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St. Lucia: Staff Report for the 2015 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. Western Hemisphere Dept.
Published Date:
February 2016
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Fund Relations

(As of December 31, 2015)

Membership Status:Joined: November 15, 1979; Article
VIII
General Resources Account:SDR MillionPercent of Quota
Quota15.30100.00
Fund holdings of currency15.49101.22
Reserve Tranche Position0.010.04
SDR Department:SDR MillionPercent of
Allocation
Net cumulative allocation14.57100.00
Holdings14.0296.26
Outstanding Purchases and Loans:SDR MillionPercent of Quota
Emergency Assistance1/0.191.25
RCF Loans3.8325.03
ESF RAC Loan5.5136.03
Latest Financial Arrangements:None
Projected Payments to the Fund2/
Forthcoming
20162017201820192020
Principal1.952.142.142.140.77
Charges/Interest0.000.010.010.000.00
Total1.952.152.152.150.77

Emergency Assistance may include ENDA, EPCA, and RFI.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Emergency Assistance may include ENDA, EPCA, and RFI.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative:Not Applicable
Implementation of Multilateral Debt Relief Initiative (MDRI):Not Applicable
Implementation of Post-Castrophe Debt Relief (PCDR):Not Applicable

Exchange Rate Assessment: The de jure exchange rate arrangement is a currency board. St. Lucia participates in a currency union with seven other members of the ECCU and has no separate legal tender. The Eastern Caribbean dollar is pegged to the U.S. dollar under a currency board arrangement at EC$2.70 per U.S. dollar. St. Lucia has accepted the obligations of Article VIII, Sections 2(a), 3 and 4, and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.

Safeguards Assessment: Under the Fund’s safeguards assessment policy, the Eastern Caribbean Central Bank (ECCB), of which St. Lucia is a member, is subject to a full safeguards assessment under a four-year cycle. In line with this policy, an update safeguards assessment of the ECCB is underway. The previous assessment concluded in April 2012 found that the ECCB continued to maintain a relatively sound safeguards framework. In addition, the external audit and financial reporting mechanisms complied with international standards and financial statements were published in a timely manner. Independent oversight on external and internal audits and reserves management was exercised by the Audit and Investment Committees, respectively. Recommendations were made to enhance the ECCB’s legal framework.

Article IV consultation: St. Lucia is currently on a 12-month cycle. The last Article IV consultation was concluded on March 1, 2013 by the Executive Board; the relevant document is SM/13/41.

Technical Assistance: St. Lucia has received substantial technical assistance from the Caribbean Region Technical Assistance Center (CARTAC) and the IMF. Technical assistance missions focused on national accounts, tax reforms, revenue administration, expenditure rationalization and the financial sector.

Macroeconomics and Programming Analysis

  • March 2015: To review progress on the GDP Forecasting Framework
  • October 2015: Make Presentation at CARTAC National Accounts Planning Workshop
  • July 2014: To make better use of the high-frequency macro indicators in updating short-term GDP projections

National Accounts

  • March 2014 (CARTAC): Development a plan to assess the quality of the GDP estimates; May 2011 (CARTAC): preparation for quarterly GDP compilation, with St. Lucia being a pilot in the OECS;
  • December 2010 (CARTAC): real sector projections, including the preparation of scenarios that assessed the impact of Hurricane Tomas on the economy;
  • July-August 2009 (CARTAC): national accounts mission aimed at rebasing the GDP estimates to 2006 and exploring the feasibility of producing final expenditure in constant prices.

Real Sector Statistics

  • September 2015: A Real Sector Statistics Mission visited Castries to provide TA to the CSO for St. Lucia on reviewing and providing advice to expand and improve the national accounts, including producing SUT and rebasing the GDP estimates.

External Sector Statistics

  • January 2015 (CARTAC): Training on External Sector Statistics for Survey Respondents

