Saint Kitts and Nevis, officially the Federation of St Kitts and Nevis, is a two-island state located in the Leeward Islands chain of the Lesser Antilles. With a population of 52,000 and an area of 269 sq km, it is the smallest sovereign state in the Western Hemisphere, in both area and population, as well as the world’s smallest sovereign federation.
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In the decade preceding the pandemic, the country successfully built up substantial fiscal buffers. This was largely due to the country’s citizenship by invest (CBI) programs, whereby foreigners obtain citizenship through their investments in the island. During 2012 -2019, CBI revenues averaging 10 percent of GDP were prudently saved, resulting in a decade of budget surpluses.
Combined with the 2012–14 sovereign debt restructuring, public debt fell from a 2010 peak of 145% of GDP to 52% in 2019, making St. Kitts and Nevis the first country to meet the Eastern Caribbean Central Bank’s 2030 debt target of 60% of GDP. The government utilized these economic gains to construction public infrastructure and new tourism facilities along with the introduction of a new social welfare scheme to alleviate property in 2018.
In 2020, the impact of the COVID-19 pandemic on St. Kitts and Nevis’ economy was severe despite timely government actions that kept domestic infections the lowest in the Western Hemisphere. The country’s GDP growth declined by 13%, with all major revenue categories recording double digit contractions.
On a micro level, this was characterized by reduced income and falling food security and consumption. In a survey conducted by World Food Programme (WFP), 68% of respondents experienced job loss or a reduced income in their households and 22% of respondents reported skipping meals or eating less than usual and 10% stating that they have no food stocks in their household.
The public sector debt-to-GDP ratio was estimated to have increased to 67.7% from 57.4% in 2019, reflecting governments increased financing to mitigate the impact of the pandemic. The government bought medical equipment and supplies, committed additional resources to boost the agriculture sector; and provided payments to workers who lost their jobs or saw their hours reduced.