Report No. 6500-CRG

St. Christopher and NevisUpdating Economic Memorandum

December 23, 1986

Latin America and the Caribbean Regional Office

FOR OFFICIAL USE ONLY

Document of the World Bank

This document ha a restricted distributioh and may be used by recipientsonly in the perfomance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit: East Caribbean Dollar (EC$)

Since its creation in 1965, the East Caribbean dollar was tied to the poundsterling at a rate of t1.00 - EC$4.8. In July 1976 the link with sterling.was broken asud the EC$ was pegged to the US dollar at the rate of US$ 1.00- EC$2.70.

Since Jul7 1976

EC$1.00 = US$0.37 orUS$1.00 = EC$2.70

FOR OFFICUIL USE ONLY

PREFACE AND ABSTRACT

This report reviews recent economic developments and the mainpolicy insues in St. Christopher and Nevis. (A more detailed analysis ofthe development issues is contained in St. Kitts and Nevis - EconomicMemorandum," Report No. 5477-CRG, April 10, 1985).

The economy of St. Christopher and Nevis performed weaker thanexpected in 1985, with GDP at factor cost growing by 1X. Adverse weatherconditions brought about a drop in sugarcane production of over 10%, whilemanufacturing output declined also by 10X. The financial situation of thepublic sector deteriorated sharply in 1985, with the current deficit of theFederal Government increasing from 31 of GDP in 1984 to nearly 7% of GDP in1985, and it is not likely to improve in 1986. In particular, the domesticdebt of the Federal Government would double to nearly EC$120 million thisyear, and interest payments on both domestic and foreign debt would absorbabout 25% of current revenues. Therefore, the Government should takedrastic measures to adjust its finances, while continuing to rely on highlyconcessional capital flows for most of its investment program. Therehabilitation of the sugar industry and the development of the SoutheastPeninsula for tourism are crucial for future economic growth. With theseprojects, and a sustained program of policy reforms and adjustmentmeasures, a growth rate of up to 4% per year is feasible for the economy inthe medium term.

This document has a restricted distribution and may be used by fecipients only in the performance|of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.|

This report is based upon the mork of an IBRD mission toSt. Christopher and Nevis in Augput 1986 led by Mr. D. Yuravlivker. Themission included Mr. 0. Byam (AIM), Mr. P. Ramlogan (CDB) and Ms. J. Curry(consultant). UNDP (Barbados) contributed to the preparation of theTechnical Cooperation Program included ia this report.

ST. CHRISTOPHER AND NEVIS

TABLE OF CONTENTS

Pa*.

COUNTRY DATA

SUMMARY AND MAIN ISSUES .................................. a * * . *-ii

I. RECENT ECONOMIC DEVELOPMENTS .................... ... 1

II. PUBLIC SECTORFINANCE ISSUES ............................. 2

III. BALANCE OF PAYMENTS AND EXTERNAL DEBT .................... 4

tV. SECTOR POLICY ISSUES ................ ..................... 5

V. PUBLIC SECTOR INVESTMENT PROGRAM (PSIP}. 1986-88 ......... 9

VI. TECHNICAL COOPERATION PROGRAM ............................ 11

VII. HEDIUM-TERM POLICIES AND PROSPECTS ....................... 11

ANNEX Is DEVELOPMENT POLICY ISSUES ..... .... .... 14

ANNEX II: PUBLIC SECTOR INVESTMENT PROGRAM AND TECHNICALASSISTANCE PROGRAM................................. 17

ANNEX III MACROECONOMIC PROJECTIONS .......................... 25

STATISTICAL APPENDIX.. *................ ...... 29

MAP

C UNTRY OATA - ST. CHRISTOPHER AND NEVIS

AREA POPULATION 6JENSITY29km 2 42,759 (ed 1085) 183 p.r km2

Rat. of Qo.wth:-0.4X (from 1980-8S) 293 per km2 of Arabl LEand

POPULATION CHARACTERISTICS 191115 HEALTH 198227rude Birth Me (por lPime 28 Jopuiation per Physician 1980

Crude Death Rate (per 1,OW) 10.2 Population pcr Hospital Bad 120Infant Mortality (per 1,000 live births) 30.2

INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP (1971)% of Natlonal Income, Highost Quint)ile .. Ownd by Top 10% of .wners

Lowest Quintile .. X Owned by Lowest 10% of Owners

ACCESS TO PIPED WATER 1982 ACCESS TO ELECTRICITY (1980)% of Population - Urban 100.0 X of House,holc 67.6

- Rural 86.0

NUTRITION (1882) EDUCATION (1981ailoris Intake a X of Requirments 144.0 Adult LitracyRto at 80 .0

Per Capita Protein Intake (gr./day) 99.0 Primary School Enrollment X 99.6

OW PER CAPITA IN 1986: US81620

GROSS DOMESTIC PRODUCT IN 1986 ANNUAL RATE OF GROWTH (X, constant prices)US$ Min. % 1980-84 198S

GDP at Market Prices 11i7 100l 0 1.3 2.1Gross Domestic Investment 8.6 12.4 -20.6 71.4Cross Donestic Saving -3.2 -4.7Current Account Balance (deficit) -11.7 -17.0Export of Coods, NFS 42.1 81.3 4.7 7.9Imports of Coods, NFS 63.0 91.7 8.3 4.4

OUTPUT 1986Value Added

us$ irn ~ Agriculture 8.9 12.0Industry 8.1 14.1Services 42.8 73.9

Total 57.6 1'O 0

GOVERNMENT FINANCEConsolidated Public Sector Central Government

EC8 million) X of GD million) X-of GDP1984 1985 1984 1986 1984 1'86 1984 1985

Current Receipts 65.1 69.8 38.1 32.0 42.2 40.8 24.0 22.0Current Expenditures 56.6 e8.4 31.7 36.8 43.9 53.7 26.0 29.0Current Surplus +23 -7.1 1.4 -3.8 -1.7 -12.9 -1.0 -7.0Capital Expenditures 12.8 28.4 7.0 16.3 8.7 20.8 6.0 11.2External Assittance (not) 18.4 7.8 7.8 4.2 12.9 6.8 7.4 3.1

not availaslenot applicable

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COUNTRY DATA - ST. CHRISTOPHER AND NEVIS

MONEY. CREDIT AND PRICES 1981 1982 19088 1984 1985

LiabilItie. to Privet, Sector S/ ?.# 61.1 69.7 79.8 197.0Bonk Credit to Public Sector 58.0 7.6 10.7 -8.4 -18.4Sank Credit to Private Sector j 51.9 "0.2 69.$ 81.2 89.1

(Percentag of Index Members)

Liabilltie* , Private Sector as X of GOP 84.4 88.4 48.4 45.4 57.7Retail Price Index (Jonuory 1978 a 100) 162.8 161.4 16S.9 169.6 178.8

Annual Percentage Changes insRetall Price Index 10.6 6.0 2.2 2.7 2.2Bonk Credit ts Puablic Sector . 56.0 87.2Bank Credit to Privtoe Sector 8.8 16.O 15.1 17.2 9.7

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1988-85&1982 1988 1984 1985

pS II ;[Fr USSI MIA. X

Export. of Goods, NFS 84.2 81.7 80.5 42.1 Sugar 10.0 46.1IUporta of Goode, NFS 68.0 57.6 69.6 63.0 Manutacture. 7.2 38.2Resource Gap -18.6 -25.9 -21.1 -20.9 All other commoditloe 4.6 20.7

Factor Payment (net) 0.7 1.0 8.1 -1.4 Total MerchandiseNet Transfer* 8.6 7.6 9.5 10.8 Exports 21.7 100.0Balance on Current Account -El -1771 -ltT -IT7

EXTERNAL DEBT. DECEMBER 81. 1985USS MIn.

Private capita 1.6. 18.9 4.6 6.21Public Debt, 1n¢1. Guaranteed 19.8

Public Capital 8.0 8.5 7.2 5.5 Non-guaranteed Private Debt -Total Outstanding A Disburred is.

Change In Governmnt 0.7 -0.1 -0.8 -.°Asseet

DEBT SERVICE RATIO FOR 1985 /S

Pubilc Debt, Incl. guaranteed ElNon-guaranteed Privae DebtTotal Outstanding & Dlubured .

RATE OF EXCHANCE

Since July 1976US81.00 * ECS2.70

1.00 a USSW.37

*/ Ratio of Debt Service to ExporOt of Goods and NWsifactor Servicoe.V Operations of the commercial banks.

.. not availiablo.not applicable

SUMMARY AND MAIN ISSUES

I. The performance of the economy of St. Christopher and Nevis in1985 was weaker than projected by the last Country Economic Memorandum(CEH)3 real GDP at factor cost grew by 12 instead of the projected 32,following a decline of nearly 22 in 1983 and an increase of 3.4X in 1984.This amounts to an average annual growth rate of less than 12 in 1983-85,compared to more than 52 in 1980-82. The main reasons for the lower growthin the last three years were bad weather, that affected both sugar and non-sugar agriculture, and a slowdown in construction, In the transport andtelecommunications sectors and in government services. The very highvariability in the growth rates of agriculture and manufacturing in thelast six years reveal the problems of a small economy, which is heavilydependent on external trade and extremely vulnerable to adverse weatherconditions.

ii. The financial situation of the public sector deteriorated sharplyin 1985, and it is not likely to improve in 1986. The current deficit ofthe Federal Government doubled from an average 3.3% of GDP in 1982-84 to6.72 of GDP in 1985, while its overall deficit reached nearly 19% of GDPlast year. This resulted mainly from a steep increase in current as wellas capital expenditures by the Federal Government, reversing their downwardtrend, relative to GDP, of the previous four years. Current expenditure isexpected to increase significantly in 1986 because of the 20-25Z wageincrease granted to civil servants and because of higher interest payments.Revenues will not match this increase, and the current deficit of theFederal Government could further deteriorate to about 10% of GDP this year.This is an unsustainable situation, and the lack of a firmer fiscal policystance could undermine the prospects for future economic growth.

iii. The main issues of public finance are the narrow revenue base ofthe Federal Government and its huge domestic debt. Current revenuesdeclined from nearly 332 of GDP in 1981 to 252 of GDP in 1985. Personalincome taxes were abolished in 1980 and the sugar levy in 1982, with alarger share of the burden shifting to taxes on domestic production andconsumption. To widen the tax base, the new budget introduces a socialservices levy of 42 on wages. However, this measure would add less than102 to tax revenues. Therefore, it is essential to improve tax collectionand to look for additional sources of revenue which, together with atighter control of current expenditures, will help Government cut itsdeficits and prevent further increases in the public debt. The domesticdebt of the Federal Government was over EC$60 million at the end of 1985,252 of which resulted from the purchase of sugar lands. This debt nearlydoubled to EC$120 million (652 of GDP) in 1986 when the Government assumedthe debt of the National Agricultural Corporation (NACO), following theconsolidation of the sugar industry. At the same time, its external debtrose from US$12 million in 1983 to US$20 million (about 302 of GDP) by theend of 1985. Consequently, the interest payments of the FedAral Governmenton both domestic and foreign debt will rise from EC$7.7 million in 1985 toabout EC$12 million this year, absorbing roughly 252 of its currentrevenues. Thus, the capacity of the Government for contracting additionaldebt, unless at very concessional terms, has been drastically reduced.

iv. The balance of payments deteriorated sharply in 1981-83, improvedsubstantially in 1984 and did not chango much in 1985. The main issue ofthe external accounts in the past five years is the decline of sugar, andits substitution by tourism, as the main provider of foreign exchange.This suggests that the external position of the country in the medium term

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depends heavily -n the growth of the tour4sm sector, a fact that has to beconsidered when tasignlng the general development strategy of the economyand the Public Sactor Investment Program (PSIP).

v. The sirar industry is the backbone of the agricultural sector and,to some extent, of the economy. Further, sugar is likely to maintain itsdominant role in the economy in the foreseeable future. The main problemsof the industry are declining yields and increasing labor costs, whichresult in large operating losses. The reasons for the drop in yields aredry seasons, management problems and deteriorating harvesti.ng practices.Irrigation can greatly Improve yields, but its economic viability has yetto be determined. Since the quantities that can be sold at preferentialprices in the US and UK are limited by quota restrictions, there is anurgent need to find ways of reducing fixed as well as operating costs inorder to eliminato losses at the current production levels. In thatrespect, the recent consolidation of the industry under a single managementis a step In the right direction. Moreover, there is little certainty thatthe current US quota will be maintained in coming years, which stresses theimportance of promoting and expanding agricultural diversification.However, in order to proceed with the diversification effort, irrigationhAs to be expanded and the land tenure problem has to be solved. TheGovernment has just made an additional payment to the former land owners,reaching the EC$14 million mark at which they are to transfer land titles.Once the Government secures these titles, it can lease parcels to farmersfor the production of various crops and other agricultural products.

vi. Tourism is the key sector for further econom±c growth inSt. Christopher and Nevis. The sector expanded dramatically in the lasttwo years, with revenues doubling from US$10 million in 1983 to over US$20million in 1985. Hotel capacity grew by about 25X in the last year, andthere are plans for further expansion. The Government provides substantialincentives for the construction of large hotels, including exemption fromall duties on imports for projects of 250 rooms or more. However, thereare several hotels in Frigate Bay which are currently at one-third or one-half of the size of their original plans. For rapid expansion, it could bemore practical to support the completion of these hotels rather thanattract brand new developments. The main priorities of the tourism sectorare finalixing Its development plan to ensure coordinated growth andproceeding with the development of the Southeast Peninsula. The peninsulahas the greatest tourism potential of the country, and its development iscrucial for the future of the sector. Therefore, it is extremely importantto begin construction of the penetration road, scheduled to start in early1987, and proceed with complementary infrastructure projects, which willopen up the peninsula for tourism development.

viii. Exponditures on the PSIP nearly doubled in 1985 to almost EC$20million, while the estimated PSIP for 1986-1988 amounts to EC$97 million.Expenditures are expected to increase steeply in 1987 and 1988 largely as aresult of the implementation of the Frigate Bay Sewerage project andseveral infrastructure projects associated with the development of theSouthest Peninsula. Relative to 1985, the 1986-88 PSIP reflects a shifttowards the productive sectors and infraatructureo, which will jointlyaccount for nearly 80S of the PSIP. However, the share of education willdouble to neotly 10X; O*raXl, the inter-sectQsz Us.ocation of resourcesin the PSIP si _ t'o be £r ate and oDs(i "With a developmentstrategy that emphasizes tourism as the leading sector In future growth.

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lx. The Government expects to mobilize about 852 of the financina forthe PUIP from external sources. In turn, 852 of the external financitigrequirements have already been identified. Major projects for whichfinancing is still required include water and electricity supply for theSoutheast Peninsula, which could be Implemented simultaneously with theconstruction of the new road, and the rehabilitation of the SugarManufacturing Corporation.

x. The medium-term economic outlook for St. Christopher and Nevis isuncertain. The difficult situation of the public sector, particularly itsgrowing debt service burden, casts doubt on its ability to implement thePSIP and overshadows the prospects of future economic growth. As mentionedabove, tourism would be the leading sector in that growth, but itsexpansion depends heavily on the development of the Southeast Peninsula.In agriculture, sugar will maintain its dominant role, althoughdiversification into other crops, through a concentrated effort by theGovernment, could become increasingly Important. Assuming that a sustainedprogram of policy reforms and adjustment measures is undertaken and thatthe major development projects are actually implemented, GDP is projectedto grow at a rate of 2.52 in 1986, 3.52 in 1987 and 42 per year in 1988-91.The higher growth rates in 1987-88 would result from the substantialincrease in the PSIP, while the development of the poninsula itself, withan Increasing share of private investment, would gather steam in 1989-91.

xi. Exports of goods and nonfactor services are projected to increase,largely because of higher tourism receipts. However, since the tourismindustry requires a large import component, imports would rise accordingly,and the current account deficit of the balance of payments would stayroughly constant, as a fraction of GDP, through 1990. External grants areprojected to increase through 1988, following the substantial incresse inthe PSIP, and to decrease thereafter. External debt as a percentage of GDPvould thon increase gradually, from 292 in 1985 to an average of about 322in 1990-95, and debt service payments would absorb on average 4% of totalexports in the early 1990s. It is important to point out, though, that theexport projections are highly dependent on tourism revenues, which couldturn out to be lower than expected.

xii. For the public sector, aidentified finance for 1986 stood in mid-year at EC$28 million due to particularly high amortization payments and tothe larg public sector deficit. Consequently, the public sector'soverdraft at the National Bank is likely to increase sharply this year.The projections of public sector savings assume that the Government willhave to focus on the worsening situation of its finances and take drasticmoasure to correct these imbalances, including an adjustment program to beImplemented next year. With such a program in place, unidentifiedfinancing of the public sector, mostly for PSIP purposes, will averageabout EC$35 million per year in 1990-95. If no adjustment takes place,public soctor savlngs will remain negative at roughly the 1987 level andthe finance requizements would tend to be higher. Howevor, the size offuture deficits wlll be bounded by the volume of external capital flows andby the capacity of the Government to continue borrowing from the SocialSecurity Scheme and other domestic sources. With these constraints, theGovernment will have to adjust in any case. Therefore, it is highlypreferable to plan this adjustment as soon as possible and prevent afinncial crisis in the public sector that would undermine the prospectsfor future economic growth.

