Press Release No. 09/167

Press Release: IMF Executive Board Approves US$3.4 Million in Emergency Natural Disaster Assistance for St. Kitts and Nevis

May 15, 2009

The Executive Board of the International Monetary Fund today approved a request for SDR 2.225 million (about US$3.4 million) in Emergency Natural Disaster Assistance for St. Kitts and Nevis.

St. Kitts and Nevis was hit by Hurricane Omar in October 2008. The damage caused by the hurricane has greatly aggravated the economic slowdown, with a significant impact on unemployment, fiscal revenues, and tourism receipts, particularly on the island of Nevis. Fund financing will help offset the balance of payments impact of the hurricane, estimated at US$19 million (about 3½ percent of GDP).

The IMF provides emergency assistance to help member countries with urgent balance of payments financing needs in the wake of natural disasters or armed conflicts. See Factsheet about the Emergency Natural Disaster Assistance.

Following the Executive Board discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, issued the following statement:

“The damage caused by Hurricane Omar has resulted in substantial loss of employment and great hardship to St. Kitts and Nevis. In particular, Nevis has suffered the temporary closure of its largest tourism resort. The adverse balance of payments impact of the hurricane has been compounded by the global recession and the collapse of the Trinidad and Tobago-based CL Financial Group.

“The authorities are responding with a comprehensive economic program to deal with the effects of the natural disaster within the context of the difficult economic situation facing the country. They aim at strengthening public finances to reduce public debt ratios, while undertaking structural reforms. These efforts will be supported by Fund emergency assistance for natural disasters.

“The government, with the assistance of its development partners, is developing a growth and poverty reduction strategy to guide its medium-term reform agenda. In addition to strengthening fiscal policies and debt management, the main priorities for reform are enhancing the investment climate for private sector development, including through privatization and sale of public land and assets, and strengthening oversight of the financial sector.

“While the global downturn and the heavy debt burden of St.Kitts and Nevis are likely to weigh heavily on near-term growth, the authorities’ implementation of prudent policies and their reform agenda, together with support from the international community, should help St. Kitts and Nevis recover from the setbacks caused by the hurricane and place the economy on a path of sustainable, strong growth,” Mr. Portugal stated.