Policy-Based Loan, St. Kitts

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July 22, 2010 No. 28/10-BD CDB REVISES CONDITIONS FOR POLICY-BASED LOAN TO ST. KITTS AND NEVIS The Caribbean Development Bank (CDB) has revised the conditions under which the Government of St. Kitts and Nevis will receive the second tranche of a policy-based loan (PBL) approved by the Bank in December 2006. CDB's Board of Directors had approved a loan equivalent to USD20 million, to be disbursed in two tranches. The first tranche was disbursed in May 2008. However, in spite of good progress in some areas, the Government found meeting all the second tranche conditions precedent for disbursement difficult. The PBL is part of a broader assistance strategy by CDB for St. Kitts and Nevis that seeks to improve the country's debt dynamics, enhance public sector management systems to foster fiscal sustainability and improve the overall macroeconomic fundamentals, while protecting past social gains. The PBL is intended, through improvements in governance and institutional arrangements, to enhance the quality of fiscal and economic management. The Bank recognised that a change in policy focus was warranted, because the economic environment in which the reforms were being implemented had deteriorated significantly, among other factors. Therefore, new policy reforms have been approved and the dates for implementing these reforms revised.

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