1. RECENT ICONOMIC DEVELOPHENTS

1. The performance of the economy of St. Christopher and Nevis in1985 was weaker than projected by the lat Country Economic Memorandum(CEM): real GDP at factor cost grow by 1% Instead of the projected 32. Adrought brought about a drop in sugarcane production of more than 102,while difficulties In CARICOM trado that affected mainly the garments andshoo industries resulted in a marked decline of manufacturing output.These negative offects were partially offset by substantial growth inconstruction, tourism, and the distributive trades (Table 1). The low GDPgrowth rate in 1985 follows a decline of nearly 22 in 1983 and an increaseof 3.42 in 1984. This amounts to an average annual growth rate of loesthan 12 in 1983-85 compared to more than 52 in 1980-82. The main reasonsfor the lower growth in the last three years were bad weather, thataffected both sugar and non-sugar agriculture, and a slowdown inconstruction, in the transport aasd telecommunicztions sectors and ingovernment services. The very high variability in the growth rates ofagriculture and manufacturing in the past six years reveal the problems ofa small economy, which is heavily dependent on external trace and extremelyvulnerable to adverse weather conditions.

Table l SELECTED ECONOMIC INDICATORS(Annual percentage changes)

Prel.1980 1981 1982 1983 1984 1985

Real GDP at Factor Cost 4.0 5.0 6.3 -1.9 3.4 1.0Of whicht

Agriculture -10.12 5.2 0.0 -18.4 4.3 -2.5Hotels & Restaurants -7.1 11.5 -13 7 0.0 16.0 13.8Wholesale & Retail Trade 13.3 -2.1 10.9 7.8 11.8 5.7Manufacturing 2.3 -10.3 8.2 -11.3 12.0 -9.2Construction 26.2 3.9 18.8 9.5 -16.3 12.6Government Services 5.4 -5.2 7.4 0.0 0.6 -6.8

GDP Deflator 13.3 11.1 6.5 1.1 5.4 3.4Exports of Goods and NFS 35.3 20.1 -14.6 -4.2 21.4 9.3Imports of Goods and NFS 38.6 18.1 -2.0 8.7 3.5 5.7

Sources Statistical Appendix Tables 2.1, 2.2, 2.3.

2. The Consumer Price Index (CPI) rose by an estimated 22 in 1985,slightly less than in the previous two yeors. Given the openness of theeconomy, the low increase in prices reflects the slowdown in worldinflation as well as the appreciation of the US dollar, to which the ECdollar is pegged. At the same time, there are price controls on about 50goods, mainly imports, with most of their prices fixed at 10-15X overlanded cost. The Government is also the sole importer of soveral basicfoods, seeking to ensure their low and stable prices to protect thepurchasing powor of wages. However, real wages in the agricultural sectorhave declined slightly since 1980, while they have increased substantiallyin manufacturing. Wages of civil servants, which have not been increasedsince 1981, were raised by 20-252 in 1986, roughly compensating for the CPIIncrease of the last 5 years.

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II. PUB&BIC SECTOR FINANCE ISSUES

3. The financial situation of the public sector deteriorated sharplyin 1985. The current deficit of the Federal Government doubled from anaverage 3.3X of GDP in 1982-84 to 6.72 of GDP in 1985, while its overalldeficit reached nearly 192 of GDP last year (Table 2). This resultedmainly from a steep increase in current as well as capital expenditures bythe Federal Government, reversing their downward trend, relative to GDP, ofthe previous four years. Interest payments doubled to nearly EC$8 millionin 1985 (172 of current revenues), while fixed investments increasad by 602to nearly EC$14 million. Total capital expenditures increased even worefollowing the payment of over EC$8 million, obtained from an externalcommercial bank loan, to the former sugar estate owners for the purchae ofland. Current expenditure is expected to incroase further in 1986 becauseof the wage rise granted to civil servants and because of higher interestpayments.

Table 2: PUBLIC SECTOR PERFORMANCE(Percent of GDP)

Prel1981 1982 1983 1984 1985

Consolidated Federal GovernmentCurrent Revenue 32.6 28.9 27.6 26.7 25.0Current Expenditure 33.8 32.3 30.9 29.8 31.8Current Balance -1.2 -3.4 -3.3 -3.1 -6.7Central Government -1.2 -3.4 -2.7 -1.0 -6.9Nevis Administration n.a. a/ n.a. -0.6 -2.1 0.2

Social Security - Current Balance 5.1 4.4 5.5 5.2 5.4Public Enterprises - Current Balance -9.0 3.3 -6.7 -0.7 -2.5Current Balance Public Sector -5.1 4.3 -4.5 1.4 -3.8

Capital Revenue 0.9 3.2 3.1 2.1 1.2Capital Expenditure 9.4 8.8 8.4 7.0 15.3

o.w. Purchase of Land - - 1.2 1.0 5.1Capital Balance -8.5 -5.6 -5.3 -4.9 -14.1

Overall Balance Public Sector -13.6 -1.3 -9.8 -3.5 -17.9o.w. Federal Government -8.4 -9.9 -8.9 -8.1 -18.7

Financing 13.6 1.3 9.8 3.5 17.9Exteprnal Grants 2.9 3.9 4.5 2.8 4.6External Borrowing (Aet) 0.1 -0.6 0.1 5.0 -0.4Domestic Borrowing 10.6 -2.0 5.2 -4.2 13.7ECCB (net) 0.0 1.6 0.3 4.3 1.1Commercial Banks 10.3 -3.2 4.1 -9.3 8.3o.w. National Bank 5.0 -5.4 2.1 -6.8 8.7

Other 0.3 -0.4 0.8 0.7 4.3

Memo:GDP at market prices (EC$ mil.) 151.0 159.3 160.7 175.6 185.4

a/ Not available.Source: Statistical Appendix Table 5.6.

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4. The fiscal situation is not likely to improve In 1986. Theircrease in government revenues will not match the increase inexpenditures, and the current deficit of the Federal Government couldfurther deteriorate to about 102 of GDP this year. This is anunsustainable situation, and the lack of a firmer fiscal policy stancecould undermine the prospects for future economic growth.

5. The two main issues of public fineance in St. Christopher and Nevisare the narrow revenue base of the Government and its large domestic debt.The current revenues of the Federal Government declined from nearly 33Z orGDP in 1981 to 25% of GDP In 1985. Personal income taxes were abolished in1980, while the Fiscal Incentives Act granted benefits to approvedenterprises in the form of tax holidays, export allowances and exemptionsfrom import duties. The sugar 'evy, which contributed 20% of all currentrevenues in 1981, was abolished In 1982 when the situation of the sugarindustry deteriorated, and a larger share of the burden shifted to taxes ondomestic production and consumption. To widen the tax base, the 1986budget introduced a social services levy of 41 on wages, to be paid half bythe employer and half by the employee, which was estimated to produceadditional revenues of EC$4 million (about 101 of tax revenues). However,since the Federal Government does not pay the levy, revenues will probablyreach only about EC$2.5 million. Therefore, it is extremely important toimprove revenue collection and to look for additional sources of governmentrevenue. For example, a higher tax rate on land transactions in theSoutheast Peninsula has been just introduced. In addition to that, awindfall capital gains tax on the sale of land in the peninsula, whereprices have increased twenty fold in the last six years, could greatly helpthe Government in its difficult financial situation. This effort on therevenue side should be complemented by a tighter control of currentexpenditures, which could be achieved by a reorganization of the FederalGovernment to streamline operations and increase itq efficiency.Implementing these measures will not be easy, but it would show theGovernment's comnitment to a comprehensive adjustment program.

6. In 1986, the domestic debt of the Federal Government would amountto roughly EC$120 million (twice the amount registered in 1985), whichrepresents nearly three times its current revenue or about 651 of GDP.This debt comprises the debt of the National Agricultural Corporation -NACO- (EC$53 million), which was assumed by the Government in February1986, overdraft at the National Bank (EC$28 million), debentures (EC$10million), loans from Social Security (EC$5 million) and from commercialbanks (EC$4 million), debt to the former land owners (EC$8 million), andoutstanding Treasury B'111 (EC$12 million). NACO accumulated its debt,which was In fact a huge overdraft at the National Bank, during severalyears of operating deficits. The Government now intends to get a directloan from Social Security to repay NACO's debt to the National Bank, withSSMC contributing part of the interest payments, and it plans to pay backSocial Security with proceeds from the sale of state lands. However, it isnot clear yet what lands will be sold and whether the proceeds from thesale will suffice. In mid-1986, the Government ssumed also the EC$2.2million commercial debt of the Fort Thomas Hotel, where it had majorityshareholding. The doubling of the outstanding domestic debt of the FederalGovernment will sharply increase its debt service obligations. Inparticular, interest payments on both domestic and foreign debt will risefrom EC$7.7 mill2.-n in 1985 to about EC$12 million this year, absorbingroughly 251 of the current revenues of the Federal Government.

7. Electricity and water are provided by departments of Government inSt. Christopher and Nevis. Consequently, their expenditure provisions arepart of the general line Item estimates, bearing no relationship to theirrevenue collections, which go to the general pool of fiscal revenues.Moreover, these departments are given specific allocations for each item,and have little flexibility over the reallocation of this expenditure.Efficiency could improve substantially if separate and independent unitsfor the provision of these two services were established, as was suggestcdseveral times in the past.1 The authorities were reluctant to follow thesesuggestions, maintaining that they have a direct responsibility to providethese basic services. Alternatively, the Government could try to improveefficiency in the operation c.: the utilities by strengthening management,giving it more freedom of action, and by improving accounting andcollection practices. However, if these efficiency objectives are notachieved, it is recommended th..t the Government reconsider theestablishment of different, more independent institutional structures forthe ptovision of these services. In fact, the Nevis Administration is nowseriously considering a movement In that direction. A similar situationexisted in telephones until the Government sold the sy,stem to a privatecompany, creating the St. Kitts and Nevis Telecommunications Company(SKANTEL). The Government has 202 of the equity and appoints three of theeight Board members. The new company will invest EC$40 million in a moderntelephone system over the next 5 years, with its first stage expected to beready by the end of 1987. The Government now pays for telephone service,but it will get in turn 20% of dividends plus 2% of net revenues plus thecorresponding corporation tax. Moreover, the staff of the new company hasincreased substantially since its establishment, and rates have increasedonly moderately.

III. BALANCE OF PAYMENTS AND EXTERNAL DEBT

8. The balance of payments deteriorated sharply in 1981-83, improvedsubstantially 4n 1984 and did not change much in 1985. The deteriorationof the early 1980s resulted mainly from the decline in sugar exportsbecause of a 252 drop in prices in 1982 and a 20% drop in volume in 1983.Imports increased somewhat during that period, and the deficit in thecurrent account of the balance of payments tripled to US$17 million -nearly 30% of GDP - in 1983 (Table 3). The current account deficitdeclined by one-third in 1984, as tourism revenues increased by 50%. Thegrowth in the tourism sector continued in 1985, offsetting the negativeimpact of another steep decline in sugar exports.

9. The main issue of the external accounts in the past five years isthe decline of sugar, and its substitution by tourism, as the main providerof foreign exchange. The share of sugar in total exports of goods andnonfactor services dropped from neirly 40% in 1981 to about 20% in 1985,while the share of tourism doubled in the same period to nearly 50%. Thissuggests that the external position of the country in the medium termdepends heavily on the growth of the tourism sector, a fact that has to beconsidered when designing the general development strategy of the economyand the Public Sector Investment Program (PSIP).

1/ Under the existing arrangement, the Government does not have to pay forits own consumption of water nor electricity (for the latter, the billwould have been about EC$750,000 last year).

Table 3: BALANCE OF PAYMENTS SUMMARY(US$ Millions)

1981 1982 1983 1984 1985

Exports of Goods & NFS 38.8 34.2 31.7 38.5 42.1of which: Sugar 14.7 12.2 10.0 11.3 8.8

Tourism 9.9 9.8 10.4 15.4 20.3Imports of Goods & NFS 54.6 53.0 51.6 59.6 63.0Resource Balance -15.8 -19.9 -25.9 -21.1 -20.9

Factor Services and Transfers 9.6 9.5 8.6 9.6 9.2Current Account Balance -6.2 -6.4 -17.3 -11.5 -11.7

Official Grants 1.6 2.3 2.7 1.8 3.1Public Borrowing (net) 0.9 0.7 0.8 5.4 2.4Commercial Banks 3.5 -1.2 1.2 -4.0 -0.2Private Investment and Other a/ 5.0 4.8 13.9 10.1 8.3

Overall Balance 4.8 -3.8 1.2 1.8 1.9

a/ Includes errors and omissions.Source: Statistical Appendix, Table 3.1.

10. The external debt was fairly constant between 1981 and 1983,averaging 20% of GDP du.ing that period, but it rose significantly in thefollowing two years, reaching 30% of GDP by the end of 1985. Project-related borrowing plus the US$3 million commercial bank loan obtained topay for the sugar lands accounted for most of the increase. Approximately802 of the debt at the end of 1985 was on concessionary terms, carrying aninterest rate of 5% or less, while the average maturity period was 13years. Accordingly, after rising slowly between 1981 and 1983, debtservice payments increased substantially in 1984 and 1985. The 1984increase was due mainly to a more-than-doubling of amortization payments,while the 1985 increase was due to a doubling of interest paymentsresulting from the rise in interest rates. Despite these increases,external debt service payments remained relatively low, at less than 4% oftotal exports or 9% of current revenue in 1985. One cannot, however,consider external debt servicing independently of domestic debt servicing,and the discussion in para. 6 suggests that the capacity of the Governmentfor contracting additional external debt, unless at very concessionalterms, has been drastically reduced.

IV. SECTOR POLICY ISSUES

11. Agriculture. Agricultural production fell by nearly 20% in realterms in 1983, mainly as a result of a decline in sugarcane production, andremained fairly constant in 1984 and 1985. Agriculture in St. Christopherand Nevis is dominated by sugar, which occupies about 75% of all arableland and contributes 50% of the total value added of the sector. The other50% is comprised by crops, livestock and fishing. The main issues in theagricultural sector are: a) the situation and prospects of the sugar

- 6 -

industry, including resolution of the land tenure problem; b) irrlgation;and c) the prospects for diversification of production.

12. The sutar industrv is the backbone of the agricultural sector and,to some extent, of the economy.. Moreover, although there is potential fora g.owing diversification in the sector, this can be only a gradualprocess, and therefore sugar is likely to maintain its dominant role in theeconomy in the foreseeable future. In February 1986, the Governmentundertook a major step to reorganize the industry by merging NACO, whichmanaged the sugar field operations, Into the St. Kitts Sugar ManufacturingCorporation (SSMC), which processed the sugarcane and marketed the sugar.This was a step in the right direction, putting the complete cycle fromplanting to processing and marketing under a single management tostreamlire the operation of the industry and improve its efficiency.

13. Sugarcane output has been declining almost continuously afterpeaking in 1979. Since the harvested area remained fairly constant (atabout 10,500 acres) during these years, this decline reflects a drop in theyield per acre from an average of 34 tons in 1980-82 to about 26 tons in1985-86. The reasons for this drop in yields were dry seasons, managementproblems and deteriorating harvesting practices. Irrigation can greatlyimprove yields: the 100 acres that are currently irrigated produce 40-45tons of cane per acre. The Government is considering expanding theirrigated areas initially to 400 acres and then to 800 acres. However, theeconomic viability of these projects would have to be evaluated taking intoaccount their cost, the cost of water and the expected price of sugar.Management problems can be add-essed more effectively following the mergerof all operations into SSMC, although the merger itself will notsutomati ally solve these problems and a thorough review of all levels ofoperation is still required. Addressing the management issue at the fieldlevel will also contribute to the improvement of harvesting practices.These are lacking in the excessive cane left in the fields and in theextension of the harvesting period because of high worker absenteeism. Atthe same time, the wage bill of the industry increased by about 802 from1979 to 1985, and it was the main factor behind the steep increase inproduction costs. These higher costs could be addressed through theintroduction of mechanization to harvesting and through a wage-bonus systemwhich would tie wage increases to productivity. For example, wage bonussescould be paid weekly or monthly upon achieving targets defined in terms ofarea-h.4rvested and production levels. Well designed wage schemes could becrucial in cutting labor costs and providing incentives to reverse thedownward trend of sugarcane production.

14. A key issue of the sugar industry is that, while its break-evenpoint is a production of roughly 32,000 tons per year, the country can sellonly about 29,000 tons at the current protected price of about USJ18/lb.This is because of the current quota allotments - 15,000 long tons to theUK and 11,160 long tons to the US. Adding exports to CARICOM tons anddomestic consumption brings up the total that can be sold at preferentialprices to nearly 29,000 tons. Since the 12-month quota period is differentin the UK and the US, SSMC can spread out the marketing of one year's cropover two quota years. However, it is clear that, under the existingconditions, over a period of five or ten years the average quantity ofsugar sold will be lower than the break-even point by about 102 andconsequently the industry will continue to generate losses. Therefore,there is an urgent need to find ways of reducing fixed as well as operating

costs in order to eliminate losses at the current production levels. Forexample, reducing the harvest period could eliminate the periodic shutoffsat the factory, which amounted to a total of 800 hours in the 1986 season;the factory itself could modernize its equipment, a process that willactually start with a UK-financed project in 1988; and improvement inworking practices at all levels of production can contribute to improvingthe industry's finances. Moreover, there is little certainty that thecurrent US quota will be maintained in coming years, which stresses theimportance of promoting and expanding the diversification efforts inagriculture.

