We are all here today as stakeholders demonstrating our commitment to advancing our Federation — St. Kitts and Nevis. This exercise ensures that all perspectives are documented and all voices are heard as a means of ensuring that the interests and the passions of our people, young and old, are reflected in the government’s plan for the 2025 fiscal year. Out of this national forum, your government intends to present a path forward for St. Kitts and Nevis, one marked by innovation, inclusivity, and sustainability, as we march towards a sustainable island state.
…And as we embark on this journey, we must create a foundation that fuels the achievement of such a vision. Innovation is at the heart of a country’s growth potential, which allows for new ideas, solutions, and technologies that can unlock opportunities and address the evolving challenges that we face. Economic uncertainties, global crises, and technological advancements have reshaped the landscape of economies. As a small island developing state, we must navigate these challenges with resilience and foresight.
St. Kitts and Nevis is known to be a resilient and evolving island state with immense growth potential. The economy is projected to grow by 2.5 per cent in 2025 compared to growth of 1.2 per cent and 4.3 per cent in 2024 and 2023, respectively. The medium-term outlook reveals the economy will likely grow by an average of 2.8 per cent per annum over the medium term, 2025 to 2027. The services-related sectors such as Construction, Hotels and Restaurants, Wholesale and Retail Trade, Financial Services, Transportation, Storage and Communications, and Public Administration are anticipated to contribute significantly to the economic outlook.
Tourism remains the cornerstone of our economy, which has impacted various sectors, including hotels and restaurants, transport, storage, and communication sectors. The Sector is estimated to grow by 8.2 per cent in 2024 and by approximately 3.0 per cent per annum over the medium term. This follows a notable increase of 23.8 per cent in 2023, attributed to an increase of 31.0 per cent in tourist arrivals to 104,500 persons. In general, the performance of this Sector is linked to the increased airlift into the Federation via the traditional airlines, including the return of LIAT to the airways as well as the introduction of new airline services such as Inter-Caribbean Airways, Sunrise Airways, and Jet Blue. Further, with the intense marketing efforts of the St. Kitts and Nevis tourism authorities, it is anticipated that tourist arrivals will surpass their 2018 pre-pandemic levels by 2025. No doubt, you will agree that this Sector drives significant inflows, creates jobs for our people and fosters the growth of small businesses.
Activity in the Construction Sector, which is the largest economic sector here in the Federation, continues at a pace with increased activity in commercial and residential construction. In the medium term, we can expect the Construction Sector to bloom as a direct result of the implementation of our Sustainable Economic Expansion and Diversification (SEED) pillars. We expect the full implementation of several planned projects in both the Public and Private Sectors that should spur activities in the Construction Sector. These include but are not limited to the New Basseterre High School, Smart Homes, Basseterre Desalination Plant, Needsmust Power Plant Expansion, and the reinvigoration of the Kittitian Hill and Christophe Harbour projects.
Building a robust economy is not without challenges, and the current status of the Manufacturing Sector is one such area of challenge. We are aware that activities in the Manufacturing Sector have been declining over time due to the closure of some factories. The Government will seek to implement the Manufacturing Strategy and continue to seek out opportunities to partner with international investors to revive the Sector.
At this juncture, an essential question for us to contemplate today is what will it take for us here in St. Kitts and Nevis to not only achieve the growth numbers that have been estimated by the Ministry of Sustainable Development but also how to set our sights higher. How can we work together to raise the bar and at least double the growth rate over the medium term?
About inflation, the rate is forecasted at 1.5 per cent by the end of this year. Prices here in our Federation continue to be influenced by world events such as the Russia-Ukraine war. The general price levels we are experiencing in the local marketplace reflect the impact of the ripple effects of exogenous factors to which we must continue to pay careful attention. Additionally, the increased costs of imported manufactured goods and shipping services have also had an impact on prices. Notwithstanding, the maintenance of price control mechanisms on commodities such as fuel, cement, cooking gas, electricity rates, and public and sea transport have had a countering impact on otherwise higher levels of inflation.
Another significant factor driving growth in the Federation is the CBI Programme, which has generated considerable revenue for development. Over the past two years, our Administration has been working assiduously to protect the gains and integrity of our CBI Programme. Within the past year alone, we have made some very tough decisions to secure the long-term future of our nation by taking action to preserve the good name of our country. To date, our primary activities have resulted in important legislative and administrative changes to strengthen our Programme. Our boldness and determination have placed St. Kitts and Nevis as a leader in the regional CBI arena by championing the reform agenda for CBI business. We are proud of the work done in partnership with the other four OECS Prime Ministers, the US Treasury Department and the Eastern Caribbean Central Bank to establish the six key principles for operating CBI Programmes within the region. The five participating countries with CBI programmes have collectively agreed to the following:
· Standardised treatment of denials,
· Virtual or in-person interviews of applicants,
· Additional screening of applicants via the Financial Intelligence Units,
· Independent audits of Citizenship by Investment Units,
· Retrieval of cancelled passports, and
· Suspension of Russian and Belarussian applicants.
Our CBI Programme and those operating in our neighbouring OECS countries now have a real chance of stability and sustainability. Our Programme is now set to again deliver real benefits to the people of this country, that is, real jobs and viable economic opportunities. We believe that the Citizenship by Investment Programme is an important vehicle for the continued development of our beloved Federation. I also hasten to say that this Programme ought not to be the only pillar of development for our country.
