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Western Hemisphere > Antigua and Barbuda

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Cover IMF Staff Country Reports
Antigua and Barbuda: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
Antigua and Barbuda’s economy continues its solid expansion with growth projected at 5.7 percent for 2023. Tourism and construction activity have both been strong, with real activity expected to return to its pre-pandemic level during 2023. After reaching 9.2 percent at end-2022, inflation fell to 6.6 percent by August of this year, with core inflation steadily declining. The current account deficit widened to an estimated 16.2 percent of GDP in 2022 with higher tourism receipts more-than-offset by an increase in goods imports and a worsening in the terms of trade. The current account deficit is expected to fall to around 12 percent of GDP this year. The rebound in nominal GDP lowered public debt to 87 percent of GDP at end-2022, from 95 percent of GDP at end-2021. Nonetheless, gross financing needs are high, and there has been limited progress in resolving arrears to creditors and domestic suppliers. Financial sector balance sheets are healthy. However, credit union lending has continued to grow rapidly, albeit from a low base, raising concerns about future credit quality.
Cover Selected Issues Papers
Unlocking Tourism Potential for Sustainable and Inclusive Growth in Dominica
Mr. Yibin Mu, Sinem Kiliç Çelik, and Archit Singhal
Tourism is an important driver of Dominica’s economy. The damage of the pandemic on Dominica’s tourism sector was severer than in most regional peers, and the recovery has also been much slower, mostly due to the timing of lockdown restrictions. This paper reviews the tourism sector landscape in Dominica, assesses its recent performance relative to peers, and analyzes the main determinants and constraints for tourism development. Our econometric analysis shows that flight connectivity and demand variables play the most significant role in explaining tourism developments, while natural disasters can have negative lasting significant impacts. This calls for improving infrastructure and enhancing resilience.
Keywords:
Island economy; tourism; Caribbean states; tourism sector; tourism development; Dominica's economy; demand variable; stringency index; Natural disasters; COVID-19; Inclusive growth; Income; Caribbean
Cover IMF Staff Country Reports
Dominica: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper reviews the tourism sector landscape in Dominica, assesses its recent performance relative to peers, and analyzes the main determinants and constraints for tourism development. Tourism plays a vital role in Dominica’s economy. It contributes significantly to growth, employment, and exports. The coronavirus disease 2019 pandemic had a significant impact on Dominica’s tourism sector, and the recovery has been slower compared to peers. While the drop in tourist arrivals in Dominica was similar to regional peers, the recovery has been much slower. The underperformance appeared mainly explained by the costs of stay and timing of lockdown restrictions. The econometric analysis shows that flight connectivity and demand variables play the most significant role in explaining tourism developments, while natural disasters can have negative lasting significant impacts. This calls for improving infrastructure and enhancing resilience. Furthermore, countries can enhance competitiveness and reduce vulnerabilities by investing in the expansion of skilled labor supply for the sector and diversifying product offers.
Keywords:
tourism sector landscape; tourism recovery; market source; tourism flow; Yibin mu; Tourism; Natural disasters; COVID-19; Income; Caribbean
Cover IMF Staff Country Reports
Antigua and Barbuda: 2022 Article IV Consultation-Press Release and Staff Report
International Monetary Fund. Western Hemisphere Dept.
This 2022 Article IV Consultation discusses that the Antigua and Barbuda’s economy is on a gradual recovery path, following a sharp contraction in real output of 20 percent in 2020 due to the coronavirus disease 2019 pandemic. The growth momentum is expected to carry into 2022 and 2023, with real gross domestic product projected to expand by 6 and 5 1/2 percent respectively, supported by strong tourist arrivals, foreign direct investment in the hospitality sector, and public sector projects. Continued fiscal consolidation efforts and the growth recovery have helped improve the fiscal position, but outturns underperformed the targets envisaged in the government’s medium-term fiscal strategy, while gross financing needs and arrears to domestic and external creditors remain high. It is recommended to strengthen the policy framework that underpins the Medium-Term Fiscal Strategy to institutionalize fiscal discipline. In addition, the report also highlights that it is imperative to mitigate the effects of rising living costs through replacing broad-based price controls and subsidies with targeted transfers and a strengthening of the social safety net.