15. Irrigation is the key for the diversification of agriculturalproduction. Results from ongoing research indicate that there is potentialfor a substantial expansion of crops, fruits and vegetables, replacingabout one-third of food imports over the next four to five years. However,this expansion depends heavily on a plan for the irrigation of anadditional 500 acres at a cost of about US$4 million, for which funding hasyet not been found. An acute water problem exists in Nevis; to deal withthe problem, a project for the development of water sources in the islandis nearly completed, tnd the construction of three new reservoirs that willincrease capacity by two-thirds has recently started. To complement theseprojects, the Nevis Administration intends now to improve the waterdistribution system.

16. The land tenure problem has to be solved in order to proceed withthe diversification effort. This implies carrying out the agreement reachedbetween the Government and most sugar landowners in 1984, whereby theGovernment would buy their land for EC$22 million. In August 1986, theGovernment borrowed another US$1.5 million abroad and made an additionalpayment of EC$4.6 million to the land owners, reaching the EC$14 millionmark at which they are to transfer the land titles. Once the Governmentsecures these titles, it can lease parcels to farmers to grow various cropsor produce other agricultural products. The St. Kitts Development Bankwould accept long leases as collateral for loans, and this could open upnew possibilities for the diversification of agriculture.

17. The tourism sector expanded dramatically in the last two years,with the industry's revenues doubling from US$10 million in 1983 to overUS$20 million in 1985. Cruise ship visitors tripled in 1982-84, while thenumber of stopover visitors increased by 202 per year in 1984 and 1985.These are impressive achievements, which resulted from concentrated effortsby both thet Government and the private sector. The main reasons for thisgrowth were increased marketing and promotion, particularly the opening ofa tourism office in Toronto last year, and the Jack Tar operation, whicharranges for all-included package deals to the island. About 150 hotelrooms were added in the last 12 months, bringing the total number ofavailable rooms up to nearly 800, about 600 in St. Kitts and 200 in Nevis.There are plans for further expansion of the hotel capacity, including anew 250-room hotel in Major Bay, a 200-room hotel on Pinneys Beach in Nevisand several smaller projects. The Government provides substantialincentives for the construction of large hotels, including exemption fromall duties on imports for projects of 250 rooms or more. However, thereare several hotels in Frigate Bay which are currently at one-third or one-half of the size of their original plans. For quick expansion, it could be

-8-

more practical to support the completion of thase hotels rather thanattract brand new developments.

18. The main priorities of the tourism sector are finalizing itsdevelopment plan and proceeding with the development of the SoutheastPeninsula. The development plan is needed to evaluate the potential andconstraints of the industry, define its targets and ensure coordinatedgr3wth. In particular, the plan would direct marketing and promotionefforts to desigtated target markets, and will also coordinate theexpansion of hotel capacity with efforts to increase the number of carrierflights to the country. The Southeast Peninsula has the greatest tourismpotential of the country and its development is crucial for future economicgrowth. Construction of the penetration road that will open up thepeninsula for development is scheduled to start in early 1987, after beingdelayed several times in the past. The Government has just signed anagreement to finance the road mostly with a hi;hly concessional loan, butfinancing for other infrastructure projects in the peninsula has not beenfinalized yet.

19. The manufacturing sector in St. Christopher and Nevis did notexpand in 1985-86. In the last 12 months, three new plants opened up butthree closed down, and the net effect of this turnover might have beenslightly negative. Most of the manufacturing is export oriented,particularly garments and electronics. The main issues in this sector arethe marketing difficulties that the garments industry encounters withinCARICOM and in the US, and, in the electronics industry, keeping up withthe rapidly changing technology. Factory space is not a constraintt about6,000 square feet are now empty, and another 20,000 square feet will befinished by the end of the year. As in other sectors in the economy,manufacturing also needs a clear strategy to induce domestic and attractforeign investment. The new Foundation for National Development is a smallscale operation for technical and credit assistance to small domesticfirms, but it is a step in the right direction. The Government is nowconsidering the establishment of an industrial development unit, whichcould be very helpful in screening potential foreign investors andproviding them with a one-stop facility for information and help.

20. The Social Sector. The 1986 budget maintains the currentexpenditure allocation for the Ministry of Education, Health and CommunityAffairs at nearly 30Z of total current expenditure, a similar share as inthe last three years. In education, the emphasis is shifting from the pre-primary level to technical and vocational education and to the post-secondary level. Two new multi-purpose workshops will be established thisyear as part of the education project for the OECS countries. To cutcosts, a new College of Further Education, affiliated with the Universityof the West Indies, will allow students to finish their first andeventually their second year before going to the campus countries tocomplete their degrees. At the primary and secondary levels, the emphasiswill continue to be the training of teachers. In the area of health, theemphasis is on primary care, bringing the service to the people by means ofvery accessible health centers. There are 11 health centers in St.Christopher and 6 in Nevis, about three miles apart, and one of thepriorities of the sector is to upgrade these centers over a period of fiveyears. Another priority is to renovate the General Hospital in Basseterreand expand its capacity from 164 to 220 beds.

V. PUBLIC SECTOR INVESTMENT PROG1AM (PSIP), 1986-88

21. Expenditures on the PSIP nearly doubled in 1985 to almost EC$20million, because of the implementation of housing projects and the rapiddisbursements of lines of credit onlent to small farmers and businessmen.Expenditure on social services increased from EC$2.1 million in 1984 toEC$6.9 million in 1985 or from 20X to 351 of total capital expenditures.Construction of low income houses, financed by the National Bank w.ftth fundsborrowed from the Government of Taiwan, began during the year.Disbursements from CDB's line of credit to the St. Kitts Development Bankgrew threefold in 1985 in order to meet the demands of the local privatesector for investment funds. Local sources financed 301 of capitalspending in 1985, up from 152 in 1984. This increase was due mainly to theaforementioned onlending of Taiwanese project funds by the NationalCommercial Bank. The share of agriculture in total capital expendituresdeclined from 21% in 1984 to 91 in 1985, after the first phase of the UK-financed tick eradication program was completed. The energy sector's shareof capital expenditures nearly doubled to 7% with the purchase onsuppliers' credit of a diesel-generating set in Nevis. The UK-financedpower project, which entailed the commissioning of a 850 kw diesel-generating set in 1984, was hampered by equipment failure in 1985 andconsequently additional expenses were incurred. Projects in thetransportation sector performed well during the year. The construction ofCDB-financed feeder roads was completed in 1985, and the implementation ofthe CIDA-financed shed and maintenance garage for the deepwater portprogressed smoothly and was completed in early 1986.

22. The estimated PSIP for 1986-1988 amounts to EC$97 millionsEC$21.6 million in 1986, EC$34.7 million in 1987 and EC$40.6 million in1988.1 These estimates include projects for which financing has beensecured and projects which have been developod but require financing(financing requirements are discussed below and in Section VII).Expenditures are expected to increase steeply in 1987 and 1988, largely asa result of the implementation of the Frigate Bay Sewerage project andseveral infrastructure projects associated with the development of theSoutheast Peninsula. Failure to implement these projects in a timelymanner will result in significantly lower investment growth in 1987 and adecline in the level of the public investment in 1988, since there will notbe enough time to prepare substitute projects. in either case, there isneed for a project monitoring system to ensure timely development andimplementation of projects in the PSIP.

23. In terms of priorities, the 1986-88 PSIP reflects, relative to1985, a shift towards the productive sectors and infrastructure, which willjointly account for nearly 80% of the PSIP; Water and sewerage projects,mostly in the Frigate Bay tourism area, will absorb 22Z of all capitalexpenditures between 1986 and 1988, while the transportation sector willaccount for 17% (Table 4). The Goverrnent intends to promote privateinvestment by focussing on improvements and expansion of the country'sinfrastructure, which is also essential for the development of tourism.

L/ The Government waa working on its Five Year Development Plan at thetime of the mission's visit. Consequently, the PSIP discussed hereinshould be viewed as preliminary.

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Expenditures in the social sectors will decrease mainly because of thecompletion of the housing project. However, the share of education in thePSIP will double to nearly 10X in 1986-88. Overall, the inter-sectoralallocation of resources in the PSIP seems to be appropriate and consistentwith a development strategy that emphasizes tourism as the leading sectorin future growth.

Table 4t PUBLIC SECTOR INVESTMENT PROGRAM AND FINANCE

1985 1986-88EC$'000 X EC$'000 Z

Economic Sectors 12,674 64.6 75,643 78.1Agriculture 1,705 8.7 10,454 10.8Energy 1,307 6.7 11,153 11.5Manufacturing 605 3.1 6,391 6.6Transportation 3,677 18.7 16,551 17.1Water and Sewerage 2,000 10.2 21,667 22.4Other Economic Sectors 3,380 17.2 9,428 9.7

Social Sectors 6,950 35.4 21,233 21.9Education 861 4.4 9,159 9.5Health & Community Services 1,191 6.1 1,100 1.1Housing 3,778 19.3 2,781 2.9Public Safety 523 2.7 693 0.7Other 598 3.0 7,500 7.7

TOTAL 19,624 100.0 96.876 100.0

FinancinaExternal Grants 8,200 41.8 50,800 52.4External Loans 5,450 27.8 21,175 21.9Local 5,975 30.4 14,550 15.0Unknown 0 0 10,351 10.7

Sourcess Annex II.

24. The Government expects to mobilize about 85% of the financIng forthe PSIP from external sources. In turn, 85% of the external financingrequirements have already been identified. Nearly 901 of the projects bythe Federal Government will be financed with external grants, while for therest of the public sector all financing comes from external loans. Majorprojects for which financing is required include water and electricitysupply for the Southeast Peninsula, which could be implementedsimultaneously with the construction of the new road, and therehabilitation of the Sugar Manufacturing Corporation. Domestic financingrequi.-sments amouit to 15% of the program. Given the reductions in publicsector savings in 1985 and 1986, some reduction in the local financing ofcapital etoenditures is projected for 1986 and 1987. However, theconstruction of the Frigate Bay sewerage pipeline and treatment plant thefollowing year, and their local counterpart requirement, is expected tonearly double the local financing of capital expenditures in 1988.

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VI. TECHNICAL COOPERATION PROGRAM

25. The Government, with the assistance of the United NationsDevelopment Program (UNDP), has prepared a technical cooperation program(TCP) for the period 1987 through 1991. The program consists of ongoingtechnical assistance projects, at a total cost of over EC$16 million, and alist of proposed projects with an estimated cost of about EC$15 million.The program reflects the PSIP's sectoral priorities, concentrating on theagriculture and water sectors as well as on education. In agriculture, theTCP supports the development of a comprehensive plan for the sector and theexpansion of forestry. The largest project of the program is the WaterResource Management and Soil Conservation project, at a cost of EC$5.5million - about one third of the total ongoing TCP. Projects in educationtotal EC$4.6 million, 301 of which are directed to student loans. Theproposed TCP maintains the emphasis on agriculture and education, but doesnot include additional projects in the water sector. In agriculture, thefocus is on research and development projects. The TCP is useful inproviding a survey of the Government's manpower requirements with respectto both the implementation of major projects in the PSIP and to the ongoingprovision of essential services. The Government needs to closelycoordinate the TCP and ensure that it continues to reflect its developmentpriorities.

VII. MEDIUM-TERM POLICIES AND PROSPECTS

26. The medium-term economic outlook for St. Christopher and Nevis isuncertain. The difficult situation of the public sector, particularly itsgrowing debt service burden, casts doubt on its ability to implement thePSIP and overshadows the prospects for future economic growth. Tourismwould be the leading sector in that growth, but its expansion dependsheavily on the development of the Southeast Peninsula. In agriculture,sugar will maintain its dominant role in the foreseeable future, althoughdiversification into other crops, through a concentrated effort by theGovernment, could become increasingly important. Therefore, production inthis sector depends largely on improvements in the sugar industry and onthe success of the diversification efforts, as well as on the weatherfactor. Assuming that a sustained program of policy reforms and adjustmentmeasures is undertaken and that the major development projects are actuallyimplemented, the mission projects that, following a growth of 2.5% in 1986,GDP would grow at a rate of 3.5% in 1987 and 42 per year in 1988-91 (Table5). The higher growth rates in 1987-88 would result from the substantialincrease in the PSIP during the construction of the Frigate Bay sewagesystem and the Southeast Peninsula road, while the development of thepeninsula itself, with an increasing share of private investment, wvouldgather steam thereafter.

27. Exports of goods and non-factor services are projected to increaselargely because of higher tourism receipts. However, since the tourismindustry requires a large import component, imports would rise accordingly,and the current account deficit of the balance of payments would stayroughly constant, as a fra:tion of GDP, through 1990. This deficit would befinanced by a combination of grants, foreign investment and externalborrowing. External grants are assumed to increase through 1988, following

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Table 5: SELECTED MACROECONOMIC PROJECTIONS

Actual Prelim.1984 1985 1986 .987 1988 1989 1990-95

GDP Growth Rate 3.8 2.1 2.5 3.5 4.0 4.0 3.4

2 of GDPInvestment 7.5 12.0 12.8 18.3 20.5 20.4 20.0Public 6.0 10.4 10.8 15.0 17.1 14.6 12.1Private 1.5 1.6 2.0 2.3 3.4 5.8 7.9

Gross Domestic Savings -25.1 -19.5 -9.2 -8.9 -7.1 -6.3 -4.1Public Sector Savings -3.1 -7.1 -9.7 -9.0 -5.1 -3.1 0.0Exports GNFS 59.2 61.3 72.0 71.1 71.7 72.5 76.7Imports GNFS 91.6 91.7 93.9 98.2 99.2 99.1 100.7Resource Balance -32.4 -30.4 -21.9 -27.1 -27.5 -26.6 -24.0Current Account BOP -17.7 -17.0 -12.4 -18.1 -18.3 -17.5 -15.1External Grants 2.8 4.5 5.7 8.2 9.0 5.2 2.4External Debt 26.3 28.8 28.1 29.5 29.4 30.8 32.3Debt Service 1.7 2.3 6.2 1.7 3.6 2.3 3.1

Debt Service/Exports GNFS 2.9 3.7 8.6 2.4 5.0 3.2 4.1Debt Service/Curr. Rev. a/ 6.5 9.1 24.8 6.9 14.0 9.0 13.4

a/ Refers to external debt service and to the current revenues of the FederalGoverment.

Sourcess Mission Estimates (Annex III).

the substantial increase of the PSIP in 1987 and 1988, and to decreasethereafter. Foreign investment is projected to increase in 1989-91, as thedevelopment of the Southeast Peninsula picks up. The remaining gap wouldhave to be closed with new borrowing, and it is assumed that its termswould be an interest rate of 5X and a repayment period of 12 years, with 4years grace. As a result of this new borrowing, external debt as apercentage of GDP would increase gradually, from 292 in 1985 to an averageof about 322 in 1990-95, and debt service payments will absorb on average42 of total exports in the early 1990s. It is important to point out,though, that the export projections are highly dependent on tourismrevenues, the single most important source of foreign exchange. Ifmerchandise exports and tourism revenues turn out to be lower thanexpected, the ratio of debt service to exports will be higher. As Table 5shows, the debt service ratio is also very sensitive to repayments ofprincipal: it increases sharply in 1986, when the Government pays back theUS$3 million loan contracted in 1984 to pay for suga- lands, and it willjump again in 1988, when it repays the US$1.5 million loan contracted thisyear for the same purpose.

28. For the public sector, unidentified finance for 1986 stood in mid-year at EC$28 million (Table 6). Since most of the PSIP is covered byalroady identified grants and loans, this large financing gap is a resultof particularly high debt service payments in 1986 and of the large publicsector deficit. Consequently, the public sector's overdraft at theNational Bank is likely to incroase sharply this year. The projections ofpublic sector savings assume that the Government will have to focus on the

- 13 -

worsening situation of its finances and take drastic measures to correctthese imbalances, including an adjustment program to be implemented in1987. The short te:. object of such a program would be to slash thecurrent deficit in order to check the growth of domestic debt. Therefore,it will have to include tight controls on current expenditure as well asmeasures to improve revenue collection. Moreover, new sources of revenuewill have to be considered, as discussed in para. S. In the medium term,the program would aim at producing positive public ssvings to finance partof the PSIP. With such a program in place, unidentified financing of thepublic sector, mostly for PSIP purposes, would average about EC$35 millionper year in 1990-95. If no adjustment takes place, public sector savingswill remain negative at roughly the 1987 level and the finance requirementswould tend to be higher. However, the size of future deficits will bebounded by the volume of external capital flows as well as by the capacityof the Government to continue borrowing from the Social Security Scheme andother domestic sources.

Table 6: PUBLIC SECTOR FINANCE REQUIREMENTS(EC$ Millions)

1986 1987 1988 1990 1995

Public Sector Capital Expenditure 21.6 34.7 40.6 37.0 47.0Debt Service 12.4 3.8 8.3 7.6 15.4Amortization 9.7 1.6 5.9 3.5 8.9Interest 2.7 2.2 2.4 4.1 6.5

Financing Reguirements 34.0 38.5 48.9 44.6 62.4Sources:Public Sector Savings -12.0 -9.0 0 10.0 25.0Identified external 17.8 28.4 26.2 0 0Unidentified 28.2 19.1 22.7 34.6 37.4

Source: Mission estimates.

