IMF Confirms Falling CBI Revenues In ECCU
According to a recent IMF report, revenues from the Citizenship By Investment programs in member countries of the Eastern Caribbean Currency Union have been on the decline.
The ECCU is comprised of Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, which does not have a CBI program like the other countries where non-nationals can gain citizenship solely by making a financial payment.
Earlier in June the IMF mission held policy discussions with the Governor of the Eastern Caribbean Central Bank (ECCB), senior officials of the Caribbean Development Bank (CDB) and Organization of Eastern Caribbean States (OECS), financial sector regulators, and representatives of the private sectors.
Based on the consultations, the IMF said, “Favorable external conditions continue to support economic recovery, but flat tourism receipts and falling revenues from citizenship programs have weakened growth. The fiscal position has deteriorated slightly and public debt remains high.”
Sources within the CBI scheme have indicated that in the wake of recent scandals surrounding the programs, interest in the region’s CBI programs have fallen off significantly.
Some of the ECCU countries CBI programs have recently faced negative scrutiny surrounding allegations of persons who bought citizenship were charged for serious crimes in their home countries, placed on US watch lists, and have been accused of using illicit gains to purchase said citizenships.
Many of the countries experienced financial windfalls early on in the CBI stages, especially St. Kitts and Nevis which has the longest running program of all the islands, and in fact worldwide.
St. Kitts and Nevis channeled its CBI receipts through the Sugar Industry Diversification Foundation (SIDF), where persons could pay US$250,000 for citizenship.
Prime Minister and Minister of Finance Timothy Harris revealed that audits showed since its inception, up to the year 2014, the SIDF had received just about EC$1.5 billion dollars in citizenship “contributions”.
In St. Kitts and Nevis and the other islands, CBI revenue has been used to fund projects in almost every sector of the economy including education, health, infrastructure and social services.
The IMF directors have over the past few years warned ECCU governments about the over-reliance on CBI revenue, since the inflows could stop at any time. The Fund recommended CBI revenues be used to pay down the high sovereign debts.
This most recent report said, “Revenues from Citizenship-by-Investment programs, which should be used to reduce public debt where necessary, can also be directed to saving funds and to finance appropriate investment plans.”
The IMF Directors suggested that a regional approach to CBI programs would help strengthen the integrity of these programs while reducing their costs.