Financial Secretary clarifies early repayment of un-used funds to the IMF

BASSETERRE, ST. KITTS, AUGUST 28TH 2014 (CUOPM) – The money returned to the Washington-based International Monetary Fund (IMF) was received for a specific reason under the Stand-by Arrangement (SBA) and could not be used for any other purpose.

Acting Financial Secretary, Mrs. Hilary Hazel
Acting Financial Secretary, Mrs. Hilary Hazel

So says Acting Financial Secretary, Mrs. Hilary Hazel. Her statement was in response to opposition statements after the Federal Government made an early repayment to the IMF of the EC$46 million.

“It has been brought to my attention that there is a suggestion that the government could have kept this money and use it for other things. The $46.1 million dollars was granted as part of the Stand-By Arrangement (SBA) support by the IMF for a specific reason and that reason is to support the banking sector in the event that something was to go wrong as a result of the restructuring, as a result of going through the programme,” Mrs. Hazel explained.

“We have been through the 36 months and there has been no requirement whatsoever, not even a hint towards using this money. While we were holding it, it was counted against the debt. It must be repaid and while were holding it also, we were paying interest, interest is accruing to the IMF and we saw no wisdom in keeping it beyond the period and so therefore the decision was taken and supported by all advice that the government is granted to return the money. So why saddle the public with a debt that you really don’t need to have,” Mrs. Hazel told listeners to Freedom FM’s “Good Morning St. Kitts and Nevis” hosted Mr. Maurice “EK” Flanders.

Mrs. Hazel pointed out that the successful three-year IMF programme was a home-grown programme “actually designed by our own people at the Ministry of Finance and that is fact.”

“I think we also need to realize that it probably would have blown over in the news, but the whole idea of not accepting further funds from the IMF started since last year. We were actually eligible to draw down an additional $22.2 million which at the end of the appropriate assessments, we would have written to the fund, indicating that we would not wish to draw those funds down. So effectively, what has happened is that we have returned $46 million dollars, not drawn down on $22.2 million dollars and so about $68.3 million easily like that is no longer a part of the script of our debt,” Mrs. Hazel said.

The IMF has commended the Government of St. Kitts and Nevis for the economic achievements made under the recent Stand By Arrangement (SBA).

By repaying the money ahead of St. Kitts and Nevis has the record of being the first Caribbean nation to repay the IMF early.
“There has been a significant improvement in fiscal and debt sustainability and a strong economic recovery. St. Kitts and Nevis’ ability to repay the IMF ahead of schedule reflects the improvement in its macroeconomic balances that reflect both policy efforts and the strong inflows under the Citizenship-By-Investment programme,” said the IMF.

The IMF said the early repayment will reduce the outstanding obligations of St. Kitts and Nevis to about US$56 million and reduce its debt to GDP ratio by about 2 percent of GDP.

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