29. Two types of uncertainties overshadow the economic pr.ospects ofSt. Christopher and Neviss a) factors beyond domestic control, such asweather conditions and shocks in external markets; and b) the nature andimplementation of adjustment measures and their overall effect.Regarding external conditions, there could be, for example, major changesin the price of sugar or events affecting the volume of tourism to theislands. While these factors are exogenous to the economy, theyemphasize the need to diversify production and exports, in order to makethe country less vulnerable to these type of shocks, As to theGovernment's adjustment measures, they should be thorough and implementedin full, particularly those related to current revenues and expenditures.Annex I which follows sets out the key development policy issues in St.Christopher and Nevis and specifies additional measures required. Theeffect of these measures should be monitored closely, and fiscalperformance, in particular, has to be evaluated continuously. TheGovernment has to act swiftly to reverse current trends and prevent afinancial crisis in the public sector that would undermine the prospectsfor future economic growth.

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ANNEX I: DEVELOPMENT POLICY ISSUES

- s-

Sr. OftsTOPNg AND NEVI

O6VOLOP454 POLICY ISSl

A. TPublic Sect

1. Fderal Government Contain the Growth of currnt CMMle4idatich of tn "so?r TWO Government intende tolEponditures and Debt expenditures In ordet to Industry to lepovwo Its enduct c eurvey of the civil

roduce the current deflit, effiie*ncy cnd top the drain eervieo to ease" it manpower

which more thnn doubled to an public rouree. However, reulesernt. There Is nedt.71 of OP In 1908. Chec the deOetic debt of the to streamlino the operaftoenth oroth of both deedtie Federal Government, which of the governmnt adminiotra-

and external debt. esmmed NCO'c debt, hwe tion and pareattals. A1 a

doubled In 19W. first stop to deal with th

growing dometio debt. Its

volume ehould be froen and

govemrnenO expenditure

reduced accordingly.

2. Feernl owerneent Tho revenue bas Is narrow. A weial Services levy of 45 Need to impreve revenuoRoevnues Current revenues of the on wae" was introduced this oolletion erd develop other

Federal (overnment declined year. plus It for eeqerac revenue sources. Consider a

from Su of MP in 1901 to 253 pay. Consumption tax on windfll capital gsins tx on

of CDP In 1985. Several luxury its" ee lInds In the Southest (S1

Increased. A higher ax rate Peninsula.

on land traeOctione In the

Southeast Pen inuln he just

been Introduced.

S. Public interprise and a) olectriclty and water arc NDADO as merg Into S1C to The merger has to be followldUti I Iies

provided by Departments of consolidate the sur industor by a thorouh reorganization

Gkvornsnt under a sinjl senegeat. otf MSC to Improve management

b) Poor perforeance of the s at all lovels eo oporation.

gar Industry. Rfklney in the oporations

of the electricity *nd water

departOnto heo to be Improved

by strengthening mangent

end better accounting and

collection practices.

Alternatively, a more

Independent Institutional

structure for thes

Departnts ehowld be

conoidred.

3. jgpjgjvZnO Rate of unempleyat io The developent of the Toes further aetion to

estimated at 20-255. The Southeat Penisula, incrse private investoent.

neOative net migration has particuNry Infrastructure Procee with the develoment

brouoht about a decrease in projects, will incras, the of infratructur, which Is a

total population of 6.01 in genrxtlon of new jobs. Iabor-intesive activity.

190824, alleviating the Proced with diversificationproblem of agriculture by leasing

lends to indepene farmers.

- is

C. aISancS of Puvmnte Exports of sugar, the main Consolidation of sugar Strese improvemont of

source of foreign exchange for industry to iaprove efficiency efficiency in sugar induatry.

many year., have betn and increase production. Expand effort. for

declining for several years. Empha-ize development of divereification of agriculture

sugar quotas to the US and EEC touriem, which has substituted to Incres., export- and reduce

might be reduced in the sugar *a the mejor source of food imports.

future. foreign exchange. Pursue development of tourism

sector,

0. tMin Secteral Issues

1. Agricul ure a) the production of sugar On sugar, see above. Pursue loosing of land to

has been declining since Government completed poyment farmers end diversification

1979, of EC$14 million to former effort, On water, improve and

b) diversification of lond owners. Once title io expand the diotribution

agricultural production. rocoived, it can leoma lands system.

c) water shortage, mainly in to farmer. to puraue

Novis. Need to expand diversification of production.

irrigation. On water, the main oopthorie

d) land tenure issue. hao beaa developing resources

(woll drilIing) and increas;ni

reservoir cpc i ty.

2. Tourism a) Need a sector development The Oovernswnt is working now The Government has to finalize

plan; on a master plan for development plan. Arrange

b) Development of the SE development of tourism. has financing for infrastruc+.,re

Peninsula, ehich has the just aigned an agreement for development in SE Peninsula.

largest potential for construction of SE Penineula Coneider givingl incentives

tourism; road. Incentive, for large alsz for the conetruction of

C) focus on marketing and nea hotels, smallor hotel., including

promiotin; complotion of sxiating eitee.

3. Mtnufacturing Several plants have shut down The new Founcldtion 7or There is noed for an

shortly after opening due to National Development offers industrial devolopment unit to

bad planning. Crmoent and technical and credit help foreign investore operate

shoo industries have been assistance to small local in the country, providing

damaged by Import restrictions firmo. About 20,000 equate information and cutting red

imposed within CRICON. Need feet of factory space will be tapo, as Well as domestic

to attract more foreign finiehed by the end of the producers market abroad. The

investment. year. electronic. induotry hoe to

keep up with the Ilteot

technologies.

- 17 -

ANNEX II: PUBLIC SECTOR INVESTMENT PROGRAM AND

TECHNICAL ASSISTANCE PROGRAM

St. Christopher/Nevis - PSIPMajor Ongoing Proj oct and Source of Funding TOTAL EXTERNAL FINANCING SOURCE TERMS AID CONDITION DATION

COST OFPROJECT (ECS'00) (ECS'08) X FtNDS Int.Rat. Amort.Pr.4race P.r. Com. Cospl.FEDERAL GOVERNMENT

AgricultureSpring Hill Da - Nevis 201 0 OX NCM-Taiwan .. .. .. 1984 1908New River Pilot Irrigation Projoct 178 178 1081 ODD .. .. .. 1984 198SSt. Kitta/Novis Resourco Management 045 346 10X UAID .. .. .. 18 187Hinptlld Citrus Projct 172 172 W1i PDD .. .. .. 1964 1966Abbatoir 1260 1260 100X CIDA .. .. .. 1066 1987Agricultural Equipment 46 O Olt NC-Taiwan .. .. .. 1065 166Input Supply/Sm Il Farm Equipmt Pool 1161 1308 s1o CDB 4.AX 15 6 1066 1987

EducationMolyneoux Primary s8e 808 101 COdB/BNTF .. .. .. 1986 1986NM School- - St. Johnston's Primry 1700 1700 101: E .. .. 1986 1907St. John's Primry - Nsvts 700 700 IO CD8/CNTF .. .. .. 1986 1906Cay"n High School 929 O2n 108X CDB7/NTF .. .. .. 1905 1966Sandy Point High School 580 gm 1O CDO/UNTF .. .. .. 198C 1906

N""is Power Project 2664 2564 1008 .. .. 1984 1986Electricity Supply Expansion 3012 8012 1 EDF .. .. .. 1066 10t6

Health and Community ServicesNeKnight Coemunity Centor 275 276 1081 CD9SBNTF .. .. .. 196" 1066Improvements to Grove Park 9b0 a ox Local .. .. .. 165 10s"Pogeon HOspitol 271 271 100X COO/BNTF .. .. .. 1/65 1086

HouslnsLow Income Housing - Taiwan 4060 0 0X NCR-Taiwan .. .. .. 1906 1986

Pubi c SafotySpecial Services Unit Building S6e 60 1OOl US .. .. .. 1985 1966Polloe Radios 422 422 108t ODD .. .. .. 1986 1906

Water and SewerageExploratory Drilling 6M28 6028 1081 CIDA .. .. .. 1904 1907

OtherPurchase and Dev. of Industrial S;tes Nevis 1096 0 oX Local .. .. .. 1984 1906

St. Christopher/Nevis - PSIPMajor Ongoing Projects and Source of Funding TOTAL EXTERNAL FINANCING SOURCE TERMS AMD CONDITIONS DURATION

COST OFPROJECT (ECS'000) (ECS'00V ) % FUNDS Int.Rate Amort.Per.Crace Per. Comm. Compl.REST OF PUBLIC SECTOR

EducationStudent Loans II 678 678 100X CDB 4.0% 15 S 1983 1988Student Loans III 948 948 100% CDO 4.0% 1S 5 1984 1987

Industry

Industrial Estates III 2448 1958 80% CDB 4.0% 10 6 1983 1988Industrial Estates IV 7818 6253 80% CDB 4.0% 10 5 1988 1987

TransportationTransit Shed and Maintenance Garage 2500 2600 100% CIDA .. .. .. 1984 1986

OtherConsolidated Line of Credit 4097 4097 100% CDB 4.0O 15 5 1984 l986Strengthening of St. Kitts/Nevis Dev. Bank 1914 1914 100% E1 .. .. .. 1984 1988Consolidated Line of Credit II 8620 7020 82% CBD 4.0% 16 S 1988 1989

TOTAL: 62651 62083

St. Christopher/Novis - PSIPMajor New Projects and Source of Funding TOTAL EXTERNAL FINANCING SOURCE TERMS AMD CONDITIONS DURATION

COST OFPROJECT (ECS'000) (EC'000) X FUNDS Int.Rate Amort.Por.Graco Per. Comm. Compl.

FEDERAL GOVERNMENT

AgricultureDevelopment of Grazing Pastures 136 135 100% W.Cer 1987 1987

EducationNow Schools - Trinity andBasseterre Primaries 3423 3423 100% EDF 1987 1988

Regional Vocational & TechnicalEducation Project 4326 3587 82% CDB/IBRD 0.75/4.0X 40/1S 10/5 1988 198

EnergySecond Generator - Nevis 1885 1386 100% BDO 1987 1987

SE Peninsula Electricity 3000 3000 100X Unknown 1988 1989

Electricity Distribution - Nevis 8S0 860 lOX BDD 1S8B 198B

Electriocity Supply Expansion 8846 8846 100% UK 0.0X 18 7 1988 1987

TransportationSE Peninsula Road 22000 22000 100% USAID 1987 1988

Water and SewerageIrrigation 11000 11900 100% Unknown 1989 1990

Frigate Bay Reservoir 2700 2700 100% Unknown 1987 1987

SE Peninsula Water 4000 4000 100% Unknown .. 88 1989

Sewage - Frigate Bay 22276 16275 73% CIDA 1987 1989

REST OF PUBLIC SECTORAgricultureSugar Manufacturing Corporation - Rehab. 4050 4060 100 Unknown 1988 1988

TOTAL: 82788 78010

TECHNICAL ASSISTANCE PROGRAM

0ngoing Projects1987-19?1

Part t. Projects Scheduled to terninate during the new Country Programewhich are related to its objectives

Project Title Source of Funds CP Objective Initial approval Scheduled Total Budgetto which it relates Date Termination Budget During new CP Justificatiom

Date

Land Settlement Adviser BDO Agric. Diversification June 84 Kay I1 77000 12000

Consultacy Resour OAS Agric. iversification I Aug. 86 July '87 4800 25000Nffana!elmet Planning

Pilot Forestry Development CAS Agric. Diversification Jan. '96 Dec. I7 282000 140000

Soil Conservation USAID Agric. Diversification Jan. '8 Dec. 87 2000000 1030000

Tourism Promotion GAS Tourism Development Jae. 86 Dc. 17 250O 12000

Strengthening of Govt. OAS - Jan. 86 Dec. 87 196000 100000Institutional capacity

Electrical Engineer CFTC - Feb. '86 Ja. 8e 62000 30000

Project Nanager DD - Feb. '86 Jan. 8 62000 30000Elpctrical Co.

Development of Coroperative OAS - Jan. '86 Dec. 87 3300 6600

Part 11. ProJEcts Schedle to terminate durig the nw Country ProramO*ich wre not relited to its objctive

Part Ill. Projects to b exted b the nw lountry Program whicb rerelated to its objetive

8

NIbti-lsland Educatioa MP Additional Areas of Jan. '84 eC. 88 106000 50000Soial X EcmneicSector

Leal Draftsman UNW Improvemt & Rision v. 13 Dec. Be 42U5 150000 Extension required toof Legislatio finalize draftieq of

legislation and tofKilitate efforts tofill the LealDraftsma post witha national

Total 1615000

Proposed Projects1987-1991

Part 1. Proposed Projects for which assistance is requested frog theactual resources of the CP

CP ObJective EstiaatedProject Title to which it relates Estimated Duration External Status of Project Preparation

AssistanceBudget

Agricultural Development Programme (NOP) Agric. Diversification 3 years 000000 Project to be prepared

Small Farmers Livestock Development (UNDP) Agric. Diversification 2 years 100000 Project to be prepared

Irriqation De-elopment[FAOITCP) Agric. Diversification I year 7000* Project to be prepared

Preparation for Agric. Census& Survey (FADITCP) Agric. Diversification I Year 50000 Project to be prepared

Establishment of Fodder Oank(FAC/TCP) Agric. Diversification I year 60000*

Increase production white potatoes(FAO/TCP) Agric. Diversification 3 months 11000*

Pest NanagementJPlant Propagation4FAO/TCP) Agric. Diversification I year 150000

Cottage Industry Developeent (UNIFEN/USAID) Industrial developaent 2 years 150000* Proposals to be developed

Tourism Development (0DDiOASICIDAJ Touriss Development 2 years 92000* Proposals to be developed

Recruitmnt of UN' UNDP) Additional areas of 100000 Project to be preparedsocial & economicsector

Total £520000

' l mmIa

- 24 -

lreakdown of Resources by Objectives

1987-1991

Nell project propoballObjective Ongoing projects Program Reserve Subtotals Prcatap

$ S $ X

A. Agricultural Diversification 1177000 1178000 2355000 1t

B. Cottage Industry Development - 150000 150000 S

C. Tourisa Developmet 12000 92000 104000 3

D. lsproveent & Revision ofLegislation 150000 - 150000 5

E. Additional Areas Social &Econaoic Sector 276000 100000 376000 11

Uhprogramd Reserve 100000 S

-- ------------ --- --- 1615000 15 0 3 0 _0-- _--0----

1OIAI lZ1S000 1520000 3235000 too-- - - -- - - - - - -- - - - - - -- - - - - - - -- - - -- - - - -- - - - -- - - -- - - - -- -- -- ____

- 25 -

ANNEX III s MACROECONOMIC PROJECTIONS

- 26 -

Table 2.5s ST. CHRISTOPHER AND NEVIS - ACTUAL AND PROJECTED NATIONAL ACCOUNTS

(1984 EC5 u llionl

Actual Est. PROJECTEO

1984 1985 1986 1987 1989 1989 1990 1991 1992 1913 1994 1995

Gross domestic product at m.p. 175.6 179.3 183.7 190.2 197.8 205.7 213.9 222.5 230.3 237.2 244.3 251.6Terms of trade adjustment 0.0 -3.2 9.2 8.0 11.6 15.7 21.5 21.1 20.3 19.6 18.9 10.2Gross domestic income 175.6 176.1 192.9 198.2 209.4 221.4 235.5 243.6 250.6 256.8 263.2 269.8Isports of 6NFS 161.1 164.6 172.9 186.9 196.3 204.1 215.3 227.8 235.8 240.6 243.6 246.6Exports of GNFS -104.0 -109.9 -132.3 -'35.2 -141.7 -149.2 -159.9 -169.4 -177.2 -193.6 -199.5 -194.5Resource gap 57.1 54.7 40.4 51.7 54.6 54.9 55.3 58.4 58.6 56.9 54.1 52.1Total resources 232.7 230.8 233.3 249.9 264.0 276.3 290.8 302.0 309.2 313.7 317.3 321.9

Consumption 219.6 209.3 209.8 215.1 223.4 234.3 246.8 257.0 263.2 266.? 269.3 272.9Investment 13.1 21.5 23.6 34.8 40.6 42.0 44.0 45.0 46.0 47.0 48.0 49.0Private 2.6 2.9 3.7 4.4 6.7 12.0 16.0 17.0 19.0 19.0 20.0 21.0Governsent 10.5 18.6 19.q 30.4 33.9 30.0 28.0 29.0 28.0 28.0 28.0 28.06ross domestic savinqs -44.0 -33.3 -16.9 -16.9 -14.0 -12.9 -11.3 -13.4 -12.6 -9.9 -6.1 -3.1Private -38.6 -20.5 0.9 0.6 -4.7 -8.0 -8.2 -11.5 -11.8 -9.8 -6.7 -4.4Governsent -5.4 -12.7 -17.8 -17.5 -9.3 -4.9 -3.1 -1.8 -0.8 -0.2 0.6 1.3

