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Western Hemisphere > Dominica

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Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: 2019 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
International Monetary Fund. Western Hemisphere Dept.
This paper presents IMF’s 2019 Discussion on Common Policies of Member Countries of the Eastern Caribbean Currency Union (ECCU). ECCU’s gross domestic product (GDP) growth accelerated from 3/4 percent in 2017 to 3 3/4 percent in 2018, reflecting buoyancy in the tourism sector, sizable Citizenship-by-Investment (CBI) inflows, and a recovery from the 2017 hurricanes in Anguilla and Dominica, which were supported by large public investments in reconstruction. Fiscal deficits increased in 2018–2019, but they have remained moderate. Efforts are needed to streamline, and re-balance tax incentives based on clear principles consistent with international best practices. External imbalances are sizable and significant financial sector vulnerabilities affect both banks and non-banks. Growth is projected to gradually moderate toward its long-term average of 2 1/4 percent as the cyclical momentum normalizes and CBI inflows ease. These trends would also contribute to wider fiscal deficits, ending the downward drift in public debt dynamics. The outlook is clouded by downside risks, including a possible intensification of natural disasters and financial sector weaknesses.
Keywords:
ISCR; CR; authority; ECCB authority; e-government platform; ECCU price aggregate; article IV consultation discussion; ECCU region; ECCU country; ECCU work program; Digital currencies; Natural disasters; Tax incentives; Credit bureaus; 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 Working Papers
Tax Concessions and Foreign Direct Investment in the Eastern Caribbean Currency Union
Ms. Jingqing Chai
and
Rishi Goyal
Tax concessions have been employed as a central component of the development strategy in the small island states comprising the Eastern Caribbean Currency Union. This paper compares the costs of concessions in terms of revenues forgone with the benefits in terms of increased foreign direct investment. The costs are very large, while the benefits appear to be marginal at best. Forgone tax revenues range between 9½ and 16 percent of GDP per year, whereas total foreign direct investment does not appear to depend on concessions. A rethinking of the use of concessions in the region is needed urgently.
Keywords:
WP; firm; investor; net profit; tax rate; cost
Cover The Caribbean
The Caribbean
From Vulnerability to Sustained Growth
Mr. David Robinson
,
Mr. Paul Cashin
, and
Ms. Ratna Sahay

Abstract

This book sets out the economic challenges facing the island nations of the Caribbean and presents policy options to ameliorate external shocks and embark firmly on a sustained growth path. While the countries of the Eastern Caribbean Currency Union that are the focus of the book have enjoyed a sustained period of price and exchange rate stability, they have been buffeted in recent years by adverse shocks, including the erosion of trade preferences, declines in official foreign assistance, and frequent natural disasters. Strengthening their growth performance will require design of a multifaceted strategy that integrates the Caribbean with the global economy, facilitates an economic transformation from agriculture to tourism, fosters greater regional cooperation, and preserves macroeconomic stability. This volume examines the critical issues that are part of that process, including fiscal and financial sector policy, management of external flows, trade integration and tourism, macroeconomic cycles and volatility, and the economic implications of natural disasters.

Keywords:
BOOK; ECCU country; country; emigration loss; country authorities; ECCU banking system; ECCU economy; Natural disasters; Migration; Fiscal stance; Exchange rate arrangements; Caribbean; Global; North America; countries of the Eastern Caribbean Currency Union; Central America
Cover IMF Working Papers
Tax Incentives and Investment in the Eastern Caribbean
Mr. Sebastian Sosa
Tax incentives have been used extensively in the countries of the Eastern Caribbean Currency Union (ECCU) to promote investment. The associated revenue losses are large, and benefits in terms of new investment have been limited, raising doubts about the cost effectiveness of the tax incentive schemes. This paper examines the effects of incentives using the marginal effective tax rate approach (METR), adapting this methodology to the case of a small open economy where the marginal investor is a nonresident. The results show that METRs are high in the region; that there is a large dispersion in the size of METRs across financing source; and that METRs on investment are larger than the overall distortion on capital, with a substantial subsidy to domestic saving. In the presence of tax holidays-the most common incentive scheme in the region-the distortion on capital basically vanishes.
Keywords:
WP; rate of return; tax system
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Staff Report for the 2005 Regional Discussions
International Monetary Fund
This 2005 Article IV Consultation highlights that economic activity in the Eastern Caribbean Currency Union (ECCU) has accelerated since mid-2003 owing to an acceleration of activity in the tourism and construction sectors. Inflation has been stable and monetary aggregates have been expanding rapidly, reflecting continued growth in the demand for money and confidence in the banking system and the quasi-currency board arrangement. Against this background, Executive Directors have called for strengthening fiscal consolidation, lowering the debt ratios, and ensuring the consistency of fiscal policies with the currency board arrangement.
Keywords:
ISCR; CR; debt; ECCU government; public sector debt stock; ECCU country; private sector; fiscal policy; exchange rate; U.S. dollar; labor market; Public sector; Fiscal stance; Natural disasters; Caribbean; Global