Higher Revenues, Spending Retrenchment to Flip St. Kitts & Nevis’ Fiscal Balance Into Surplus In 2021

• The Saint Kitts and Nevis (SKN) government will run a fiscal surplus of 1.8% of GDP in 2021 and 2.8% in 2022, from a 5.6% of GDP deficit in 2020, as rebounding economic activity drives strong revenue growth and the government limits expenditure growth. 
• Fitch Solutions has revised its 2021 and 2022 fiscal forecasts to 1.8% and 2.8% respectively, from -3.6% and -2.4% previously as revenues have surprised to the upside in the year through June.  
• It is anticipated that rebounding economic activity will drive revenue growth of 20.0% in 2021 and 5.0% in 2022, while reduced spending on goods, services, transfers and subsidies will support a decline in expenditure by 2.0% in 2021. However, a modest uptick in expenditures, including capital expenditure, is expected in 2022 as the government gradually increases expenditure, which was reduced to limit the challenges of the pandemic on fiscal accounts. 
• Fitch also forecasts that total public debt will fall to 32.3% of GDP in 2025, from 42.2% at end-2020, as primary budget surpluses and GDP growth help reduce the debt burden.

(Source: Fitch Solutions)