The International Monetary Fund has urged the government of St. Kitts and Nevis to not overly rely on income from their Citizenship by Investment Immigration Program to fund their government operations, advising them to treat the inflows from the program as “inflows that could stop at any time”.
“The revenues from those programs should not be used to fund normal ongoing government operations, rather they should be saved and used to form…some type of rainy day fund, or to pay off expensive debt, or to probably fund some very, big ticket infrastructure type of projects for which getting financing is very difficult but definitely should not be used to fund ongoing operations,” said Trevor Alleyne, IMF Division Chief for the Caribbean.
St. Kitts and Nevis runs one of the oldest citizenship by investment programs in the world. The program which was started in 1984, introduced a new option in 2006 through which interested investors could pay cash in exchange for citizenship of the nation. The program has been very successful, raising significant revenue which is directed to the country’s Sugar Industry Diversification Fund.
However, the citizenship program had recently come under fire when the US treasury Department issued a warning stating that the program was likely getting abused by “illicit actors” who obtained St. Kitts passports to get entry into the US to bypass economic sanctions and conduct business.
The US warning was followed by Canada’s revocation of visa-free travel for citizens of St. Kitts and Nevis due to concerns over the security checks of St.Kitts’ citizenship by investment program.
Alleyne has expressed concern that it is not known how long the citizenship by investment program would remain a viable option for St. Kitts and Nevis. “That actually is the crux of the matter, since we don’t know and since…individual countries can run absolutely the best program…with preeminent due diligence and absolute first class governance at the end of the day it’s still subject to other countries deciding we’re going to change our policies and therefore, that effectively puts an end to the usefulness of that particular program,” he said.
Alleyne also stressed on the importance of good governance of the program. “So the whole due diligence prospects, the transparency of the program…making sure that the finances are all laid bare for the Parliament and the public to see, these are all very, very important, because at the very least it shows to everybody that we’re running this program on the up and up, we have nothing to hide, and therefore whoever wants to can come and look at it.”
St. Kitts and Nevis has successfully completed a three year stand-by arrangement with the International Monetary Fund and is confident of making its debt repayment by 2018 as scheduled. The Caribbean nation has even returned some unused funds to the IMF and made two early repayments, according to IMF representative Wayne Mitchell. “Critically…how St. Kitts moves forward in terms of increasing productivity, improving its competitiveness, seeing to what extent all of this is sustainable going forward, improving employment prospects- that’s a dialogue I think that the country is ripe for having now,” says Mitchell.
“Considering also too, CBI and its prospects going forward and how do you want to use those funds in the best interest of St. Kitts and Nevis but also in terms of making sure everything is sustainable.”
Source: The St Kitts Nevis Observer