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Western Hemisphere > Dominica

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Cover IMF Staff Country Reports
Dominica: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Dominica
International Monetary Fund. Western Hemisphere Dept.
The 2024 Article IV Consultation discusses that the Dominican economy has recovered strongly following the pandemic shock. Real gross domestic product grew by 5.6 percent in 2022 and an estimated 4.7 percent in 2023 returning to pre-pandemic output levels. Policy responses have eroded essential fiscal buffers, despite large Citizenship by Investment (CBI) revenues, which have supported reconstruction, infrastructure development, and climate adaptation. The country remains exposed to shocks, while tight fiscal space constrains development initiatives. The ongoing economic expansion provides an opportunity to rebuild essential buffers and reorient policies toward increasing prospects for more sustained and resilient growth. Dominica’s output has recovered to its pre-pandemic level, reflecting a rebound in tourism and public investment, supported by buoyant CBI revenues. Inflation has subsided from its 2022 peak, but external imbalances have deteriorated modestly. Banks remain well capitalized and liquid although credit unions suffer from persistent weak capital and asset quality. The outlook is subject to downside risks, especially from climate change, volatile tourism receipts, commodity prices, and CBI revenues. Meanwhile, longstanding impediments to private investment and employment weigh on growth and productivity. Policy priorities are to address fiscal and external imbalances while enhancing the basis for sustained and resilient growth.
Keywords:
CBI revenue; CBI program framework; financing strategy; core price inflation; macroeconomic policy; Fiscal stance; Credit; Caribbean; Global
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: 2024 Staff Report for the 2024 Article IV Consultation on Common Policies of Member Countries of the Eastern Caribbean Currency Union-Press Release and Staff Report
International Monetary Fund. Western Hemisphere Dept.
The 2024 Article IV Consultation with member countries on common policies of the Eastern Caribbean Currency Union (ECCU) discusses that the economies have registered a strong recovery after successive external shocks. Fiscal and external balances have improved, but public debt and current account deficits remain high. The financial system has been stable and liquid, although it continues to be confronted with asset quality weaknesses and rising risks in the non-bank financial sector. Longstanding structural challenges affecting private investment and employment create a drag on growth going forward. The regional priority is to rebuild buffers while protecting the fiscal space for priority public investment and social spending. Social policies and institutional labor market reforms would help improve competitiveness by addressing structural constraints to employment and labor productivity. Concerted efforts to address gaps in core economic data improve transparency and strengthen resource capacity for data collection would support calibration of economic policies.
Keywords:
ECCU country; asset quality; ECCU member-country government; ECCU member country; CARTAC TA mission; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit bureaus; Credit; Caribbean; Global
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper on the Eastern Caribbean Currency Union (ECCU) focuses on efficient, sustainable, and fair pension schemes. Despite recent reform efforts, the financial sustainability of the ECCU’s defined benefit social security schemes remains under strain, largely reflecting the still relatively low contributions and generous payouts. This, coupled with a rapidly ageing population and high labor market informality, increases the need for a comprehensive review and adoption of further parametric and non-parametric reforms of the pension systems to avoid abrupt and more sizable adjustments in the future as well as to reduce the risks of old-age poverty. This annex reviews pension schemes in the ECCU, with a focus on assessing their design and performance and identifying policy options to improve their efficiency, fairness, and sustainability. Key recommendations include swift adoption of further comprehensive reforms to address design weaknesses, improving coverage, investment strategy, administrative efficiency, and transparency, and establishing automatic adjustment mechanisms.
Keywords:
NIS pension schemes Overview; labor market performance; public sector pension schemes; labor markets in the ECCU; ECCU migration; Pensions; Pension spending; Aging; Retirement; Labor markets; Caribbean; Global
Cover IMF Staff Country Reports
Dominica: Technical Assistance Report-External Sector Statistics
International Monetary Fund. Statistics Dept.
This Technical Assistance report on Dominica focuses on external sector statistics. The Eastern Caribbean Central Bank (ECCB) and the Central Statistics Office have implemented recommendations from the previous mission regarding timeliness and data accessibility. The mission focused on improving data sources for travel credits and the Citizenship by Investment Program (CBI) flows for the balance of payments. Revised 2022 balance of payments estimates were reviewed; additional refinement is needed. The ECCB has been incorporating available cash-based data on CBI flows from the fiscal sector into the balance of payments. However, fiscal data for 2021 and 2022 show some possible misclassifications that would affect the correct recording of external flows in the balance of payments. The report highlights that follow-up on the request made to the CBI to complete the ECCB balance of payments questionnaires for 2021 and 2022 and report on the existence of foreign escrow accounts. Coordination between data-producing agencies needs to be improved. A survey of cruise passengers is required to improve the estimates of visitor expenditure; visitors that arrive by yatchs are not surveyed either.
Keywords:
Dominica; balance of payments statistics.; balance of payments statement; balance of payments estimate; business visitor; VES result; visitor expenditure questionnaire; ECCB website; Civil society organizations; External sector statistics; International investment position; Credit; 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
Dominica: 2023 Article IV Consultation-Press Release; and Staff Report for Dominica
International Monetary Fund. Western Hemisphere Dept.
The 2023 Article IV Consultation highlights that the Dominican economy is recovering strongly following the pandemic. Fiscal space remains tight. High Citizenship-by-Investment (CBI) revenue, nearing a record 30 percent of gross domestic product in recent years, has supported public investment and crisis response measures. The economic outlook is positive, predicated on a continued expansion in tourism and implementation of the country’s economic modernization and resilience building agenda The transition to local geothermal energy production and construction of a new airport, planned for the coming years, will sustain economic activity, reduce dependency on fossil fuels, bolster resilience to external shocks, and improve international connectivity. Meanwhile, public debt is set to decline gradually in coming years, supported by efforts to reduce current spending and strengthen tax collection. Building policy buffers and critical infrastructure will help address downside risks stemming from global economic uncertainty, climate change, and volatility of CBI revenue.
Keywords:
CBI revenue; investment goods; CBI program; debt ratio; fuel price policy; Fiscal stance; Credit; Caribbean; Global
Cover IMF Staff Country Reports
St. Kitts and Nevis: Selected Issues
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper reviews anecdotal evidence on labor market conditions and discusses policy options to strengthen the labor market and support growth in St. Kitts and Nevis. The diagnosis of labor market conditions reveals challenges and opportunities in wages, productivity, and labor allocation across sectors. These include strengthening jobs and growth opportunities across sectors, enhancing the wage setting system to support competitiveness, and increasing the efficiency of the public sector. Strong institutions are needed to effectively manage public sector wages over the medium term. Several institutional arrangements can facilitate this goal including regular comparison between public and private sector wages, regular wage negotiations as opposed to ad hoc adjustments, and using medium-term wage bill forecasting to support better fiscal outcomes. Labor market and growth policies could play a key role in strengthening jobs and growth in the post-coronavirus disease era, including by leveraging sectoral linkages to provide more diversified and higher quality job opportunities, enhancing labor market policies, and increasing the efficiency of the public sector.
Keywords:
C. climate change ADAPTATION; labor market diagnosis; staff team of the International Monetary Fund; D. wage policy; Policy implication; Public sector wages; Labor markets; Wages; Employment; Caribbean; Global
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 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