Keywords:
IMF staff calculation; money market rate; ECCB website; E.C. dollar; response rate; External sector statistics; Natural disasters; Arrears; Global; Caribbean
Cover IMF Staff Country Reports
St. Lucia: Technical Assistance Report-Remote National Accounts Mission
International Monetary Fund. Statistics Dept.
This paper presents the technical assistance report on remote national accounts mission in St. Lucia. The improved estimates will improve the understanding of the Saint Lucia economy, notably the needs of the Ministry of Finance for more robust and timely national accounts statistics. This development will also help Saint Lucia meet the IMF Special Data Dissemination Standards requirements. Training has been provided on the different components of Gross Domestic Product by expenditure (GDP-E) for current price methods and price and volume measurement. The mission identified some research topics for the national accounts department as part of its development of GDP-E. This includes checking the quality of some indicators and identifying whether some sources are available at a lower level of detail. The mission also quality assured the current methods used for compiling accommodation in the production measure of GDP. In order to support progress toward the objectives, the mission recommended priority recommendations to make headway in improving Saint Lucia’s national accounts.
Keywords:
GDP; Expenditure GDP; Quarterly GDP; Constant Prices; Supply and Use Tables; GDP-E approach; consumption expenditure; GDP-E methodology; staff team of the International Monetary Fund; research issue; Civil society organizations; Consumer price indexes; Imports; Producer price indexes; Caribbean
Cover IMF Working Papers
Natural Disasters and Scarring Effects
Weicheng Lian, Jose Ramon Moran, and Raadhika Vishvesh
This paper uses a novel empirical approach, following the literature on hysteresis, to explore medium-term scarring of natural disasters for countries vulnerable to climate change. By quantifying the dynamic effects of natural disasters on real GDP per capita for a large number of episodes using a synthetic control approach (SCA) and focusing on severe shocks, we demonstrate that a persistently large deviation of real GDP per capita from the counterfacutal trend exists five years after a severe shock in many countries. The findings highlight the importance and urgency of building ex-ante resilience to avoid scarring effects for countries prone to natural disasters, such as those in the Caribbean region.
Keywords:
Natural disasters; scarring effects; synthetic control approach; IMF working papers; scarring effect; ante resilience; medium-term scarring; output effect; Tourism; Climate change; Caribbean; Global; Western Hemisphere
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Technical Assistance Report-Review of Regulations to New Securities Act and Investment Funds Act
International Monetary Fund. Monetary and Capital Markets Department
At the request of the Eastern Caribbean Securities Regulatory Commission (ECSRC), a Monetary and Capital Markets (MCM) Department mission conducted a review of a draft version of the new Investment Funds Regulations (IFR) and Securities Regulations (SR) form May 20–June 30, 2022. The two sets of regulations are a key part of the new regime to govern the capital markets in the member territories of the Eastern Caribbean Currency Union (ECCU).
Keywords:
Securities bill; ECCU member country; investment funds bill; Securities commission; IOSCO principle; Mutual funds; Securities; Securities regulation; Caribbean
Cover IMF Staff Country Reports
St. Kitts and Nevis: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for St. Kitts and Nevis
International Monetary Fund. Western Hemisphere Dept.
Growth decelerated marginally in 2017, as the continued decline in CBI inflows slowed growth in construction. Consumer inflation was low, partly due to a small contraction in food prices. The overall fiscal balance remained in surplus but has deteriorated markedly since its 2013- peak, and the debt-to-GDP ratio increased marginally from the previous year. The current account deficit remains high and only marginally declined in 2017, as the decline in CBI receipts was more than offset by growing tourism receipts and a significant decrease in imports. Foreign reserves at the ECCB remained at comfortable levels, well above the various reserve-adequacy metrics. The banking sector has reported capital and liquidity ratios that are well above the regulatory minimum but has elevated NPLs and risks, including delays in completing the debt-land swap arrangement and loss of Corresponding Banking Relationships (CBRs).
