IMF Recommends Increasing Government Revenue to Keep Social Assistance Programs Alive In St. Kitts and Nevis

• A recent official staff mission from the IMF to the island led to a report suggesting that the economic outlook of St. Kitts and Nevis is positive. However, there is room for improvement in enhancing the labour market, encouraging economic diversification, and strengthening the financial system.
• To maintain the social assistance programs that the government offers, the IMF expressed that the government needs to increase its revenues.
• According to the IMF, external factors such as civil unrest, inflation, interest rate hikes, and other health crises could still affect growth projected at 4.5% for 2023. Additionally, despite receiving record-high CBI (Citizenship-by-Investment) revenues, the government incurred the most significant primary deficit in two decades (-2.4% of GDP).
• The IMF noted that dependence on CBI revenue is a significant source of vulnerability; thus, the report suggested that a holistic overhaul of the taxation framework would be needed to reduce dependency on CBI.
• Reforming the property tax to support the housing market and home ownership and reintroducing personal income tax could strengthen fiscal sustainability, improve fairness and equity, and achieve inclusive growth.

(Source: CariCris)