We are planting the SEED for our Sustainable Island State. Our path forward must involve building economic resiliency and diversification. Our goal is to build an economy that leverages both traditional strengths and new industries, ensuring stability and the achievement of the SDGs by the target date of 2030. To reduce vulnerability to global shocks, economic diversification is indeed a cornerstone of the Government’s strategy to ensure that the economy is not dependent on a single sector but can be transformed into a multisectoral and broad-based type of economy. The Sustainable Economic Expansion and Diversification (SEED) pillars were identified to promote the transition toward high productivity and a service-oriented economy that would yield improved macroeconomic and fiscal outcomes, including fostering economic growth and improved standards of living. As such, some of the key indicators of the Sustainable Development Goals are deeply etched in the SEED pillars, which require permanent and stable commitment and efficient and action-oriented policies that ensure that the goal is attained.
With an emphasis on clean water, Pillar #6, the Government has explored innovative techniques and adopted desalination technologies with the construction of two desalination plants. One of these will be powered by solar energy. Given the increased demand for potable water and the supply shortage due to our vulnerability to climate change, the plants were established to increase the water capacity. Additionally, water filtration systems are encouraged in the Tourism Sector as hoteliers develop reverse osmosis techniques to ensure a constant supply of water in their businesses.
Another critical area in which the Government is continuously transforming is the adaptation of “affordable and clean energy.” The Government has invested heavily in renewable energy practices such as the Street Lighting program, where energy-consuming lights/bulbs were converted into energy-saving LEDs, thereby reducing power consumption. The transition from fossil fuel into a mixture of solar energy and geothermal energy is at a pivotal stage in the Federation’s transformative plans. We concur with the IMF that “a successful transition to renewable energy would have a profound impact on the economy.” Such strategic investments in energy initiatives could reduce fuel imports, lower energy costs, and support productivity growth by boosting economic diversification and export opportunities.
In terms of diversification of the Agriculture Sector, the development of the Cannabis Industry in St. Kitts could improve the scope of the traditional production of crops. The enhancement of this industry could reap medical and economic benefits. Additionally, the collaborative efforts of the Tabasco Company and our local pepper farmers could have positive impacts on the growth of the Agriculture Sector. The 25 by 25 initiative is already reaping tremendous benefits. With the supply of seedlings, ground preparation, and the provision of irrigation systems, ground cover, fencing material, and technical assistance, the farmers are being equipped to increase local food production. We are aware that this increase in agricultural output could result in production surpluses in some areas, and the Ministry of Agriculture is already exploring partnerships in canning, drying, preserving, and marketing the excess.
Other critical areas of focus that could contribute to a thriving economy relate to investments in National Security and Health. When our citizens feel safe, they can pursue employment opportunities and contribute to national growth. Citizens security is not only a policy priority for our Government, but it is a fundamental right that allows each of us to live freely and peacefully. Therefore, the launch of the 90-day National Citizen Security Campaign reaffirms the Government’s dedication to upholding that right. The Government has adopted a proactive approach to deter persons from engaging in criminal activities. The Campaign provided direct engagement with citizens to gain an understanding of their security concerns as well as to bridge the gap between citizens and law enforcement. Several community and family-oriented activities were organised to promote a culture of peace. An inter-ministerial secretariat was also created to engage all segments of society regarding crime-fighting efforts.
With regards to health care, you know the saying, ‘the health of a nation is the wealth of a nation.” When our citizens are healthy, they are more productive, engaged, and able to contribute positively to the economy. Strategic investments in health care have been another policy priority of our Administration. This is evident by the ongoing construction of the new MRI building, which is expected to be operational by the first quarter of 2025. The Government also intends to construct a climate-smart hospital, a facility that could withstand the damaging effects of natural disasters and provide top-tier medical care to the people of St. Kitts and Nevis. The construction of the hospital will be a joint venture between the Government of St. Kitts and Nevis and the Republic of China (Taiwan), to which I express profound gratitude.
Finally, I want to turn to the idea of financial sustainability concerning the Social Security System. Social security is a fundamental pillar of economic security and social stability for our people. It provides support during times of need and ensures dignity in retirement. However, population ageing and increasing longevity are placing financial pressure on Social Security Systems globally. The Social Security Board (SSB) has been making strides in diversifying its revenue streams as its portfolio includes short-term bank deposits, Government T-bills and Bonds, equities, and real estate.
To preserve the financial balance of the Social Security Fund and protect intergenerational equity, the Social Security Board will embark on a comprehensive reform of the system. The reform recommendations include the following:
Increasing Pensionable Age (Age 65)
Increasing the number of contributions to qualify for aged pension (500 – 750 contributions)
Method of calculation, i.e., using a contributor’s best 7 years instead of the best 3 years out of the last 15 years;
Maximum Pension of $3,900 (60% of $6,500), which would be in line with that of other regional states;
Maternity Benefit consideration to increase to 14 weeks in line with recommendations from the International Labour Organization;
No pension for contribution avoiders and
Unemployment Benefit.
The Board has begun several consultations with the general public to ensure that these reforms would be in the best interest of all stakeholders.
As outlined in our Agenda for today, further details will be provided on other focus areas of the economy, such as Tourism, Agriculture, Digital Economy, and Renewable Energy, as well as climate change adaptation. I look forward to a lively discussion, your comments, and suggestions on how we can move forward toward a vibrant economy that embraces innovation, inclusivity, and sustainability.
I thank you.