The International Monetary Fund (IMF) has projected that Saint Kitts and Nevis’ economy will rebound in 2026, driven by growth in construction, agriculture, renewable energy and tourism, while warning that declining Citizenship-by-Investment (CBI) revenues and rising public debt remain major concerns for the federation.

In concluding its 2026 Article IV consultation with the twin-island nation, the IMF said economic growth slowed in 2025 but is expected to recover to two per cent in 2026 before strengthening further over the medium term.

According to the IMF, the anticipated rebound will be supported by ongoing construction activity, renewable energy projects, agricultural development and continued tourism expansion.

However, the Washington-based institution cautioned that elevated oil prices linked to the conflict in the Middle East could negatively affect the tourism and transportation sectors and place additional pressure on the economy.

Inflation is projected to rise moderately to 2.2 per cent in 2026 due to higher global food and energy prices before stabilising over the medium term.

The IMF also noted that the country’s current account deficit remained wide at 14.6 per cent of GDP in 2025, while the overall fiscal deficit widened to 11.7 per cent of GDP as revenues from the CBI programme continued to decline.

Public debt also increased closer to the Eastern Caribbean Currency Union’s regional benchmark of 60 percent of GDP, while government deposits declined further.

“Persistently low CBI revenues are expected to keep deficits elevated in 2026 and over the medium term, while public debt is projected to continue rising,” the IMF said.

Despite those challenges, the IMF said debt sustainability remains intact, although it warned that contingent liabilities from public banks and the Social Security Fund pose significant risks.

The IMF said near-term growth risks remain tilted to the downside due to heightened global uncertainty, geopolitical tensions, volatility in commodity and financial markets and potential further declines in CBI inflows and tourism activity.

The institution also stressed the need for continued fiscal consolidation, including reducing expenditure and increasing tax revenues, to stabilise debt and rebuild financial buffers.

Among its recommendations were broadening the VAT base, strengthening property taxation, improving tax administration and reducing reliance on CBI revenues.

The IMF also encouraged authorities to formally adopt fiscal rules linked to the regional debt benchmark and move ahead with the planned Sovereign Wealth Resilience Fund to help manage fluctuations in CBI revenues and strengthen disaster resilience.

The report noted that the banking sector remains broadly stable, with stronger capital positions and declining non-performing loans, although vulnerabilities remain.

It also called for reforms to the Development Bank and continued efforts to address labour market skills gaps and improve the investment climate.

Prime Minister and Minister of Finance Terrance Drew welcomed the IMF’s assessment, saying it reflected progress in the government’s economic transformation agenda.

“This report reflects that our country is building a more sustainable and resilient economy, one grounded not in dependence on a single sector, but in strategic investment across construction, agriculture, renewable energy, tourism and people development,” Drew said.

He added that the government remains committed to balancing economic growth with long-term sustainability and expanding opportunities for citizens.