Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review ST KITTS AND NEVIS

services rose by 4.3 per cent to $212.0m, in contrast to a decline of 2.1 per cent in 2017, mainly as a result of increased intake from the Value Added Tax (VAT). Value added tax (VAT) receipts, which accounted for an average of 28.3 per cent of the tax revenue over the last two years, increased by 5.5 per cent to $150.3m (5.4 per cent of GDP) compared with a total of $142.4m (5.3 per cent of GDP) in 2017. Property tax revenues were higher by 23.9 per cent on account of an increase in the performance of house tax and condominium tax of 12.1 per cent and 88.2 per cent respectively. The expansion in the current account surplus was moderated by higher current expenditure which rose by 12.3 per cent to $734.7m (26.2 per cent of GDP), following an increase of 1.0 per cent to $654.2m (24.4 per cent of GDP), in 2017 . The primary factor contributing to the outturn was an estimated 45.5 per cent ($67.9m) elevation in spending on goods and services and a 4.7 per cent ($13.8m) rise in payment for personal emoluments. Higher outlays on goods and services were due to a rise in professional and consultancy fees consistent with the increase in revenue from the CBI programme, while an increase in employment in the public sector

and the payment of an additional month’s salary drove the expenditure on personal emoluments higher. The increase in current expenditure was constrained by decreases in interest payments (4.8 per cent), as payments on domestically held debt fell. Capital expenditure increased by 34.6 per cent to $186.8m (6.7 per cent of GDP) compared with a 25.7 per cent increase to $138.7m (5.2 per cent of GDP) in 2017, as work advanced on a number of major capital projects. Public investment consisted of road works on both islands, continuing work on the second cruise pier, the resurfacing of the airport runway, renovations to the coast guard headquarters and the completion of a bus terminal in St Kitts. On Nevis work advanced on the new Treasury building and the water taxi pier. Inflows of official assistance (grants) rose by 11.4 per cent to $95.0m (3.4 per cent of GDP), in contrast to a 6.1 per cent decrease to $85.2m (3.2 per cent of GDP) in 2017. The major contributor to the increase was a 40.3 per cent rise in current grants to $43.2m.

The fiscal operations of the Nevis Island Administration (NIA) recorded a smaller overall deficit of $6.6m in 2018, compared

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