Net factor payments 0.3 -3.8 -2.4 -1.8 -2.1 -2.9 -3.3 -3.5 -3.7 -4.0 -4.3 -4.5Transfers 25.7 28.4 19.0 18.4 20.5 22.4 24.4 25.7 26.9 28.0 29.0 29.9

Gross national savinqs -18.1 -8.6 -0.2 -0.3 4.4 6.7 9.8 8.8 10.6 14.1 18.6 22.2Gross national product 201.5 204.0 200.4 206.8 216.1 225.2 235.0 244.6 253.5 261.2 268.9 276.9Gross national income 201.5 200.8 209.6 214.8 227.7 240.9 256.6 265.7 273.8 280.8 287.9 295.1

GOP deflator 100.0 103.4 108.6 114.0 119.7 125.7 132.0 138.6 145.5 152.8 16).4 168.5GDP in current prices 175.6 185.4 199.5 216.8 236.8 258.6 282.4 308.3 335.1 362.4 3s1.9 423.9

6rowth rates

6P at sarket prices 2.1 2.5 3.5 4.0 4.0 4.0 4.0 3.5 3.0 3.0 3.0Total resources -0.8 1.1 7.1 5.6 4.7 5.3 3.8 2.4 1.4 1.1 1.4Investment 63.8 9.9 47.7 16.6 3.5 4.8 2.3 2.2 2.2 2.1 2.1Consumption -4.7 0.2 2.5 3.8 4.9 5.4 4.1 2.4 1.3 1.0 1.3Agriculture -2.5 7.0 1.0 3.0 3.0 3.0 3.0 2.0 2.0 2.0 2.0Nanufacturing -9.2 2.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0Government 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0Services 7.5 2.0 4.0 5.0 6.0 6.0 6.0 5.0 4.0 4.0 4.0

Percentages

InvestsentJ6DP 7.5 12.0 12.8 18.3 20.5 20.4 20.6 20.2 20.0 19.8 19.6 19.56DS/6DP -25.1 -18.6 -9.2 -8.9 -7.1 -6.3 -5.3 -6.0 -5.5 -4.2 -2.5 -1.2GNS/6IP -10.3 -4.8 -0.1 -0.1 2.2 3.2 4.6 4.0 4.6 5.9 7.6 8.8Consumption/6P 125.1 116.8 114.2 113.1 112.9 113.9 115.4 115.5 114.3 112.4 110.2 108.5Current revenue/GDP 26.7 25.0 25.0 25.0 28.9 30.5 30.8 30.8 30.8 30.8 30.9 30.8Current expenditure/GDP 29.8 31.8 34.8 34.0 33.9 33.6 32.6 31.8 30.8 30.3 29.9 29.4Current acct. balance/GDP -3.1 -6.7 -9.8 -9.0 -5.1 -3.1 -1.8 -1.0 0.0 0.6 1.0 1.4

Source: Mission estimates.

- 27 -

Table 2.6: sT. CHRISTOPHER AND NEVIS - ACTUAL AND PROJECTED TRADE 6ROdTH RATES AND PRICE INDICES

Actual Est. P R O J E C t E D

1984 1985 1986 IPS7 1988 1989 1990 1991 1992 1993 1994 1S#5------------- - -. --------- - -

Exports 6routh Rates

Sugar -11.4 6.0 -3.0 2.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0"olasses 70.6 3.0 5.0 0.0 2.0 2.0 2.0 2.0 0.0 0.0 0.0Manufacturing -4.6 0.0 2.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0Other 24.1 I5.0 12.0 10.0 8.0 9.0 8.0 8.0 8.0 8.0 8.0Stamps -0.7 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0Re-exports 112.8 15.0 10.0 8.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0Total erchandise exports -3.0 4.6 0.4 3.1 2.9 3.0 3.0 2.1 2.1 2.1 2.2Non-factor services 2S.1 8.0 8.0 9.0 10.0 12.0 12.0 10.0 8.0 7.0 6.0Total exports 12.0 6.4 4.6 5.9 7.0 9.3 8.5 7.1 5.9 5.4 4.8

Price Index 11984 c 100)Su==r 1. 89 28 4 11 16 1. 1. 1. 9Sugar 100.0 87.9 122.8 124.6 141.4 156.6 178.2 180.9 193.7 186.6 189.6 192.7Nolasses 100.0 87.9 122.8 124.6 141.4 156.6 172.2 160.9 183.7 136.6 189.6 192.8Oanufacturing a/ !00.0 100.7 113.8 117.3 118.8 120.4 122.0 126.2 130.6 135.2 139.9 144.8Sther ap 100.0 100.7 113.8 117.3 118.8 120.4 122.0 126.2 130.6 135.2 139.9 144.8StaR ps a/ 100.0 100.7 113.8 117.3 118.8 120.4 122.0 126.2 130.6 135.2 139.9 144.8Re-exports a/ 100.0 100.7 113.8 117.3 118.8 120.4 122.0 126.2 130.6 135.2 139.9 144.8Nerchandise exports 100.0 94.1 118.6 121.0 130.2 138.5 149.8 153.0 156.1 159.4 162.8 166.4Non-factor services al 100.0 100.7 113.8 117.3 118.8 120.4 122.0 126.2 130.6 135.2 139.9 144.8Total exports 100.0 97.6 116.0 118.9 123.7 127.8 132.8 136.1 139.6 143.4 147.4 151.7

Imports in 1984 Prices

Fuel 5.7 5.5 5.8 6.4 6.9 7.4 8.0 8.5 8.8 9.2 9.6 9.9Chemicals 10.2 10.5 11.4 12.3 13.3 14.3 15.8 17.0 18.0 18.8 19.3 19.9Food and beverages 4.3 4.1 4.2 4.3 4.4 4.6 4.7 4.9 5.0 5.2 5.3 5.5Nanufactured Products 18.0 19.1 19.8 21.0 22.7 24.5 27.0 29.1 30.9 32.1 33.1 34.1Consuner goods 10.3 9.5 9.9 11.9 13.1 14.1 15.5 16.5 17.1 17.7 18.0 18.4Other imports 3.4 4.8 5.2 5.8 6.3 7.0 7.7 8.3 8.9 9.1 9.5 9.9Nerchandise imports 51.9 53.4 56.3 61.6 66.7 72.0 78.7 84.3 88.7 92.0 94.8 97.6Non-factor services 7.7 9.3 8.0 8.8 9.5 10.3 11.2 12.1 12.3 12.4 12.3 12.2Total imports 59.6 62.8 64.3 70.4 76.3 82.2 89.9 96.3 101.0 104.4 107.1 109.8Ilport price index - 6NFS 100.0 100.4 109.0 112.0 114.0 115.4 116.9 121.3 125.7 130.3 135.0 140.0

Import grouth rates

Nerchandisa imports 2.9 5.5 9.4 8.2 7.9 9.3 7.1 5.2 3.8 3.0 3.0Non-factor services 21.2 -14.8 10.2 8.9 7.8 9.3 7.3 2.0 0.4 -0.5 -0.6Total imports 5.3 2.4 9.5 8.3 7.8 9.3 7.1 4.8 3.3 2.6 2.6

Teres of trade indices

Export price index 100.0 94.1 118.6 121.0 130.2 138.5 149.8 153.0 156.1 159.4 162.9 166.4Import price index 100.0 100.4 108.0 112.0 114.0 115.4 116.9 121.3 125.7 130.3 135.0 140.0Terms of trade index 100.0 93.7 109.8 108.1 114.2 120.0 128.1 126.2 124.2 122.3 120.6 118.9

ail Source of price projections is Economic Projection Department

Source: fission estiumtes.

- 28 -

Table 2.7: ST. CHRISTOPHER AND NEVIS - ACTUAL AND PR0JECTED 3AIANCE OF PAYNENTS

IUSS million)

Actual Est. P R O J E C T E O

1984 1985 1996 1987 1988 1999 1990 1991 1992 1993 1994 1995

Exports of GNFS 39.5 42.1 53.2 57.1 62.8 69.5 70.2 97.0 95.5 103.9 112.6 121.4laports of BNFS 59.6 63.0 69.4 78.8 87.0 94.9 105.1 116.9 127.0 136.0 144.6 153.7Resource Balance -21.1 -20.9 -16.2 -21.8 -24.1 -25.5 -27.0 -29.9 -31.5 -32.1 -32.0 -32.3

Net current transfers 9.5 10.6 9.0 9.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0Net factor payments 0.1 -1.4 -1.0 -0.8 -0.9 -1.3 -1.5 -1.6 -1.8 -2.0 -2.2 -2.4Interest -0.5 -1.0 -1.0 -0.8 -0.9 -1.3 -1.5 -1.6 -1.9 -2.0 -2.2 -2.4Other NFS 0.6 -0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Current account balance -11.5 -11.7 -9.2 -14.5 -16.0 -16.7 -17.4 -19.5 -20.2 -20.1 -19.2 -18.8_- - - - - - -- - - -- -- --- - -- -- -- - -- -- -- -- ---- -- -- -- -- -- -- -- -- ------ ___

Direct foreign investment 10.1 9.3 4.0 5.0 6.0 8.0 11.0 14.0 13.0 12.0 12.5 13.06rants 1.8 3.1 4.2 6.6 7.9 5.0 3.0 3.0 3.0 3.0 3.0 3.01&LT public debt (net) 5.5 2.4 1.0 2.9 2.1 3.7 3.5 2.5 4.2 5.0 3.9 2.8Disbursement 6.1 3.0 4.6 3.5 4.3 4.7 4.7 4.1 6.2 7.4 6.5 6.0Amortization 0.6 0.6 3.6 0.6 2.2 1.0 1.3 1.6 2.0 2.4 2.7 3.3

Arrears - - - - - - - - - - - -Errors & omissions -4.1 0.0 - - - - - - - - - -

Change in reserves -1.9 -2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0(- t increase)

Memo:

Debt service as I of exportsof GNFS 2.9 3.7 8.6 2.4 5.0 3.2 3.5 3.7 4.0 4.2 4.4 4.7Debt service as Z of GDP 1.7 2.3 6.2 1.7 3.6 2.3 2.6 2.9 3.0 3.3 3.4 3.6Debt service as 1 of currentrevenue (Fed. Gov't) 6.5 9.1 24.8 6.9 14.0 9.0 9.8 10.8 11.5 12.3 12.9 13.6DOD as l of exports of 6NFS 44.4 47.0 39.1 41.5 41.1 42.5 42.2 40.8 41.5 43.0 43.0 42.2DOD as X of GDP 26.3 28.8 29.1 29.5 29.4 30.8 31.5 31.1 32.0 33.3 33.4 32.6

Source: Mission estimates.

- 29 -

ST. CHRISTOPHER AND NEVIS

STATISTICAL APPENDIX

TABLE OF CONTENTS

Table No. .Pate

1.1 Population Trends ................................ ... . 30

2.1 GDP at Current Factor Cost............................ 31

2.2 GDP at Constant Factor Cost ............... ........... 32

2.3 Expenditure on GDP at Current Prices ................... 33

2.4 Expenditure on GDP at Constant Prices.................. 34

33.1 Balance of Payment .................................. . 35

3.2 Composition of Merchandise Exports ..................... 36

3.3 Composition of Merchandise Imports ..................... 37

4.1 Summary of External Public Debt Operations............. 38

5.1 Summary Operations of Federal Government................ 39

5.2 Federal Government Revenue............................ 40

5.3 Federal Government Expenditure ........................ 43

5.6 Summary Operations of Consolidated Public Sector....... 45

5.7 Operations of Selected Non-financial Public

6.1 Commercial Bank Operations ............................. 53

7.1 Selected Tourism Data .............................. . ... 54

8.1 Consumer Price Index................................... 55

- 30 -

Table 1.1i ST. CHRISTOPHER AND NEVIS - POPULATION TRENDS

1970 1976 1990 1991 1992 1993 1994 1995---------------------------..-------------------------------------- __--------__----------------

Total Population (end of year) 44884 43535 43963 44923 45262 44130 43205 42290

Total Population (mid-year) .. .. 43834 44443 45093 44696 43668 42748

Crude Birth Rate (per 1000) 25.9 26.9 26.8 25.9 29.1 24.1 25.3 23.7

Crude Death Rate (per 1000) 10.9 9.7 11.3 10.2 11.2 10.6 10.9 10.2

Rate o4 Natural Increase 14.9 18.9 15.5 15.6 17.9 13.6 14.4 13.5

Births 1156 1320 1170 1137 1307 1093 1115 1026

Deaths 489 476 493 450 503 478 491 441

Natural Increase 667 844 677 687 804 615 634 585

Net Migration .. -534 -418 273 -465 -1747 -1559 -1500

Net Population Increase .. 310 259 960 339 -1132 -925 -915

S__urces______Statisti_____________ce______lannin__________t___and__________Secret____riat.__GSurcest Statistics Office, Planning Unit, and ECCM Secretariat.

- 31 -

Table 2.1t ST. CHRISTOPH4ER ANO NEVIS: GDP AT CURRENT FACTOR COST

(EC$ Billion)

Prel1979 1990 1991 1992 1993 1984 1985

Agriculture 13.6 16.5 13.8 20.3 16.2 19.7 18.5Crops 2.3 2.2 2.5 2.3 1.7 1.4 1.6Sugarcane 7.3 9.9 5.3 11.4 7.5 11.4 9.4Livestock 2.5 2.6 3.4 3.5 3.S 2.9 3.1Fishing 1.5 1.8 2.5 3.0 3.4 3.9 4.2Forestry 0.1 0.1 0.1 0.1 0.1 0.1 0.2

mining 0.2 0.3 0.3 0.4 0.4 0.4 0.5

tanufatturing 12.8 15.7 17.9 18.7 17.6 22.6 21.9

Construction 9.1 10.6 10.9 13.6 15.0 12.8 14.9

Electricity and Water 0.8 0.9 1.1 1.4 1.4 1.4 1.5

Wholesale and Retail Trade 9.9 13.0 14.1 16.5 19.3 20.7 22.4

Hotels and Restaurants 4.8 4.5 5.4 4.3 4.4 5.2 6.1

Transport and Communications 7.8 10.0 15.0 17.0 17.9 18.8 21.0

Banking and Insurance 4.6 5.3 5.8 8.6 8.2 11.1 12.0

Real Estate and Housing 6.5 6.7 7.5 7.9 8.1 9.5 9.0

Sovernment Services 17.9 18.8 26.2 28.1 28.2 28.2 28.5

Other Services 4.0 5.2 6.6 7.3 7.8 8.4 9.0

Less Imputed Service Charges -3.5 -4.4 -4.0 -6.2 -7.1 -8.9 -9.7

Gross Domestic Product at f.c. 97.5 103.1 120.5 137.8 136.2 149.9 155.6

Sourcast Statistical Office, Planning Unit, and mission estimates.

- 32 -

Table 2.2: ST. CHRISTOPHER AND NEVIS1 SOP AT CONSTANT FACTOR COST

(ECS sillions at 1977 Prices)

Prel.1979 1990 1961 1982 1983 1984 1995

Agriculture 14.9 13.4 14.1 14.1 11.5 12.0 11.7Crops 2.1 2.0 2.1 1.7 1.3 1.2 1.3Sugarcane 9.1 8.0 8.0 9.3 6.5 7.0 6.2Livestock 2.4 2.2 2.5 2.5 2.1 2.1 2.4Fishing 1.2 1.1 1.5 1.5 1.5 1.6 1.7Forestry 0.1 0.1 0.1 0.1 0.1 0.1 0.1

hining 0.2 0.2 0.2 0.3 0.3 0.3 0.3

Manufacturing 13.3 13.6 12.2 13.2 11.7 13.1 11.9

Construction 6.1 7.7 8.0 9.5 10.4 8.7 9.8

Electricity and Water 0.7 0.9 0.9 1.0 1.0 1.1 1.1

Wholosale and Retail Trade 8.3 9.4 9.2 10.2 11.0 12.3 13.0

Hotels and Restaurants 2.9 2.6 2.9 2.5 2.5 2.9 3.3

Transport and Communications 6.3 6.9 9.3 9.4 9.6 10.0 10.9

Banking and Insurance 4.1 4.3 4.2 5.0 5.0 5.6 5.8

Real Estate and Housing 5.4 5.5 5.6 5.6 5.7 5.8 6.0

Government Services 14.7 15.5 16.3 17.5 17.5 17.6 16.4

Other Services 3.4 3.8 4.3 4.5 4.7 5.0 5.2

Less Imputed Service Charges -3.1 -3.6 -3.1 -3.3 -3.3 -3.6 -3.8

Gross Domestic Product at f.c. 77.0 80.1 64.1 89.4 87.8 90.7 91.6

GOP Growth .. 4.0 5.0 6.3 -1.9 3.4 1.0

Sources: Statistical Office, Planning Unit, and sission estimates.

