The International Monetary Fund (IMF’s) 2025 Article IV Report on St. Kitts and Nevis’ economy is out and here is what the agency said:

Growth is expected to pick up by 2 percent in 2025—from 1.5 percent in 2024—supported by tourism, with inflation remaining around 2 percent. The Current Account Deficit (CAD) further widened to 15 percent of GDP in 2024, from 12 percent in 2023. CAD remains significantly larger than pre-pandemic levels, reflecting a decline in CBI inflows and widening fiscal deficits. It is expected to remain around 12 percent of GDP in the medium term.

Staff projects fiscal deficits are to remain large with public debt rising. The fiscal deficit in 2024 is estimated at 11 percent of GDP, driven by a sharp reduction in CBI revenue. Bank credit growth accelerated while vulnerabilities remain. Bank credit grew rapidly at 11 percent (particularly in mortgages and consumer loans) amid High Non-Performing Loans (NPLs) and low buffers, while competition among banks increased.

Near-term risks are tilted to the downside, but the potential for renewable energy provides upsides over the medium term. Substantial changes in CBI revenue constitute an important two-sided risk but a further decline in CBI revenue would pressure fiscal accounts. On the other hand, the renewable energy projects could create an additional source of growth and fiscal revenue.

The staff believes that the main priority is to implement a prompt and steady fiscal consolidation to keep public debt below the regional ceiling of 60 percent of GDP. While the authorities made efforts to contain the fiscal deficit in 2024, more active Tax reforms would boost tax revenue by 2.5 percentage points of GDP and are well within reach. Current expenditure.