Keywords:
SKN government; SKN economy; CBI program; NPL resolution strategy; due diligence; Commercial banks; Public sector; Government finance statistics; Credit; Caribbean
Cover Regional Economic Outlook: Western Hemisphere
Regional Economic Outlook: Western Hemisphere
International Monetary Fund. Western Hemisphere Dept.

Abstract

Recent developments in the Western Hemisphere—that is, the United States/Canada and Latin America and the Caribbean (LAC)—have been dominated by the impact of two distinct global shocks: the COVID-19 pandemic and then the Russian invasion of Ukraine. A third shock—the tightening of financial conditions—is now shaping the outlook. After contracting sharply in 2020, most of the Western Hemisphere’ economies recovered strongly in 2021 and early 2022, helped by the global recovery, the normalization of service sectors, and booming commodity prices. However, inflation pressures built up with pandemic-related disruptions, expansionary policies, rebounding demand, and the impact of the war in Ukraine on energy and food prices. The swift response of LAC’s monetary authorities to rising inflation—well ahead of other economies—helped contain price pressures and keep long-term inflation expectations anchored, but inflation remains high. Amid global monetary and financial tightening, and the ensuing slowdown in global growth and softening of commodity prices, activity is expected to decelerate throughout the Western Hemisphere in late 2022 and 2023, while inflation pressures are expected to recede gradually. Downside risks dominate the outlook and stem from tighter financial conditions, a more pronounced global slowdown, and entrenched inflation. For LAC, a sharp fall in commodity prices and social unrest are important risks. With inflation yet to abate and most economies still operating at or near potential, monetary policy should avoid easing prematurely and must stay the course. Clear communication of policy intentions will be key to reducing uncertainty and keeping inflation expectations anchored. Fiscal support deployed to mitigate the impact of inflation on the most vulnerable should be accompanied by compensating measures, where fiscal space does not exist, but also support monetary authorities’ efforts to tame inflation. Given rising financing costs, strengthening fiscal frameworks and advancing with inclusive fiscal consolidation—that protects key social objectives—will be essential to credibly putting public debt on a firm downward path while ensuring social stability. Boosting LAC’s medium-term growth requires raising productivity and good-quality public and private investment. Supply-side policies should focus on strengthening human capital, simplifying and modernizing labor regulations, and lifting barriers to firm entry and exit.

Keywords:
country abbreviation; tourism dependent; inflation expectation; headline inflation; IMF staff calculation; inflation pressure; nominal GDP; Inflation; Commodity prices; Energy prices; Food prices; Caribbean; Central America; South America; Global; Western Hemisphere
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper focuses on scarring effects of the pandemic on the Eastern Caribbean Currency Union’s (ECCU). Assessing the extent of the scarring effects is essential for the conduct of future economic policy in the ECCU. A better understanding of the factors affecting the scarring effects and their fiscal implications could help inform the discussions on policies needed to overcome them, especially for economies with limited economic diversification and high vulnerability to frequent shocks and natural disasters such as the ECCU countries. The significant output contraction would generate scarring effects in the ECCU countries. The degree of scarring could vary with countries’ economic structure and policy responses to the pandemic. ECCU countries need to balance difficult tradeoffs to mitigate scaring effects of the pandemic, other recent shocks, and limited fiscal policy space. In the short term, the priorities are to continue health spending to cope with the pandemic and use effective social transfers to cope with rising living costs. In the medium term, moving from income support and job retention measures to adopting active labor market policies would facilitate the reallocation of workers and resources to their most productive uses and help foster productivity growth.
Keywords:
responsibility framework; ECCU country; difference in Debt-to-GDP projection; B. output loss; Real GDP loss; Fiscal rules; Natural disasters; COVID-19; Fiscal stance; Global; Caribbean