- 33 -

Table 2.3, ST. CHRISTOPHER AND NEVIJ - EXPENDITURE ON GDP AT CURRENT PRICES

(ECS Gillioa)

Pr.l.1980 1981 1982 1983 1984 1985

---------- _- ------------ --- _ ------- ____._.__a------ a… no------------ of"_____. a___--

Total Consumption 127.6 177.3 196.2 216.2 219.5 218.9Public 29.3 34.4 34.8 38.3 40.6 42.9Private 98.3 142.9 161.4 177.9 178.9 176.0

Bross Domestic Investment 40.7 16.4 16.8 14.4 13.1 22.9Public 38.6 13.3 14.1 12.1 10.5 18.9Private 2.1 3.1 2.7 2.3 2.6 4.0Inventory change 0.0 0.0 0.0 0.0 0.0 0.0

Resource Balance -37.5 -42.7 -53.7 -69.9 -57.0 456.4Exports, B&NFS 87.2 104.8 89.4 85.6 104.0 113.7lmports, S&NFS 124.7 147.4 143.1 155.5 160.9 170.1

Bross Domestic Product at o.p. 130.8 151.0 159.3 160.7 175.6 185.4

Ninus: Indirect Taxes Net 27.7 30.5 21.5 24.5 26.7 29.6of Subsidies

Gross Domestic Product at f.c. 103.1 120.5 137.8 136.2 148.9 155.6

Bross Domestic Savings 3.2 -26.3 -36.9 -55.5 -43.9 -33.5

Net Factor Income 0.5 2.4 1.9 2.7 0.3 -3.9Net Current Transfers 30.5 23.5 23.8 20.5 25.7 28.4

Bross National Savings 34.2 -0.3 -11.3 -32.3 -18.0 -8.7

Sources Statistics Oifice and mission estimates.

- 34 -

Table 2.4: ST. CHRISTOPHER AND NEVIS - EXPENDITURE ON SDP AT CONSTANT PRICES

(EC$ millions at 1977 Prices)e-- - - n-------- --- ----- … ------------ 0--------

Est.1990 1991 1982 1993 1984 1985

__________________--------------------ee-e--------------------------______________

Total Consumption 97.1 122.1 129.3 143.6 139.5 134.2Public 20.0 21.3 20.3 21.9 22.6 23.3Private 77.1 100.8 108.9 121.7 116.9 110.9

Gross Domestic Investment 28.8 11.2 11.4 9.9 9.1 15.6Public 27.3 9.1 9.6 9.3 7.3 12.9Private 1.5 2.1 1.9 1.6 1.8 2.7Inventory change 0.0 0.0 0.0 0.0 0.0 0.0

Resource Balance -26.9 -30.3 -38.7 -51.8 -43.0 -42.0Exports, G&NFS 62.3 74.5 64.4 63.4 78.4 84.6Imports, 6&NFS 89.2 104.9 103.2 115.1 121.4 126.7

Gross Domestic Product at m.p. 99.0 103.0 102.0 101.7 105.6 107.8

Hinus: Indirect Taxes Net 18.9 19.9 12.5 14.0 14.8 16.2of Subsidies

Bross Domestic Product at f.c. 80.1 84.1 99.4 87.8 90.7 91.6,____________________________ ----- ----- ----- ----- _____

Gross Domestic Savings 1.9 -19.1 -27.3 -41.8 -33.9 -26.4=-------------------- - ----- ----- ----- -----

Net Factor Income 0.4 1.7 1.4 2.0 0.2 -2.9Net Current Transfers 21.8 16.7 17.1 15.2 19.3 21.3

Gross National Savings 24.1 -0.7 -9.8 -24.7 -14.3 -7.9______________________----- ----- ----- ---_ __ _ ----- _ _ -

…__________________________________________________________________________________

Source: Statistics Office and mission estimates.

- 35 -

Table 3.1t ST CHRISTOPHER AND NEVIS BALANCE OF PAYtENTS

(US$ millions)

Prel.1991 1992 1993 1984 1985

Exports of Goods and NFS 39.9 34.2 31.7 38.5 42.1Nerchandise Exports 25.3 21.0 18.7 20.5 18.7Non-Factor Services 13.5 13.2 13.0 19.0 23.4

Imports of Goods and NFS 54.6 53.0 57.6 59.6 63.0NerLhandise Imports 47.6 44.3 51.4 51.9 53.6Non-factor Services 7.0 8.7 6.2 7.7 9.4

Resource Balance -15.8 -19.8 -25.9 -21.1 -20.9

Factor Services & Transfers 9.6 9.5 8.6 9.6 9.2Net Factor Service Payments 0.9 0.7 1.0 0.1 -1.4

o1w Interest -0.3 -0.4 -0.4 -0.5 -1.0Net Private Transfers 9.7 8.9 7.6 9.5 10.6

Current Account Balance -6.2 -9.3 -17.3 -11.5 -11.7

Official Transfers 1.6 2.3 2.7 1.8 3.1

Public Borrowing (Not) 0.9 0.7 0.8 5.4 2.4

Commercial Banks 3.5 -1.2 1.2 -4.0 -0.2

Private Direct Investmentand Other a/ 5.0 3.7 13.9 10.1 8.3

Overall Balance 4.8 -3.8 1.2 1.8 1.9

Financing -4.8 3.9 -1.2 -1.8 -1.9

Changes in Imputed Reserves -4.7 3.1 -1.1 -1.5 -1.9

Change in Foreign Assets -0.1 0.7 -0.1 -0.3 0.0

a/ Includes'errors and omissions.

Sources: Ministry of Finance, Statistical Office, and staff estimates.

- 36 -

Table 3.2s ST. CHRISTOPHER AND NEVIS - CONPOSITION OF NERCHANDISE EXPORTS_________

Prcl.1961 1982 1983 1984 1985

(In Nhllions of U.S. Dollars)

Total Nerchandise Exports 25.3 21.0 18.7 20.5 18.7~~t --- … -m ft ee fteent sentf ---- -- - --- f

Re-exports 1.9 1.6 1.0 0.7 1.5

Domestic Exports 23.4 19.4 17.7 19.8 17.2

Sugar 14.7 12.2 10.0 11.3 9.8"olasses 0.3 0.5 0.4 0.2 0.3Manufactures 6.6 4.7 6.6 7.6 7.3Deverages 0.3 0.5 1.0 1.0 1.2Clothing 1.7 1.6 1.7 2.1 2.2Footwear 2.4 0.9 1.6 1.3 1.0Electrical Nachineryand Appliances 1.6 1.6 1.5 2.1 2.0

Other Nanufactured G00ds 0.6 0.1 0.9 1.1 0.9Other Domestic Exports a/ 0.6 0.9 0.4 0.4 0.5Philatelic Stanps 1.0 1.1 0.3 0.3 0.3

(In Percent of Total Exports)

Sugar bf 59.3 60.5 55.6 56.1 48.7Nanufactures 26.1 22.4 35.3 37.1 39.0Other c/ 14.6 17.1 9.1 6.9 12.3

(Annual Percentage Change)

Domestic Exports -1.3 -17.1 -9.8 11.9 -13.1Sugar bi -0.6 -15.3 -18.1 10.6 -20.9Nanufactures -19.5 -29.8 40.4 15.2 -3.9Others C/ 157.1 11.1 -65.0 0.0 14.3

a/ Includes groundnuts, copra, lobsters, cotton, etc.bl Includes molasses.c/ Includes philatelic stamps.

Sources. Statistical O4fice, Planning Unit, and mission estimates.

- 37 -

Table 3.3i ST. CHRISTOPHER AND NEVIS - CONPOSITION OF MERCH4ANDISE IMPORTS

Prel.1981 1982 1983 1984 1995

s------------------------ ----------- _____----- "---_ _ --- -------------

tin sillions of US dollars)

Total Merchandise Imports 47.6 44.3 51.4 51.9 53.6

By SITC

Food 9.3 9.2 9.4 10.2 10.6Beverages and tobacco 1.2 1.4 1.4 1.4 1.6Crude materials 0.8 1.1 1.0 1.1 1.5Fuel 5.2 4.9 5.2 5.7 5.3Animal & veg. oils & fats 0.3 0.3 0.7 0.9 1.1Chemicals 4.2 4.1 4.4 4.3 4.1Manufactured goods 9.6 9.0 11.8 9.8 11.7hachinery & transport eqpt. 9.9 8.3 10.0 10.3 9.6Misc.manufactured articles 6.9 5.6 7.4 8.2 7.5Miscellaneous 0.3 0.4 0.1 0.0 0.6

By Broad Economic Classification

Consumer goods 20.9 19.1 22.3 21.7 23.1Of whichs passenger cars 1.4 1.2 1.4 1.8 2.1

Intermediate goods 22.0 20.9 24.8 22.8 24.7Capital goods 4.7 3.8 4.8 5.2 5.8

(In percent of total imports)

Consumer goods 43,9 43.1 43.4 41.8 43.1Intermediate goods 46.2 47.0 48.2 43.9 46.1Capital goods 9.9 8.6 9.3 10.0 10.8

(annual percentage change)

Total imports 6.0 -6.9 16.0 1.0 3.3Consumer goods 20.1 -8.6 16.8 -2.7 6.5Intermediate goods -4.8 -5.5 19.2 -8.1 8.3Capital goods 6.8 -19.1 26.3 9.3 11.5

Sourcesa Statistical Office, Planning Unit, and mission estimates.

- 38 -

Table 4.1s ST. CHRISTOPHER AND NEVIS - SUMNARY OF EXTERNAL PUBLIC--------- AND PUBLICLY GUARANTEED DEBT OPERATIONS a/

----------------------- _---------------------------------------__---------

Prol.t981 1982 1983 1984 1985

e_____________________________- a___ ------ a- -.---------------------------

(In thousands of US dollars)

Total outstanding debt at_________________________

end of period 11379.4 11437.7 11994.0 17091.7 19838.6

Consolidated Federal Governnen 4357.7 4516.0 4551.3 8275.0 9731.9Drawings 352.7 357.8 240.0 4002.0 760.0Amortizations (-) -229.8 -199.5 -195.8 -274.9 -237.1Valuation adjustment 0.0 0.0 -8.9 -3.4 -66.0

Pubiicly guaranteed debt 7021.7 6921.7 7442.7 8816.7 11106.7Drawings 820.9 590.0 842.0 2090.0 2231.0Asortizations (-) -47.7 -85.0 -64.0 -357.0 -332.0Valuation adjustment 46.7 -605.0 -257.0 -359.0 391.0

Debt service payments 619.5 679.1 663.6 1084.9 1521.2

Amortizations 277.5 284.5 259.8 631.9 569.1Consolidated Federal Bov t 229.8 199.5 195.8 274.9 237.1Publicly guaranteed debt 47.7 85.0 64.0 357.0 332.0

Interest 342.0 393.6 403.8 453.0 952.1Consolidated Federal Bov't 98.4 110.7 123.1 146.4 573.7Publicly guaranteed debt 243.6 282.9 280.7 306.6 378.4

Total debt outstanding/SDP 20.3 19.4 20.2 26.3 28.9Debt Service/XSNFS & Private

Transfers 1.3 1.6 1.7 2.3 2.9Amortization/X8NFS & Private

Transfers 0.6 0.7 0.7 1.3 1.1Interest/XBNFS & Private

Transfers 0.7 0.9 1.0 0.9 1.8Debt Service/Public Current

Revenue 2.9 2.9 3.3 5.0 6.9Amorti2ation/Public Current

Revenue 1.3 1.2 1.3 2.9 2.6Interest/Public Current Revenu 1.6 1.7 2.0 2.1 4.3

Average Interest Rate b/ 3.3 3.5 3.5 3.8 5.6

--------------------------------------------------------------------- __---

a/ Nedium- and long-term debt. Excludes debt held by ECCB.b/ Ratio of interest payments to debt at beginning of period.

Bourcets inistry of Finance and staff estimates.

- 39 -

Table 5.1o ST. CHRISTOPHER AND NEVISi SUNNARY OPERATIONS OF---- THE CONSOLIDATED FEDERAL BOVERNNENT

(EC sillion)--- _-----------------------------------------------------------__----------

Prel.1981 1982 1983 1984 1985

…---------._-------------------------------------------------------__---.--Total Revenue 49.4 46.2 46.7 49.4 47.4

Currnnt Revenue 49.2 46.1 44.4 46.9 46.4Capital Revenue 0.2 0.1 2.3 1.5 1.0

Total Expenditure 62.2 62.0 61.0 62.6 82.0

Current Expenditure 51.1 51.5 49.7 52.3 58.9Capital Expenditure 11.1 10.5 11.3 10.3 23.1

Fixed Invoetoents 11.1 10.5 9.3 8.6 13.7Purchase of Land 0.0 0.0 2.0 1.7 9.4

Current Account Balance -1.9 -5.4 -5.3 -5.4 -12.5

Overall Balance -12.8 -15.8 -14.3 -14.2 -34.6

Financing 12.8 15.8 14.3 14.2 34.6,________-- - --- ____-- ----

External 0.1 2.3 -0.3 9.3 1.4Capital Grants 4.4 5.9 5.8 4.7 6.1Concessionary Loans (Net) 0.4 0.5 -0.5 2.2 1.6Commorcial Banks (Net) 0.0 0.0 0.6 7.9 -0.2Other 0.0 0.0 0.0 0.0 0.0Change in foreign assets -0.3 1.8 -0.4 -0.8 0.0

Domestic 12.7 13.5 14.6 4.9 33.2ECCI Borrowing (Not) 0.0 2.6 0.5 7.6 2.0Commercial Banks (Net) 8.2 5.2 8.1 -8.5 16.1o/w National Dank 0.0 2.0 4.8 -4.2 16.7

Social Security Scheme -0.1 2.3 -0.1 -0.2 3.4Public enterprises 0.0 -1.2 -0.8 0.2 -0.2Other 4.6 4.6 6.9 5.8 11.9

Total Revenue and Srants/SDP 32.7 29.0 29.1 27.6 25.6

Current Revenue/SOP 32.6 29.9 27.6 26.7 25.0Capital RovenuelSBP 0.1 0.1 1.4 0.9 0.5Capital Brants/SDP 2.9 3.6 3.6 2.7 3.3

Total Expenditure/SP 41.2 38.9 38.0 35.6 44.2

Current Expenditure/SDP 33.8 32.3 30.9 29.8 31.8Capital Expenditure/GOP 7.3 6.6 7.0 5.9 12.5

Curront Account Balance/SDP -1.3 -3.4 -3.3 -3.1 -6.7

Overall Balanco/SDP -8.5 -9.9 -9.9 -9.1 -18.7

External Financing/BDP 3.0 5.1 3.4 8.0 4.0Domestic Financing/SOP 5.5 4.C 5.5 0.1 14.6

Sources: Ministry of Finance, Planning and Development and mission estimates.

- 40 - Pageof3

Table 5.2a ST CHRISTOPHER AND NEVIS - CONSOLIDATED FEDERAL--- GOVERNMENT REVENUE

(EC$ Gillion)

1981 1982 1983 t984 1995

Total Revonue 53.8 52.0 52.5 53.1 53.5____.________ ----- _.__.... ..... ... _... ....... __

Current revenue 49.2 44.1 44.4 46.9 46.4_______________ ..... .. . .. _. ----- ----

Tax revenue 38.6 32.0 30.5 35.1 37.3

Taxes on income 4.0 5.2 4.4 5.5 6.2Incose Tax 4.0 5.1 4.2 5.4 6.1Alien enploysent levy 0.0 0.1 0.2 0.1 0.1

Taxes on property 0.1 0.1 0.2 0.4 0.7House tax 0.1 0.1 0.2 0.4 0.7Land tax 0.0 0.0 0.0 0.0 0.0Taxes on domestic productionand consumption 12.0 11.9 11.9 14.8 15.4Consumption tax 9.6 9.6 9.2 10.4 10.4Excise duties 0.0 0.0 0.1 0.0 0.0dheel tax 0.4 0.5 0.5 0.6 0.9Entertainment tax 0.1 0.0 0.0 0.0 0.0Traders tax 0.1 0.1 0.1 0.1 0.2Hotel room tax 0.4 0.4 0.4 1.0 1.0Gasoline levy 0.0 0.0 0.1 0.2 0.2Stamp duties 1.1 0.9 1.1 1.9 1.9Licenses 0.3 0.4 0.4 0.4 1.0

Taxes on internationaltransactions 22.9 15.2 14.1 14.3 14.9Sugar levy 10.0 1.6 0.2 0.0 0.0loport duties 10.5 10.9 11.0 11.8 12.3Export duties 0.3 0.4 0.3 0.3 0.3Stamp tax 0.0 0.0 0.1 1.3 1.3Withholding tax 0.2 0.2 0.2 0.5 0.3Foreign currency tax 1.? 1.8 2.0 0.0 0.0Travel tax 0.2 0.3 0.3 0.4 0.5Other 0.0 0.0 0.0 0.0 0.2Minust tax rofunds -0.4 -0.4 -0.1 -0.1 -0.1

Non-tax revenue 10.6 11.0 10.5 11.4 8.3

Surpluses of departmentalenterprises 2.9 2.7 1.4 1.6 0.8Port, harbor, and wharf dues 0.5 0.4 0.3 0.2 0.1Fees, fines, and forfeitures 0.1 0.1 0.2 0.2 0.1Government departments andservices 3.3 3.7 4.0 6.4 5.3Rent of government property 0.1 0.2 0.2 0.2 0.8Interest on advnces anddeposits 0.1 0.1 0.0 0.1 0.3Currency profits 3.3 3.6 4.3 2.3 0.9Dividends 0.3 0.0 0.0 0.2 0.2Peasant development 0.0 0.2 0.1 0.2 0.0

