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Western Hemisphere > Dominica

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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 Working Papers
The Macroeconomic Returns of Investment in Resilience to Natural Disasters under Climate Change: A DSGE Approach
Emilio Fernández Corugedo
,
Andres Gonzalez
, and
Mr. Alejandro D Guerson
This paper presents a Markov switching dynamic stochastic general equilibrium model designed to evaluate the macroeconomic return of adaptation investment to natural disasters (NDs) and the impact of climate change. While the model follows the existing literature in assuming that NDs destroy a share of the public and private capital stocks and a government that can invest in adaptation at an additional cost, it adds several features that are key to the analysis, both in the near (transition) and long (steady state) terms. Those include incomplete markets, financial frictions with collateral constraints, foreign remittances, full menu of tax and government spending instruments, and endogenous climate risk premium. The model is calibrated to the case of Dominica. It finds that NDs have large and persistent negative effects on output and public finances. It also shows that adaptation investment has large returns in terms of private investment, employment, output and tax revenue in the long term, especially under climate change.
Keywords:
natural disasters; climate change; DSGE; resilient capital; financial frictions; Dominica; climate adaptation policies; adaptation investment; investment producer; government spending instrument; endogenous climate risk premium; ND event; moment calibration summary; Consumption; Return on investment; Caribbean; Global
Cover IMF Staff Country Reports
St. Vincent and the Grenadines: 2018 Article IV Consultation-Press Release; Staff Report and Statement by the Executive Director for St. Vincent and the Grenadines
International Monetary Fund. Western Hemisphere Dept.
This Article IV Consultation highlights that following the opening of a modern international airport, signs of an economic recovery have emerged, with increased direct flights from major cities in the United States and Canada and renewed interests from foreign investors in tourism projects. The overall fiscal balance has improved over the past few years, and the debt to GDP ratio fell in 2017 for the first time since 2007. However, despite these positive developments, St. Vincent and the Grenadines faces challenges in sustaining the growth momentum over the longer-term. Like other Caribbean economies, its high exposure to natural disasters, limited land, narrow production and exports base, weak business competitiveness, and limited physical and human capital constrain potential growth. The financial system remains broadly stable but has vulnerable spots in the non-bank financial sector. It is important to implement structural reforms to foster private sector activity, by improving the investment environment and strengthening physical and human capital.
Keywords:
ISCR; CR; GDP; budget; assumption underpinning budget estimate; SVG economy; growth outlook; GDP target; debt target; debt reduction objective; Natural disasters; Fiscal stance; Caribbean; Global
Cover IMF Staff Country Reports
St. Kitts and Nevis: 2017 Article IV Consultation- Press Release; Staff Report
International Monetary Fund. Western Hemisphere Dept.
This 2017 Article IV Consultation highlights that the economic performance of St. Kitts and Nevis moderated in 2016. Growth moderated, reflecting the deceleration in tourism-linked sectors and contraction in manufacturing output, while still exceeding the average growth in the Eastern Caribbean Currency Union region. Consumer inflation was negative, reflecting the favorable tax environment and low international fuel prices, but end-year inflation turned positive as these effects started to subside. Growth is expected to average at about 3 percent in the medium term. Inflation is projected to rise with the expected rise in fuel prices, remaining about 2 percent in the medium term.
Keywords:
ISCR; CR; CBI inflow; consumer inflation; w CBI fee; inflow; SIDF grant; oil-price weakness; correspondent banking risk; Fiscal stance; Public sector; External sector statistics; Caribbean; Global
Cover IMF Staff Country Reports
St. Kitts and Nevis: 2016 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
This 2016 Article IV Consultation highlights that economy of St. Kitts and Nevis continued its strong growth at about 5 percent, recording the strongest growth in the region during 2013–15. Strong growth has been underpinned by construction and tourism sector activity and their favorable spillovers on the rest of the economy, supported by surging inflows from its Citizenship-by-Investment (CBI) program. Large CBI inflows continued in 2015, albeit at a slower pace. The medium-term outlook is positive, but remains dependent on developments in CBI inflows. Growth is expected to moderate to 3.5 percent in 2016 and 3 percent, on average, over the medium term.
Keywords:
ISCR; CR; CBI inflow; Citizenship-by-Investment; CBI program; construction activity; SIDF grant; CBI receipts; CBI flow; Fiscal stance; Public sector; Caribbean; Global
Cover IMF Staff Country Reports
St. Kitts and Nevis: 2015 Article IV Consultation-First Post-Program Monitoring Program Monitoring Discussions-Press Release; and Staff Report
International Monetary Fund. Western Hemisphere Dept.
This 2015 Article IV Consultation highlights that the economic situation of St. Kitts and Nevis has continued to improve since the completion of the IMF-supported home-grown economic program in July 2014. Continued rapid inflows under the Citizenship-By Investment program have led to a surge in construction activity, and supported a large increase in government and Sugar Industry Diversification Fund investments and spending, including on the People Employment Program. These factors, together with the ongoing recovery in tourist arrivals fueled rapid GDP growth of about 6 percent in 2013 and 2014. The near-term outlook remains strong, but there are risks on the horizon.
Keywords:
ISCR; CR; CBI inflow; one-off corporate tax settlement; reform; inflow; CBI program; income tax tax collection; national assembly; Public sector; Credit; Caribbean; Global
Cover IMF Staff Country Reports
St. Vincent and the Grenadines: Staff Report for the 2012 Article IV Consultation
International Monetary Fund. Western Hemisphere Dept.
KEY ISSUES Background: Activity is slowly recovering after a cumulative decline of about 5 percent during 2008–10. Expansionary fiscal policies—largely to counteract the impact of the global slowdown and the two successive natural disasters—led to a deterioration in fiscal balances, with public debt up by about 10½ percent of GDP over this period. The fiscal deficit, however, is expected to narrow this year, largely reflecting cuts in capital spending. In the financial sector, non performing loans remain above prudential guidelines; provisioning and profitability are low; and supervision remains weak. Policy Challenges: Further fiscal consolidation—including by rebalancing government expenditure toward growth and employment generating public sector projects—is required to ensure medium-term sustained growth as well as keep public sector debt on a downward trajectory. In this regard, improving the efficiency of revenue collection and reducing current spending—especially on the wage bill, which is high relative to revenues—will be crucial to allow the government to maneuver fiscal policy. Financial sector weaknesses also need to be addressed, including through strengthening of supervisory and regulatory standards, to promote effective financial intermediation that supports private sector growth. Structural reforms, including infrastructure enhancements and labor market reforms are critical to improve competitiveness and ensure medium-term growth and current account sustainability.
Keywords:
ISCR; CR; current account; debt; deficit; real GDP; private sector credit growth; debt service; broad money; flows shock; economy of St. Vincent and the Grenadines; Financial sector; Capital spending; Caribbean; Global; North America; Northern Europe
Cover IMF Staff Country Reports
St. Kitts and Nevis: Staff Report for the 2014 Article IV Consultation and the Seventh and Eighth Reviews Under the Stand-by Arrangement and Request for Waivers of Applicability and Nonobservance of Performance Criterion
International Monetary Fund. Western Hemisphere Dept.
This paper elaborates 2014 Article IV Consultation, Seventh and Eight Reviews Under the Stand-By Arrangement (SBA), and Request for Waivers of Applicability and Non-Observance of Performance Criterion for St. Kitts and Nevis. The discussions focus on strategies to secure sustainable growth through enhancing tourism, developing cost-effective energy sources, and improving the business environment. It states that the authorities’ commitment to their program is reflected in the 2014 budget, and their plans to save the bulk of the Citizenship by Investment (CBI) application fees.
Keywords:
ISCR; CR; St. Kitts and Nevis authorities; IMF quota; authority; amount; CBI inflow; CBI revenue; CBI receipts; Fiscal stance; Credit; Caribbean
Cover The Eastern Caribbean Economic and Currency Union
The Eastern Caribbean Economic and Currency Union
Macroeconomics and Financial Systems
Mr. Alfred Schipke
,
Aliona Cebotari
, and
Ms. Nita Thacker

