The International Monetary Fund (IMF) has projected a modest economic rebound for St. Kitts and Nevis in 2025, with growth expected to rise to 2 percent, up from 1.5 percent in 2024.
This improvement is largely driven by a recovering tourism sector, while inflation is anticipated to remain stable at around 2 percent.
Despite this projected growth, the IMF’s latest Article IV Mission report highlights ongoing economic challenges, particularly concerning the country’s widening fiscal deficit and declining Citizenship by Investment (CBI) revenues. The current account deficit (CAD) grew to 15 percent of GDP in 2024, up from 12 percent in 2023, and remains significantly higher than pre-pandemic levels. The IMF attributes this trend to lower CBI inflows and increasing government spending.
The fiscal deficit, which reached 11 percent of GDP in 2024, is expected to decrease slightly to 9 percent in 2025. However, rising public expenditures, including an expanded wage bill and a temporary VAT reduction, continue to strain government finances. Public debt is forecasted to increase to 61 percent of GDP this year and could climb to 68 percent by 2030 unless corrective measures are taken.
The banking sector also saw rapid credit growth, with loans rising by 11 percent year-over-year, particularly in mortgages and consumer lending. While non-performing loans (NPLs) have declined and bank profitability has improved, vulnerabilities persist, especially as credit unions reported an increased delinquency ratio of 10 percent.
The IMF warns that near-term risks are skewed to the downside, citing potential declines in CBI revenue, global financial instability, and economic slowdowns in key tourism markets. However, the country’s investment in renewable energy, particularly its geothermal project, presents an opportunity for long-term economic growth and stability. The drilling phase of the project is set to commence with secured funding, offering a potential boost to fiscal revenues in the coming years.
The IMF’s assessment underscores the need for St. Kitts and Nevis to implement prudent fiscal policies to manage debt levels while leveraging renewable energy initiatives to drive sustainable economic growth.
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