Five-year plan to stabilise fiscal situation in Nevis

Premier Amory, on the steps to the 
Nevis Island Assembly Chambers, 
shows the briefcase that contained 
the budget speech papers

Friday, December 19, 2003

CHARLESTOWN Nevis: Premier and Minister of Finance, Mr Vance Amory, Thursday presented in the Nevis Island Assembly chambers the 2004 budget that has fiscal policies and measures that will allow for the stabilisation of the country's fiscal situation by year 2009.

He told the Assembly that under the required adjustment as espoused by the Central bank, the level of adjustment prescribed would be too burdensome on the people and consequently Government developed a five-year plan, which would in turn help to reduce the debt to GDP ratio to below 60% by 2009. 

In the budget, which was delivered under the theme "Surmounting Today's Challenges for Brighter Tomorrow", Premier Amory observed that "there has been a weakening in the fiscal position of the Nevis Island Administration over the past five years because of exogenous factors."

To achieve the goal by 2009 the government would have to generate surpluses on recurrent account of about 1.5% of GDP in each of the first three years and one percent of GDP in subsequent years, which would require some belt tightening and fiscal discipline by all concerned, but will make sure that the future will be secured. 

Among the belt-tightening measures proposed for 2004 include taxes on properties, where a new system of property valuation from imputed rental to market value would be implemented by June 2004. The Tourism Development Levy will increase from one percent to two percent from June 2004 and the tax base will be expanded by applying the accommodation tax of 7 percent and the Tourism Levy of 2 percent to the rental of villas.

The Premier also announced that the Administration was exploring the possibility of imposing an excise tax of one dollar on the price of gasoline to replace the gasoline levy, while a fuel surcharge will be added to the price of electricity. Government will ensure stricter enforcement of the announced disconnection policy for water services and an increase in the reconnection fee from EC$10.00 to EC$100.00 effective January 1, 2004.

"Government will discontinue the policy of granting exemption from consumption tax," said Premier Amory. "Churches, taxi operators and other beneficiaries of tax concession will be granted exemption from duty only. The customs service charge and consumption tax will be payable."

Ancillary Services in the Tourism Industry will be required to register with and be certified by the Ministry of Tourism, and the fees collected for the registration would be utilised to regulate these businesses and promote tourism.

During the budget speech, which was also attended by the President of the Nevis Division of the Chamber of Industry and Commerce, Mr Chris Martin, the Premier noted that the recurrent revenue for fiscal year 2004 was estimated at EC$76.5m and the recurrent expenditure at EC$75.9m, showing a projected recurrent surplus of EC$1.58m.

"The estimated increase in recurrent revenue is mainly due to the implementation of policies to improve revenue management and collections, and anticipated spin-offs from investments in the economy," pointed out the Premier.

The Assembly was told that Nevis' debt now stands at EC$160m including Government's overdraft facility of EC$30m. The debt service payments as percentage of revenue increased from 18.3% in 2001 to 28% in 2002. The debt service ratio as a percentage of recurrent expenditure increased from 17% to 27% in 2002.

Premier Amory also laid in the Assembly chambers, two volumes of the Report of the Director of Audit, National Audit office in St. Kitts, on the Accounts of the Nevis Island Administration, the first volume of up to December 1997, while the second volume covered the period up to December 31 of years 1998, 1999 and 2000. 

The Nevis Island Assembly was adjourned until Friday at 10:00 a.m., when members would be given the opportunity to discuss the 2004 budget. 

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