future. It is the same National Bank that for its entire history helped keep the sugar industry on its feet up until it was finally shut down just a few years ago. Let us not forget that it was that same sugar industry that provided jobs and economic activity that this country could not survive without at the time. It is no secret that the bulk of the National Bank debt originates from the numerous investments and financial guarantees which were provided by successive Governments for the same vital sugar industry," Dr. Douglas told the business community.
The Prime Minister expressed confidence that the productive use of the lands by the private sector, and by local people generally, will boost economic growth significantly over the short- to medium-term.
"We should not keep our valuable land resources idle while our people suffer the devastating impact of an unfriendly global environment. We must put the land to use for the advancement of our Federation and for building an economy that will generate employment and entrepreneurial opportunities for our people of this generation and future generations. It is not only foreign investors who have ideas in relation to the use of our lands," he said.
"I have great confidence in the creativity and the resourcefulness of our people and I am persuaded that, with the careful management for which my Government is renowned, the debt for land swap will generate an abundance of wealth creation opportunities for our enterprises and for our nationals at home and abroad," the St. Kitts and Nevis Prime Minister said.
Photos of the St. Kitts and Nevis Chamber of Industry and Commerce Christmas Luncheon by Giles Dickenson