Abstract

The Eastern Caribbean Economic and Currency Union (OECS/ECCU) is one of four currency unions in the world. As in other parts of the world in the aftermath of the global economic and financial crisis, the region is at a crossroads, facing the major challenges of creating jobs, making growth more inclusive, reforming the banking system, and managing volatility, while grappling with high public debt and persistent low economic growth. Policymakers have the critical task of implementing strong reforms to strengthen the monetary union while also laying the foundation for accelerating growth. This Handbook provides a comprehensive analysis of the key issues in the OECS/ECCU, including its organization and economic and financial sector linkages, and provides policy recommendations to foster economic growth.

Keywords:
BOOK; ECCU country; ECCU; OECS; ECCU economy; ECCU member; banking sector; financial crisis; Credit bureaus; Debt restructuring; Caribbean; Global; Central America; Europe; Western Hemisphere; ECCU government; ECCU authorities; South America
Cover IMF Working Papers
The Eastern Caribbean Currency Union: Would a Fiscal Insurance Mechanism Mitigate National Income Shocks?
Mr. Paul Cashin
and
Mr. Antonio Lemus
This paper studies the nature of the shocks affecting the Eastern Caribbean Currency Union (ECCU), and examines whether a hypothetical Eastern Caribbean fiscal insurance mechanism could insure member countries of the union against asymmetric national income shocks. The empirical results suggest that a one dollar reduction in an ECCU member country's per capita personal income could trigger, through reduced income taxes and increased transfers, flows equivalent to about 7 percent of the initial income shock. Each member of the currency union could benefit as well, although the extent of shock mitigation differs across individual countries.
Keywords:
WP; Fiscal insurance mechanism; income shocks; income tax revenue; transfers; Eastern Caribbean Currency Union; ECCU member; insurance mechanism; ECCU growth; ECCU country; ECCU-member country; Personal income; Income tax systems; Disposable income; Caribbean