Surplus of trust funds 0.0 3.1 3.4 0.4 0.8___.__-- -- -- -- ---- . ..... _ ___ _ ____ ---- ................... .___ _.__

Capital revenue 0.2 0.1 2.3 1.5 1.0_________________ ---- .... ---- _ _

Land sales 0.1 0.1 0.1 0.2 0.0Other 0.1 0.0 2.2 1.3 1.0

Total grants 4.4 5.8 5.08 4.7 6.1______.____._ ---n ---- ---- ---- ----

Budgetary grants 0.1 0.1 0.1 0.1 0.1Capital grants 4.3 5.7 5.7 4.6 6.0

…_--..-------_-------------_.---.-_-__-_---_-----.._-------_---_-----__---

- 41 - P49Q 2 of 3

Table 5.2a ST CHRISTOPHER ANP NEVIS - CONSOLIAITED FEDERAL......... GOVERNMENT REYENUE

(EC$ aillilon)

198) 1982 1993 1984 1985

1. Contrdl Boverneont

Total Revenue 53.8 52.0 51.2 47.3 47.1

Current revenue 49.2 46.1 43.1 42.2 40.8

Tax revenue 38.6 32.0 29.6 31.5 32.9

Taxes on incooo 4.0 5.2 4.4 5.4 Z iIncooe Tox 4.0 5.1 4.2 5.3 6.0Alien eoployment levy 0.0 0.1 0o2 0.1 0.1Taxe* an property 0.1 0.1 0.2 0.5 0.6House tax 0.1 0.1 0.2 0.5 0.6Land tax 0.0 0.0 0.0 0.0 0.0

Taxes on docestic productionand consumption 12.0 11.9 11.5 13.0 13.4Consumption tax 9.6 9.6 8.9 9.4 9.4Excise duties 0.0 0.0 0.1 0.0 0.0wheel tax 0.4 0.5 0.5 0.5 0.7Entertainment tax 0.1 0.0 0.0 0.0 0.0Tradero tax 0.1 0.1 0.1 0.1 0.2Hotel room tax 0.4 0.4 0.4 0.7 0.9Gasoline levy 0.0 0.0 0.1 0.2 0.2Stamp duties 1.1 0.9 1.0 1.6 1.4Licenses 0.3 0.4 0.4 0.5 0.7Taxes on internationaltransactions 22.9 15.2 13.6 12.7 12.9Sugar levy 0l.o 1.6 0.2 0.0 0.0tsport duties 10.5 10.9 10.5 1O.4 10.7Export duties 0.3 0.4 0.3 0.3 0.3Stamp tax 0.0 0.0 0.1 1.2 1.2Withholding tax 0.2 0.2 0.2 0.5 0.3Foreign currency tax 1.7 1.8 2.0 0.0 0.0TravOl tax 0.2 0.3 0.3 0.3 0.4Other 0.0 0.0 0.0 0.0 0.2linus: tax refunds -0.4 -0.4 -0.I -0.1 -0.1

Non-tax revenue 10.6 11.0 10.1 10.3 7.1

Surpluses of departmentalenterprises 2.9 2.7 1.2 1.6 0.7Port, harbor, and *harf duen 0.5 0.4 0.3 0.1 0.0Fees, fines, and forfeitures 0.1 0.1 0.2 0.2 0.16overneent departments andservices 3.3 3.7 3.9 5.6 4.3Rent of government property 0.1 0.2 0.2 0.2 0.6Interest on advances and

- deposits 0.1 0.1 0.0 0.1 0.3Currency profits 3.3 3.6 4.3 2.3 0.9

Dividend% 0,3 0.0 0o0 0.2 0.2Peasant development 0.0 0.2 0.1 0.0 0.0

Surplus of trust funds 0.0 3.1 3.4 0.4 0.a

Capital revenue 0.2 0.1 2.3 1.5 1.0

Land sales 0.1 0.1 0.1 0.2 0.0Other 0.1 0.0 2.2 1.3 1.0

Total grants 4.4 5.9 5.8 3.6 5.3

Budgetary grants 0.1 0.1 0.1 0.1 0.1Capital grants 4.3 5.7 5.7 3.5 5.2

------- _. -_ ----------- _- ------------------------ ------------------- _ --

- 42 - Page 3 of 3

Table 5.2, ST CHRISTOPHER AND NEVIS - CONSOLIDATED FEDERAL--------- GOVERNNENT REVENUE

(ECS million)

1981 1982 1983 1984 1985-------------------------------------------- _----------------------__-----

It. Nevis Island Administration e/

Total Revenue 1.3 5.8 10.4

Current revenue 1.3 4.7 9.6

Tax rovenue 0.9 3.6 4.2

Taxes on income 0.0 0.1 0.1Income Tax 0.0 0.1 0.1Alien employment levy 0.0 0.0 0.0

Taxes on property 0.0 0.1 0.1House tax 0.0 0.1 0.1Land tax 0.0 0°0 0.0

Taxes on domestic productionand consueption 0.4 1.8 2.2Consumption tax 0.3 1.0 1.0wheel tax 0.0 0.1 0.2Hotel Room tax 0.0 0.3 0.2Stamp duties 0.1 0.3 0.5Licences 0.0 0.1 0.3

Taxes on internationaltransactions 0.5 1.6 1.8Import duties 0.5 1.4 1.6Stamp tax 0.0 0.1 0.1Travel tax 0.0 0.1 0.1

Non-tax revenue 0.4 1.1 5.4

Surpluses of departeentalenterprises 0.2 0.0 0.1Port, harbor, and wharf dues 0.0 0.1 0.1Government departments andservices 0.2 0.8 1.0Peasant development 0.0 0.2 0.0Transfer from Federal 6overnment 0.0 0.0 4.2

Capital revenue 0.0 0.0 0.0

Total grants 0.0 1.1 0.8

Capital grants 0.0 1.1 0.8

a/ Covers period from September 19 to December 31 for 1983.

Sources: Ninistry 'f Finance, Federation of St. Christopher andNevisl and "evs Island Administration.

- 43 - Page Iof 2

Table 5.3. ST. CHRISTOPHER AND NEVIS - CONSOLIDATED FEDERAL--------- BOVERNNENT EXPEND1TURE

(EC$ million)--------------- __--------------------_--------------_--_---,-_--__---------

1991 1982 1963 1984 1985-------------------------------.----------------------------------- __-----

Total Expenditure 62.2 62.0 61.0 62.6 92.0

Current Expenditure 51.1 51.5 49.7 52.3 59.9

Personal emoluments 22.4 23.6 24.6 25.1 27.2Goods and Services 12.0 11.2 13.7 15.5 15.7Interest Payments 1.7 2.3 2.9 3.9 7.7Domestic 1.2 1.6 2.4 3.2 5.5External 0.5 0.7 0.5 0.6 2.2Transfers 15.0 14.4 9.5 7.9 8.3Departmental enterprises 5.6 6.5 2.4 2.0 0.7Tourist Board 1.9 1.0 1.0 0.9 0.9Sugar industry workers 3.1 1.3 0.0 0.0 0.0Retirement benefits 2.8 3.2 3.3 2.9 3.4Abroad 1.4 2.0 1.7 2.0 1.9Other 0.3 0.4 0.1 0.1 0.0Development Bank 0.0 0.0 0.0 0.0 1.5

Capital Expenditure 11.1 10.5 11.3 10.3 23.1

Capital expenditure 11.1 10.5 9.3 8.6 13.7Land purchase 0.0 0.0 2.0 1.7 9.4

I. Central Government

Total Expenditure 62.2 62.0 5e.8 52.6 74.5

Current Expenditure 51.1 51.5 47.5 43.9 53.7

Personal emoluments 22.4 23.6 23.4 21.0 21.6Boods and services 12.0 11.2 13.0 12.1 12.4Interest 1.7 2.3 2.9 3.8 7.7Domestic 1.2 1.6 2.4 3.2 5.5External 0.5 0.7 0.5 0.6 2.2Transfers 15.0 14.4 8.2 7.0 12.0Departmental enterprises 5.6 6.5 2.1 1.1 0.2Tourist Board 1.9 1.0 1.0 0.9 0.9Sugar industry workers 3.1 1.3 0.0 0.0 0.0Retirement benefits 2.8 3.2 3.3 2.9 3.4Abroad 1.4 2.0 1.7 2.0 1.9Other 0.3 0.4 0.1 0.1 0.0Nevis Administration 0.0 0.0 0.0 0.0 4.2Development Bank 0.0 0.0 0.0 0.0 1.5

Capital expenditure 11.1 10.5 11.3 8.7 20.8

Fixed investment 11.1 10.5 9.3 7.0 11.4Purchase of land a/ 0.0 0.0 2.0 1.7 9.4

…-- - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - -

- 44 -

Page 2 of 2

Table 5.3: ST. CHRISTOPHER AND NEVIS - CONSOLIDATED FEDERAL--------- DOVERNMENT EXPENDITURE

(EC$ mill1ion)

1981 1982 1983 1984 1965

IX. Nevis Island Administration b/

Total Expenditure 2.2 10.0 11.7

Current expenditure 2.2 8.4 9.4

Personal emoluments 1.2 4.1 5.6Goods and services 0.7 3.4 3.3Interest 0.0 0.0 0.0Transfers 0.3 0.9 0.5Departmental enterprise-s 0.3 0.9 0.5Retirement benefits 0.0 0.0 0.0

Capital expenditure and__________________-__

net lending 0.0 1.6 2.3

Capital expenditure 0.0 1.6 2.3

a/ These payments represent compensation to the former owners of thesugar lands which were nationalized by the Government in 1975.

b/ Covers period from Se'&ember 19 to December 31 for 1993.

Sources: Ministry of Finance, Federation of St. Christopher and Nevis,and Nevis Island Administration.

- 45 -

Page 1 of 6

Table 5.6i ST. CHRISTOPHER AND NEVIS - SUMMARY OPERATIONS OFen ann -n THE CONSOLIDATED PUBLIC SECTOR

(EC$ million)

1981 1982 1983 1984 1985_________w______n_na_nn___------------------e-----n-------nnn---------n-

I* Consolidated Public Sector

Total Revenue 59.1 68.8 58.9 61.7 61.b

Current Revenue 577 63.7 53.9 58.1 59.3Capital Revenue 1.4 5.1 5.0 3.6 2.3

Total Expenditure 79.5 70.7 74.7 67.9 94.8

Current Expenditure 65.3 56.7 61.2 55. 66.4Capital expenditure 14.2 14.0 13.5 12.3 28.4

Fixed Assets 13.3 14.1 12.1 10.5 18.9Purchase of Land 0.0 0.0 2.0 1.7 9.4Change in Stocks 0.7 -0.4 -0.6 -0.3 -0.3Net Lending 0.2 0.3 0.0 0.4 0.4

Current Account Balance -7.6 7.0 -7.3 2.5 -7.1_________ _____ _____ _____ _____ ___-_

Consolidated FederalGovernment -1.9 -5.4 -5.3 -5.4 -12.5Social Security Scheme 7.7 7.0 9.8 9.1 10.1Public Enterprises -13.7 5.2 -10.8 -1.3 -4.7

Overall Balance -20.4 -1.9 -15.8 -6.2 -33.2

Consolidated FederalSoverneent -12.8 -15.8 -14.3 -14.2 -34.6Social Security Scheme 7.7 7.0 8.8 9.1 10.1Public Enterprises -15.6 6.7 -10.3 -1.2 -8.7

Financing 20.4 1.9 15.8 6.2 33.2

External 4.5 4.8 5.9 13.4 7.8Captital rants 4.4 6.2 7.3 4.9 8.5Loans (net) 0.1 -1.4 -1.4 8.5 -0.7

Domestic 15.9 -2.9 9.9 -7.2 25.4Net ECCU Borrowing 0.0 2.6 0.5 7.6 2.0Commercial Banks 15.4 -5.3 6.6 -16.3 15.4o/w National Bank 7.6 -8.6 3.4 -12.0 16.1

Other 0.5 -0.2 2.9 1.5 8.0

ana- n

- 46 -

Page 2 of 6

Table 5.63 ST. CHRISTOPHER AND NEVIS - SUMMARY OPERATIONS OF---------- THE CONSOLIDATED PUBLIC SECTOR

(ECS million)

1981 1982 1983 1984 1985e_______________________________ _--------------------- ------------------

II. Consolidated Federal Boverneent…________________________ _____

Total Revenue 49.4 46.2 46.7 48.4 47.4_____________ ----- ----- ----- ----- -----

Current Revenue 49.2 46.1 44.4 46.9 46.4Capital Revenue 0.2 0.1 2.3 1.5 1.0

Total Expenditure 62.2 62.0 61.0 62.6 82.0e________________ ----- ----- ----- ----- ____

Current Expenditure 51.1 51.5 49.7 52.3 58.9Capital Expenditure 11.1 10.5 11.3 10.3 23.1

Fixed Investments 11.1 10.5 9.3 8.6 13.7Purchase of Land 0.0 0.0 2.0 1.7 9.4

Current Account Balance -1.9 -5.4 -5.3 -5.4 -12.5

Overall Balance -12.8 -15.8 -14.3 -14.2 -34.6

Financing 12.9 15.9 14.3 14.2 34.6_________ -- mee ----- ----- ----- -----

External 4.5 8.1 5.5 14.0 7.5Capital Grants 4.4 5.8 5.9 4.7 6.1Concessionary Loans (Net) 0.4 0.5 -0.5 2.2 1.6Commercial Banks (Net) 0.0 0.0 0.6 7.9 -0.2Other 0.0 0.0 0.0 0.0 0.0Change in foreign assets -0.3 1.9 -0.4 -0.8 0.0

Domestic 5.3 7.7 8.8 0.2 27.1ECCB Borrowing (Net) 0.0 2.6 0.5 7.6 2.0Commercial Banks (Net) 8.2 5.2 9.1 -8.5 16.1o/w National Bank 0.0 2.0 4.8 -4.2 16.7

Social Security Scheme -0.1 2.3 -0.1 -0.2 3.4Public enterprises 0.0 -1.2 -0.9 0.2 -0.2Other 0.2 -1.2 1.1 1.1 5.8

--------------------------------------------------------------------- _---

- 47 -

Page 3 of 6

Table 5.6: ST. CHRISTOPHER AND NEVIS - SUMMARY OPERATIONS OF--------- THE CONSOLIDATED PUBLIC SECTOR

(EC$ million)------------ _--------------------------------------------------__---------

1981 1982 1983 1984 1985------------------------------------------------------------------- __-----

1I-a. Central Government__________________________

Total revenue 49.4 46.2 45.4 43.7 41.8

Current revenue 49.2 46.1 43.1 42.2 40.8Capital revenue 0.2 0.1 2.3 1.5 1.0

Total expenditure 62.2 62.0 58.8 52.6 74.5

Current expenditure 51.1 51.5 47.5 43.9 53.7Capital expenditure 11.1 10.5 11.3 8.7 20.8Fixed investment 11.1 10.5 9.3 7 0 11.4Purchase of land 0.0 0.0 2.0 1.7 9.4

Current Account Balance -1.9 -5.4 -4.4 -1.7 -12.9

Overall Balance -12.8 -15.8 -13.4 -8.9 -32.7

Financing 12.8 15.8 13.4 8.9 32.7

External 4.5 8.1 5.5 12.9 5.8Capital grants 4.4 5.8 5.8 3.6 5.3Concessionary loans (net) 0.4 0.5 -0.5 2.2 0.7Commercial banks 0.0 0.0 0.6 7.9 -0.2Other 0.0 0.0 0.0 0.0 0.0Change in foreign assets -0.3 1.8 -0.4 -0.8 0.0

Domestic 8.3 13.5 13.7 -0.4 32.2Net ECCB borrowing 0.0 2.6 0.5 7.6 2.0Commercial banks (net) 8.2 5.2 7.1 -12.7 16.1Of which: National Bank 0.0 2.0 3.8 -9.4 16.7

Social Security Scheme -0.1 2.3 -0.2 -0.2 2.7Public enterprises 0.0 -1.2 -0.8 0.2 -0.2Other 0.2 4.6 7.1 4.7 11.6

- 48 -Page 4 of 6

Table 5.6: ST. CHRISTOPHER AND NEVIS - SUMMARY OPERATIONS OF--------- THE CONSOLIDATED PUBLIC SECTOR

(EC$ million)--------------------------------------------------------------- __---------

1981 1982 1983 1984 1985------------------------------------------------------------------- __-----

II-b. Nevis Island Administration---------------------------------

Total revenue 1.3 4.7 9.6

Current revenue 1.3 4.7 9.6Capital revenue 0.0 0.0 0.0

Total expenditure 2.2 10.0 11.7

Current expenditure 2.2 8.4 9.4Capital expenditure 0.0 1.6 2.3

Current Account Balance -0.9 -3.7 0.2

Overall balance -0.9 -5.3 -2.1

Financing 0.9 5.3 2.1

External 0.0 1.1 1.7Capital grants 0.0 1.1 0.8Concessionary loans (net) 0.0 0.0 0.9Change in foreign assets 0.0 0.0 0.0

Domestic 0.9 4.2 0.4Commercial banks (net) 1.0 4.2 0.0Of whiche National Bank 1.0 4.2 0.0

Social Security Scheme 0.1 0.0 0.7Public enterprises 0.0 0.0 0.0Other -0.2 0.0 -0.3

