St Kitts-Nevis gov't tells CDB it projects a 30% decline in revenue for 2019

The Government of St Kitts and Nevis is projecting a 29 percent drop in revenue in 2019, according to the Caribbean Development Bank (CDB).

In its outlook for St Kitts and Nevis for 2019, the Barbados-based financial institution also said the Timothy Harris-led Team Unity Government "is targeting a lower primary surplus for 2019."

"With total revenue expected to decline by 8.1% and total expenditure likely to grow by 5.7%, the primary surplus is projected to fall to 2.1% of GDP. The decline in revenue is due to a projected 29.1% drop in non˗tax revenue – mainly Citizenship By Investment (CBI) receipts – although this will remain the main revenue category," the CDB said on the outlook for 2019

The outlook is contained in the St Kitts and Nevis Country Economic Review for 2018.

CDB said capital expenditure is expected to increase by 21.8%, with one third of the funds being earmarked for improving the public infrastructure.

"Major proposed investments include the rehabilitation of the main roads on both islands, the upgrade to the airport and the construction of the second cruise ship berth in St. Kitts, and the expansion of the hospital in Nevis," CDB said.

According to CDB, the domestic banking system in St Kitts and Nevis "remains under pressure from worsening asset quality."

"The ratio of Non Performing Loans to gross loans increased from 16.5% in September 2017, to 24.9% in September 2018. Net of loan loss provisions, NPLs as a percentage of banks’ capital rose from 33.4% to 55.7% putting banks’ solvency at higher risk. Against the backdrop of worsening credit quality, domestic banks raised their precautionary liquidity provisioning by increasing their liquid assets as a proportion of total assets to 58.6%. The regulatory capital of banks in terms of their risk-weighted assets, increased slightly from 19.2% to 19.8%," the CDB said.