by Kevon Browne
St. Kitts and Nevis (WINN)—The Eastern Caribbean Central Bank has revised its 2025 Economic and Financial Review for St. Kitts and Nevis, reporting stronger-than-expected growth but warning of mounting fiscal pressures. Declining Citizenship by Investment revenue, rising expenditure and external risks are weighing on the country’s public finances.
The updated review is part of a wider release covering the ECCB’s eight member countries and the Eastern Caribbean Currency Union.
It incorporates revised economic data for 2025, updated projections for 2026 and 2027, first-quarter 2026 information, recent domestic and international developments, and findings from the Bank’s ongoing economic surveillance.
Growth Accelerated in 2025
According to the June 2026 update, St. Kitts and Nevis recorded real gross domestic product growth of 2.1% in 2025, up from 0.3% in 2024.
The result was supported by tourism, construction and public infrastructure projects, although growth fell below earlier expectations because of weaker-than-anticipated product tax performance.
Tourism activity strengthened significantly during the year. Visitor arrivals exceeded one million for the first time since the pandemic, increasing by 18.5% in 2026. The ECCB attributed the recovery in part to destination marketing efforts and national festivals.
Construction contributed largely to economic expansion, growing 15.3%. Financial intermediation and public administration also supported activity, while agriculture recorded a substantial upward revision to 10.3% growth.
Headline inflation remained relatively low at 0.9%. Food prices, however, rose by 4.6%, keeping pressure on household budgets and highlighting continuing cost-of-living concerns.
CBI Revenue Decline Widens Fiscal Deficit
The review identifies the decline in Citizenship by Investment revenue as a central challenge for the country’s public finances.
Total revenue fell to 28.6% of GDP, while CBI receipts dropped to 3.7% of GDP in 2025, compared with 8.1% in 2024.
At the same time, capital expenditure increased to 7.5% of GDP. Major projects, including the Basseterre Desalination Plant and road infrastructure works, contributed to the higher spending level.
The combination of weaker revenue and increased expenditure widened the overall fiscal deficit to 12.8% of GDP. Although the debt-to-GDP ratio stood at 54.5% at the end of 2025, the ECCB warned that significant fiscal adjustment would be needed to meet the regional 60% debt-to-GDP target by 2035.
The figures point to a fiscal position that remains highly exposed to changes in CBI activity. The ECCB is therefore calling for reforms that strengthen revenue stability and reduce reliance on volatile inflows.
External Imbalances and Banking Risks
External pressures also intensified in 2025. The trade deficit widened to 34.2% of GDP, as demand for machinery and construction materials increased faster than tourism receipts.
The review also describes a narrowing gap between net foreign assets and net domestic assets, a trend that may indicate greater reliance on domestic liquidity and central bank credit to finance government activity.
Liquidity in the banking system remained adequate, but non-performing loans continued to pose a significant concern. The NPL ratio stood at 15.8%, well above the 5.0% regulatory threshold.
The elevated level of problem loans could constrain the ability of banks to expand lending and may require continued attention from policymakers and financial supervisors.
Lower Growth Forecast for 2026 and 2027
The ECCB now projects real GDP growth of 2.3% in both 2026 and 2027. The revised forecasts are below the earlier projection of 3.0% for each year, reflecting weaker expected momentum and a more challenging international environment.
The ECCB identifies geopolitical instability linked to the conflict involving the United States, Israel and Iran as a major downside risk. It warns that the conflict could push up oil prices and transportation costs while increasing inflationary pressure across the region.
Under the revised outlook, inflation could rise to 3.0% in 2026. Higher energy, freight and food costs would place additional pressure on households and businesses, particularly if external disruptions persist.
ECCB Calls for Fiscal Realignment and Economic Diversification
The review recommends that the government pursue immediate fiscal realignment while accelerating reforms to build a more resilient domestic economy. Its proposed measures include:
- CBI reform: Strengthen the Citizenship by Investment programme to improve demand, visibility and revenue stability.
- Spending review: Reassess discretionary social transfers and tax holidays to improve expenditure efficiency.
- Fiscal rules: Establish mechanisms to manage the volatility of CBI-related revenues.
- Human capital: Expand digital and green-economy skills training to improve productivity and employment prospects.
- Long-term resilience: Accelerate the Big Push and Sustainable Island State Agenda to support sustainable domestic development.
The updated review presents an economy that has regained momentum through tourism, construction and public investment, but remains vulnerable to revenue shocks, high import demand, banking-sector weaknesses and international instability.
For St. Kitts and Nevis, the central policy challenge will be sustaining the recovery, restoring fiscal balance and reducing dependence on volatile Citizenship by Investment revenue.