…-------------------------------------------------------------------__----

- 49 -Page 5 of 6

Table 5.6t ST. CHRISTOPHER AND NEvIS - SUMMARY OPERATIONS OF-------- THE CONSOLIDATED PUBLIC SECTOR

(EC$ million)--- _--------------------------------------------_--------------__---------

1981 1992 1983 1984 1985------------------------------------------------------------------- __-----

111. Social Security Scheme a/________________________

Total Revenue 9.4 8.9 10.7 11.5 13.1

Current Revenue 9.4 8.9 10.7 11.5 13.1Capital Revenue 0.0 0.0 0.0 0.0 0.0

Total Expenditure 1.7 1.9 1.9 2.4 3.0

Current Expenditure 1.7 1.9 1.9 2.4 3.0Capital Expenditure 0.0 0.0 0.0 0.0 0.0

Current Balance 7.7 7.0 8.8 9.1 10.1

Overall Balance 7.7 7.0 8.8 9.1 10.1

Financing -7.7 -7.0 -8.8 -9.1 -10.1

External -0.1 -0.1 -0.2 -0.2 -0.2Domestic -7.6 -6.9 -8.6 -8.9 -9.9

Government 0.1 -2.3 -0.1 0.2 -3.4National Bank -7.0 -5.1 -8.9 -9.1 -6.9Other Banks -0.3 0.0 0.0 0.0 0.0Public Enterprises -0.1 0.0 0.1 0.0 0.0Other -0.3 0.5 0.3 0.0 0.4

Memorandum items________________

Public Sector Contributions 4.1 4.0 4.4 4.8 4.8o/w: Consolidated Federal

Sove'nment 2.3 2.4 2.5 2.6 2.7Fixed Deposits at the

National Bank 28.3 33.0 42.3 51.5 58.4------------------------------------------------------------------- __-----

- 50 -

Page 6 of 6

Table 5.6s ST. CHRISTOPHER AND NEVIS - SUMMARY OPERATIONS OF--------- THE CONSOLIDATED PUBLIC SECTOR

(EC$ million)----------------------------------------------------------- _---__---.------

1991 1982 1983 1994 1985------------------------------------------------------------------- ___-----

IV. Consolidated Public Enterprises_______________________________

Total Receipts 58.0 64.1 47.6 61.8 56.9

Current Receipts 56.9 59.1 44.9 59.7 5.6o/w transfers 0.9 0.1 0.0 0.8 0.0

Capital Receipts 1.2 5.0 2.7 2.1 1.3

Total Expenditure 73.6 57.4 57.9 63.0 65.6

Current Expenditure 70.5 53.9 55.7 61.0 60.3o/w transfers 11.1 1.2 3.6 3.2 2.1

interest 2.6 5.0 4.4 4.4 5.2Capital Expenditure 3.1 3.5 2.2 2.0 5.3

Fixed Assets 2.2 3.6 2.8 1.9 5.2Change in Stocks 0.7 -0.4 -0.6 -0.3 -0.3Net Lending 0.2 0.3 0.0 0.4 0.4

Current Account Balance -13.7 5.2 -10.8 -1.3 -4.7

NACO -10.4 -3.2 -6.3 -2.1 -8.5SSNC -2.4 9.2 -4.0 0.8 2.0CEMACO -0.2 0.2 0.0 0.1 0.3Frigate Bay -0.7 0.4 0.0 -0.2 0.2Port Authority 0.0 -1.4 -0.5 0.1 1.3Development Bank 0.0 0.0 0.0 0.0 0.0

Overall Balance -15.6 6.7 -10.3 -1.2 -8.7

Financing 15.6 -6.7 10.3 1.2 8.7

External 0.1 -3.2 0.6 -0.4 0.5Capital Brants 0.0 0.4 1.5 0.2 2.4

Domestic 15.5 -3.5 9.7 1.6 8.2Government 0.0 1.2 0.8 -0.2 0.2National Bank 14.6 -5.5 7.5 1.3 6.3Other Commercial Banks -0.1 0.1 -0.1 0.0 -0.1Social Security Scheme 0.1 0.0 -0.1 0.0 0.0Other 0.9 0.7 1.6 0.5 1.8

…--------------------------------------------------------------------__----

Sources: Ministry of Finance, Planning and Development and Missionestimates.

- 51 -

Page I of 2

Table 5.71 ST CWRISTOPHER AND NEVIS - OPERATIONS OF SELECTED--------- NONFINANCIAL PUBLIC ENTERPRISES a/

(ECS million)n_____._______n___ __________----- __ __-----------__------------------_

1981 1982 1983 1984 1985

1. National Agricultural Corporation (NACD) a* e/

Total receipts 15.3 19.3 14.1 19.9 14.1------------- ~---- ----- --- - --- ----- l

Current receipts 15.3 19.3 14.1 19.9 14.1Of which, transfers 0.9 0.1 0.0 0.8 0.0

Total expenditure 26.6 22.8 19.6 21.7 22.2

Current expenditure 25.7 22.5 20.4 22.0 22.6Of which: interest 1.9 3.0 3.2 3.4 4.1

Capital expenditure 0.9 0.3 -0.9 -0.3 -0.4Fixed assets 0.3 0.7 0.0 0.0 0.0Change in stocks 0.6 -0.4 -0.9 -0.3 -0.4

Current account balance -10.4 -3.2 -6.3 -2.1 -8.5

Overall balance -11.3 -3.5 -5.5 -1.8 -9.1

Financing 11.3 3.5 5.5 1.8 8.1

External -0.7 -0.1 -0.1 -0.1 -0.1Domestic 12.0 3.6 5.6 1.9 8.26overnment 0.0 0.0 0.0 0.0 0.0National Bank 11.9 3.5 5.5 2.0 8.4Other commercial banks 0.0 0.0 0.0 0.0 0.0Social Security Scheme 0.0 0.0 0.0 0.0 0.0Other 0.1 0.1 0.1 -0.1 -0.2

Memorandum item-____________

Bank overdraft 32.6 36.1 41.6 43.6 50.8

------------------------------------------------------------------- __-----

2/ Fiscal year corresponds to calender year. The Nevis Island Administrationcommenced operations in 1993.

e/ NACO was dissolved in early 1996 and its operations have been taken overby SSMC. The Central Government has assumed its operational debt withthe NAtional Dank on the order of EC$53 million as of 6/30/86.

- 52 -Page 2 of 2

Table 5.71 ST CHRISTOPHER AND NEVIS - OPERATIONS OF SELECTED----a ne-a NONFINANCIAL PUBLIC ENTERPRISES a/

(EC$ million)________________________________________________________a_________________

1981 1982 1983 1984 1985…___________________________________ ____________________________________

II. St. Kitts Sugar Manufacturing Corporation (SSMC) b/------------------------------------------------

Total receipts 38.5 35.2 26.4--- 33.4 32.0__________e ___ ----- ----- ----- ----- -----

Current receipts 38 5 35.2 26.4 33.4 32.0

Total expenditure 42.0 27.8 30.6 33.4 31.0

Current expenditure 40.9 26.0 30.4 32.6 30.0Of which: transfers 11.1 1.2 3.6 3.2 2.1

interest 0o1 0.1 0.1 0.1 0.0Capital expenditure 1.1 1.8 0.2 0.8 1.0Fixed assets 1.1 1.8 0.2 0.8 1.0Change in stocks 0.0 0.0 0.0 0.0 0.0

Current account balance -2.4 9.2 -4.0 0.8 2.0

Overall balance -3.5 7.4 -4.2 0.0 1.0

Financing 3.5 -7.4 4.2 0.0 -1.0

External 0.0 0.0 0.0 0.0 0.0Domestic 3.5 -7.4 4.2 0.0 -1.0Government 0.0 0.0 0.0 0.0 0.0National Bank 3.1 -7.7 4.4 -0.5 -1.1Other commercial banks 0.0 0.0 0.0 0.0 0.0Social Security Scheme 0.0 0.0 0.0 0.0 0.0Other 0.4 0.3 -0.2 0.5 0.1

b/ Fiscal year ending AUgust 31 of year indicated.

- 53 -

Table 6.1: ST C;iRISTOPHER AND NEVIS - COMMERCIAL BANKS OPERATIONS a/

(EC$ million)

December 31----..-.-.-- __--.-.-__.-------_-_---_----_

1981 1982 1993 1984 1985

Net foreign assets -0.2 3.0 -0.2 10.6 11.2

Assets 39.1 30.7 64.5 56.4 72.3Foreign currency holdings 1.3 1.3 1.5 1.6 1.7Clais on ECC8 area banks 5.1 5.6 4.7 1.2 4.9Claims on banks abroad 10,1 9.3 37.7 22.4 43.9Other 22.6 15.5 20.6 31.2 21.8Liabilities 39.3 27.7 64.7 45.8 61.1Balance due to ECCB area banks 11.9 7.1 22.5 10.8 11.2Balance due to banks abroad 11.4 4.3 24.1 18.9 27.8Nonresident deposits 16.1 16.3 19.1 16.2 22.1Demand 1.2 1.5 2.9 2.3 3.9Savings 9.6 11.3 11.3 9.4 10.3Time 5.3 3.5 4.0 4.5 8.0

Net position with ECC3 9.8 3.2 6.3 16.8 25.2

Claims on ECC8 13.0 5.6 9.0 17.0 25,8Currency holdings 3.6 3.6 3.1 3.8 5.5Statutory reserves b/ 0.0 0.0 0.0 7.7 8.1Statutory deposits b/ 0.0 0.0 0.0 0.0 0.0Current deposits 0.2 0.0 4.1 3.5 4.2Fixed deposits 9.2 2.0 1.8 2.0 8.0Liabilities to ECCD (- 3.2 2.4 2.7 0.2 0.6

Net domestic assets 42.4 54.9 63.6 56.7 77.3

Net credit to Central 6overneent 2.8 9.0 16.1 7.6 23.7Securities 4.1 5.S 6.3 6.3 6.3Special reserve deposits b/ 5.7 6.8 7.9 0.0 0.0Loans & advances c/ 1.9 8.8 17.0 21.7 30.4Proceeds from Taiwanese loans d/ 0.0 0.0 0.0 4.3 6.7Deposits (-) -8.9 -13.4 -15.1 -24.7 -19.7Net credit to statutory bodies 2.2 -0.2 -5.4 -11.0 -10.3Loans and advances 32.6 35.8 41.6 43.6 54.5Deposits (-1 -30.4 -36.0 -47.0 -54.6 -64.8Net credit to other financialinstitutions -6.3 -5.1 -4.6 -6.1 -5.4Loans, advances and investments 0.3 0.3 0.3 0.3 0.3Deposits 1-) -6.6 -5.4 -4.9 -6.4 -5.7Credit to private sector 51.9 60.2 69.3 91.2 89.1Interbank float 8,3 8,9 9.1 9.6 7.8Claims 12.1 14.2 12.6 10.1 10.9Liabilities 3.8 5.3 3.5 0.5 3.1Net unclassified assets -16.5 -16.9 -20.9 -24.6 -27.6

Medium- and long-term foreign______________________________

liabilities d/ 0.0 0.0 0.0 -4.3 -6.7

Liabilities to private sector e/ 52.0 61.1 69.7 79.8 107.0

Demand deposits 11.0 10.2 11.9 12.1 16.7Time deposits 14.3 14.9 17.9 23.9 42.2Savings deposits 26.7 36.1 39.9 43.8 49.1

a/ The St. Kitts-Novis-Anguilla National Bank, Barclays Bank, the Bank ofNova Scotia, and the Royal Bank of Canada.

b/ From March 15, 1984, required reserves have been held with the ECC8.c/ Includes outstanding balance of an ECS2 millton loan from Barclays

Bank to the Central Housing Authority in 1993.d/ This represents outstanding balances of a US$l million loan to St. Kitts-

Nevis-Anguilla National Bank from Eximbank of Taiwan received inMay 1994 and USt1.5 million from Bank of Taiwan for on-lending tothe Central Government.

e/ Includes resideqt deposits in foreign currencies.

Sourcess Eastern Caribbean Central Bank; commercial banks; and mission estimates.

- 54 -

Table 7.1: ST. CHRISTOPHER AND NEVIS - SELECTED TOURISM DATA

1991 1982 1983 1984 1985------------------------------------------------------------------- __--------__-----

Total Number of Visitors 46326 45721 57109 73928 79109

Cruise-ship 10950 11146 22835 32872 30164Excursionist 1034 891 969 1190 1398Stopover 34442 33684 33305 39866 47547

Hotel 14199 12685 9817 16446 24277Private homes and others 16660 18115 19882 20404 22217Business 3583 2884 3606 3016 1053

Average period of stay (days)____________________________

Hotel 5.4 5.6 6.0 6.5 7.0Private homes and others 12.2 12.4 12.5 12.5 12.5Business 4.8 4.9 5.0 5.0 5.0

Average expenditure/day (US$)_______________________

Cruise-ship 14.3 15.0 16.0 17.5 20.0Excursionist 28.6 30.0 31.0 33.0 33.0Hotel 71.4 72.0 76.0 84.5 94.5Private homes 14.3 15.0 16.0 17.5 17.5Business 76.2 80.0 84.0 98.2 90.0

(in Millions of U.S. Dollars)

Total expenditure 9.98 9.81 10.36 15.44 20.34

Cruise-ship 0.16 0.17 0.37 0.58 0.60Excursionist 0.03 0.03 0.03 0.04 0.05Hotel 5.47 5.11 4.49 9.03 14.36Private homes 2.91 3.37 3.98 4.46 4.86Business 1.31 1.13 1.51 1.33 0.47

Memorandum iteus:

Stayover Visitor. by____________________

Country of Residence (Z) 100.0 100.0 100.0 100.0 100.0

United States 34.8 31.4 28.8 35.5 32.3Canada 5.8 7.1 6.0 6.1 15.9United Kingdom 7.2 7.8 8.3 7.5 6.9CARICOM Countries 15.3 16.6 16.9 15.1 13.2Other a/ 36.9 37.1 40.0 35.8 31.8

…------------------------------------------------------------------__--------__-----a/ Mainly Virgin Islands and Netherlands Antilles.

Sourcess Statistical Office, Planning Unit, and staff estimates.

- 55 -

Table 8.1s ST CHRISTOPHER AND NEVIS - CONSUMER PRICE INDEX

(January 1979 = 100)---------------------------------------------------------------------- __-----__-----

1980 1981 1982 1983 1984 1985

I. Period Averages

All items 137.8 152.3 161.4 165.0 169.5 173.3

Food 133.2 147.9 153.7 156.8 161.3 161.8Tobacco and alcohol 137.4 153.0 169.2 173.0 175.9 183.4Housing 121.4 124.7 128.5 128.7 142.4 180.4Fuel and light 152.9 162.0 168.5 174.9 180.1 182.2Clothing and Footwear 130.9 148.6 159.0 163.9 160.9 155.7Furniture & appliances 145.5 174.2 173.7 177.7 191.4 201.7Household supplies 147.6 169.4 192.3 197.9 197.8 195.9Transportion 171.8 189.1 198.7 205.0 205.6 208.4Other services 147.0 157.8 181.0 184.9 188.9 190.0

(Percentage changes)

All items 10.5 6.0 2.2 2.7 2.2

Food 11.0 3.9 2.0 2.9 0.3Tobacco and alcohol 11.4 10.6 2.2 1.7 4.3Housing 2.7 3.0 0.2 10.6 26.7Fuel and light 6.0 4.0 3.8 3.0 1.2Clothing and Footwear 13.5 7.0 3.1 -1.8 -3.2Furniture & appliances 19.7 -0.3 2.3 7.7 5.4Household supplies 14.8 13.5 2.9 -0.1 -1.0Transportion 10.1 5.1 3.2 0.3 1.4Other services 7.3 14.7 2.2 2.2 0.6

I. End of Period

All items 144.7 157.2 162.5 166.7 171.2 174.2

Food 141.0 152.4 153.6 158.1 161.0 160.4Tobacco and alcohol 140.4 158.5 172.1 173.1 181.2 185.0Housing 122.2 126.2 128.9 128.6 176.0 180.6Fuel and light 158.3 163.4 177.0 176.3 183.2 183.1Clothing and Footwear 132.3 161.1 157.7 170.0 146.9 160.2Furniture & appliances 160.3 181.8 171.6 186.6 190.7 203.2Household supplies 153.4 181.9 196.7 194.3 196.6 193.6Transportion 188.2 189.5 205.0 205.6 205.6 238.0Other services 154.3 159.7 181.6 188.4 188.6 189.0

(Percentage changes)

All items 8.6 3.4 2.6 2.7 1.8

Food 8.1 0.8 2.9 1.8 -0.4Tobacco and alcohol 12.9 8.6 0.6 4.7 2.1Housing 3.3 2.1 -0.2 36.9 2.6Fuel and light 3.2 8.3 -0.4 3.9 -0.1Clothinq and Footwear 21.8 -2.1 7.8 -13.6 9.1Furniture & appliances 13.4 -5.6 8.7 2.2 6.6Household supplies 18.6 8.1 -1.2 1.2 -1.5Transportion 0.7 8.2 0.3 0.0 15.8Other services 3.5 13.7 3.7 0.1 0.2

Source: Statistical Offire. Plannino Unit.

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