In a shocking shocking disclosure by the Barbados-based Caribbean Development Bank (CDB) has revealed that the economic growth for St Kitts and Nevis under the Timothy Harris Unity Administration was just about one percent for 2017.
In its report for 2018, CDB said the significant increase of non-performing loans in 2018 over the previous year 2017 “puts the banks’ solvency at higher risk” and food and non-alcoholic beverages rose over five percent.
According to the regional financial institution, the growth rate for St Kitts and Nevis in 2017, continued a downward spiral, registering a paltry 1.2 percent, compared to 2.3 percent in 2016 and 2.2 percent in 2015. In the last two years of Prime Minister the Rt Hon. Dr Denzil L Douglas’ Labour Administration, the growth rate was 5.5 percent in 2013 and 6.1 percent in 2014.
CDB said that St Kitts and Nevis’ economic growth rate in 2018 is estimated at 2.5 percent.
CDB said tourism was the main contributor, with the hotel and restaurants sector performing very well, followed by the transport, storage and communications sectors.
Growth in the construction sector fell following the completion of the Park Hyatt St Kitts which opened in 2017. Construction began in 2013 under the Labour Party administration.
“The real estate and business activities sectors added very little to economic growth, as did the financial sector, which was burdened by high levels of non-performing loans,” said the CDB’s Economic Review on St Kitts and Nevis.
“The domestic banking system remains under pressure from worsening asset quality. The ratio of NPLs 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,” said CDB.
“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%,” said CDB’s Country Economic Review on St Kitts and Nevis.
The CDB said although consumer prices dropped by 1.1% following a 0.5% increase in 2017, prices for food and non-alcoholic beverages increased by 5.6 percent. Transport prices fell by 7.7% and prices for housing and utilities declined by 1.3%.
CDB said it projects an increase in growth to 3.0% in 2019, mainly on the back of expanding construction and tourism activities.
It said that construction activity is expected to accelerate with on-going public infrastructure investments at the St. Kitts airport and seaport, and on each of the islands’ main roads.
It said the strong 2018 CBI inflows and resulting construction activity in hotel and condominium projects, are expected to add to sector growth this year, as is the planned start of a $162 million medical facility at Christophe Harbour.
No mention was made of the construction of the Ritz-Carlton and the Six Senses resorts which seem to have disappeared from the government’s agenda.