Basseterre, St. Kitts, October 16, 2016 (SKNIS) Honourable Senator Wendy Phipps, Minster of State in the Ministry of Health, Community Development, Gender Affairs and Social Services, said that Budget planning is an important exercise to the people of St. Kitts and Nevis in understanding how a government functions in the management of its scarce public resources.

The Ministry of Finance met for three days (October 12-14) with Cabinet Ministers, permanent secretaries, heads of departments and senior government officials for the Budget Estimates exercise in gearing up for the 2017 Budget presentation in December.

“There are a lot of things that we would like to see St. Kitts and Nevis have in terms of improvement in our development and of course we have to temper that with the fact that we can do only what we can afford to do,” Minister Phipps said.

A government prepares the Budget for fulfilling certain objectives. Some of these objectives include the reallocation of resources, reducing inequalities in income and wealth, economic stability, management of public enterprises and economic growth.

Through the budgetary policy, Government aims to reallocate resources in accordance with the economic (profit maximization) and social (public welfare) priorities of the country.

Minister Phipps said that St. Kitts and Nevis has an economy that is transitioning and developing and therefore the country doesn’t qualify for aid like it used to.

“Yes, it is true, some may argue and state that St. Kitts and Nevis has good relations with the international community with a lot of donor agencies and so forth, and all of that is true, but at the same time what is equally true and must be acknowledged, is the fact that while we do have these relationships existing, St. Kitts and Nevis is also an economy in transition,” she said.

Minister Phipps added: “This means that we would have graduated from low- income country status and moving into middle-income developing status, so a lot of the development aid that we would have qualified for ten, fifteen years ago, we no longer qualify for now because of the fact that our per capita income has grown, and by virtue of that attention would be given by development (donor) agencies to countries that are less fortunate than us.”

She cited the Republic of Haiti as an example, which is poverty stricken, in the throes of the post-earthquake destruction of 2010, and now presently suffering from a trail of destruction loss of life, property, animals and agricultural crops and now the health hazard of cholera, due to the passage of Hurricane Matthew.

“It is countries such as these which are considered HIPC (Highly Indebted Poor Countries) where a lot of donor funds will be channeled in years to come,” Minister Phipps said.

“I think at the end of the day, what we are hoping to come out of this Budget with are programmes that would benefit the people of St. Kitts and Nevis and of course largely driven by tax revenue because everybody knows that the basic understanding of how government operates is that government is able to pay its bills based on the taxes that it is able to collect, which means that fiscal prudence has to be paramount especially when we realize that St. Kitts and Nevis only has a population of (about) 50 thousand people, which means that our tax base is relatively small and you cannot necessarily tax a population to death to get what you want done because then you threaten free enterprise (and) purchasing power of individuals, who need to buy goods and services out of income they earn,” she said.

“The whole thing spins around in a cycle because with the ability to buy goods and services, the taxes that are attracted with that are what help to keep the economy rolling and turn over money in the economy,” she added.