The International Monetary Fund (IMF) has outlined a series of economic and development challenges facing St. Kitts and Nevis in its Staff Concluding Statement of the 2025 Article IV Mission released on February 26, 2025. The report provides a critical assessment of the country’s economic performance, fiscal sustainability, and structural reforms, urging prompt action to stabilize the economy and foster long-term growth.
According to the IMF, economic growth is projected to increase to 2 percent in 2025, up from 1.5 percent in 2024, driven mainly by tourism. However, the report cautions that this growth remains modest, with medium-term projections reaching only 2.5 percent, a significant decline from previous decades when growth averaged around 6 percent.
The IMF flagged the country’s widening current account deficit (CAD), which expanded to 15 percent of GDP in 2024, reflecting a sharp decline in Citizenship by Investment (CBI) inflows and rising fiscal deficits. The report noted that the CAD is expected to hover around 12 percent of GDP in the medium term, warning that the external position remains weaker than implied by medium-term fundamentals and desirable policies.
Public debt is another pressing concern, with the IMF projecting it to rise to 61 percent of GDP in 2025 and further to 68 percent by 2030. The fiscal deficit is estimated at 11 percent of GDP in 2024, driven by reduced CBI revenue, higher wages, and temporary VAT reductions. The IMF stressed that the government must implement prompt and steady fiscal consolidation to keep public debt below the regional ceiling of 60 percent of GDP.
“The main priority is to implement a prompt and steady fiscal consolidation… anchored by a set of fiscal rules and driven by tax reforms and reductions in current expenditures while protecting capital expenditure,” the report stated.
The IMF welcomed the government’s plans to establish a Sovereign Wealth Fund (SWF) to manage CBI revenue more sustainably and create fiscal buffers against natural disasters. However, it called for greater transparency and accountability in the CBI program, recommending the publication of comprehensive annual reports following external audits
On the financial sector, the report highlighted the rapid growth in bank credit at 11 percent (y/y), particularly in mortgages and consumer loans, despite persistent vulnerabilities such as high non-performing loans (NPLs) and low capital buffers. The IMF urged the government to reform the Development Bank, which is facing significant challenges due to weak profitability and high NPLs.
“The priority is to thoroughly analyze the bank’s financial situation… and chart the optimal path forward, firmly based on the bank’s viability and fiscal prudence,” the IMF advised.
Structural reforms were also recommended to improve productivity, labor quality, and access to finance, with the report identifying digitalization of government services and enhanced credit access for businesses as key areas for improvement.
Despite the challenges, the IMF noted that the country’s transition to renewable energy projects—particularly the geothermal initiative—holds significant potential to boost growth and fiscal revenue in the medium term.
With the government facing mounting fiscal pressures and economic vulnerabilities, the IMF emphasized that timely policy implementation and transparent governance will be crucial to placing St. Kitts and Nevis on a more sustainable growth path.