Tax Reforms and Revenue Administration

  • September 2015 (Customs Administration): Provide guidance & training on improving & strengthening enforcement intelligence and risk.
  • November 2014 (Customs Administration): Support Risk Management mission
  • August 2014 (Customs Administration): TA to Montserrat Customs and Excise Department
  • May 2014 (Customs Administration): Organizational Structure Review of the CED
  • September 1-11, 2015: (CARTAC) Improve the Corporate Income Tax regime
  • July 6-17, 2015 (CARTAC) IRD structural re-organization establishment of the LMTU and DPMU)
  • March 16-27 2015, May 11-22, July 27-August 6, 2015: (CARTAC) Property taxation
  • December 9–December 22, 2014: (FAD funded by CARTAC) VAT revenue analysis
  • July, September, October 2014 and April 2015 (CARTAC) IRD structural re-organization
  • April 13-24, 2014 (CARTAC) tax and customs, data matching
  • April 2-15, 2014 (FAD) follow-up on tax and customs administrations after VAT introduction.
  • January 27-31 2014, (CARTAC) IRD strategic planning
  • October 14-November 1, 2013 and February 10-24, 2014, (CARTAC) development of VAT audit capacity
  • October 2013 (CARTAC): Strengthening the Customs Administration—Valuation workshop and training;
  • May 2014 (CARTAC): Strengthening the Customs Administration—Organizational Structure Review;
  • December 2008–January 2010 and May 2011-November 2012 (CARTAC): preparations for VAT implementation, including development of the project plan, VAT rate study, drafting the VAT legislation, delivery of training to tax and customs staff, supporting customs and Inland Revenue Department (IRD) preparations for VAT administration, development and implementation of the advisory visits program for potential registrants, and establishing a VAT section within IRD with the necessary procedures for operation;
  • June 2012 and November 2012 (CARTAC): special sector tax audits;
  • August 2012 (CARTAC): review of customs bonded warehouses;
  • June 2008, September 2008, February 2009, August 2009 and May 2012 (CARTAC): development and implementation of Customs Risk Management Program;
  • March 2010, June 2010, October 2010 and June 2011 (CARTAC): development and implementation of Customs Post Clearance Audit Program;
  • September 2010 and May 2011 (CARTAC): development of an integrity program for Inland Revenue;
  • March 2010, June 2010, October 2010 and June 2011 (CARTAC): development and implementation of Customs post clearance audit program;
  • June 2008, September 2008, February 2009 and August 2009 (CARTAC): development and implementation of customs risk management program;
  • June 2009 and September 2009 (CARTAC): development of Corporate Strategic Business Plan for Inland Revenue and customs;
  • April 2003 (FAD): modernization of the tax system in regional (OECS) context.

Expenditure Rationalization and PFM Reforms

  • October 2015 (PFM): PFM Accountant General’s Department review and Pre PEFA assessment
  • September 2015 (PFM): Program Based Budgeting
  • August 2015 (PFM): Develop a comprehensive budget manual
  • December 2014 (PFM): Budget Preparation Mission
  • October 2014 (PFM): Budget Preparation Mission
  • February 2014 (PFM): Assist with finalizing annual budget estimates document
  • January 2014 (PFM): Final Budget Preparation Reform Mission
  • May 2014 (MCM): Strengthening public debt management in ECCU countries. Assessment of Technical Assistance needs provided to the ECCB.
  • July 2014 (CARTAC): Improvements to real sector monitoring frameworks to provide for rapid updating of real sector variables using high frequency indicators;
  • January 2013, June 2013, November 2013, January 2014 (CARTAC): Budget Preparation Reform;
  • February 2013 (CARTAC): Chart of Accounts reform;
  • December 2013 (CARTAC): Diagnostic of PFM legislation;
  • October 2013 (CARTAC): Improving accountability and performance of Parastatals;
  • January 2012 (CARTAC MAC Programme): real and fiscal medium-term projections under baseline and active scenarios;
  • May and November 2011 (CARTAC): budget preparation mission;
  • June 2010 (CARTAC): preparation of a PFM reform action plan, PFM workshop;
  • December 2010 (CARTAC): fiscal projections under baseline and active scenarios;
  • August 2010 (FAD): regional project on public expenditure issues, including expenditure trends, policies, and expenditure rationalization options;
  • November 2009 (CARTAC): budget preparation and fiscal projections;
  • December 2008 (MCM): improving debt management capacity of the government.

Financial Sector

  • December 2015 (MCM): Implementation of Risk Based Supervision
  • August 2015 (MCM): Dynamic Modelling Project
  • November 2014 (MCM): Risk Based Supervision Insurance
  • September 2014 (MCM): Risk Based Supervision Framework
  • March, May and June 2014 (MCM and LEG): Strategy to resolve indigenous banks. Assistance to the ECCB.
  • May 2014 and ongoing (MCM): Collateral valuation. Assistance to the ECCB.
  • May 2014 and ongoing (MCM): Credit risk management assessment. Assistance to the ECCB.
  • May 2014 (CARTAC): Technical assistance requests from the ECCB to implement Basel II in the ECCU. The ECCB as a part of the Caribbean Group of Banking Supervisors (CGBS), has developed the operational risk guidelines for Basel II and has established a steering committee, made up of regulators from some of the SRUs to look at areas of national discretion for the implementation of Basel II.
  • November 2013 and May 2014 (MCM and LEG): Assistance to the ECCB on legislative changes to the ECCB Agreement Act, Banking Act and subsidiary legislation.
  • May 2014 (CARTAC): Assistance to the ECCB with the development and implementation of a strategic plan to achieve compliance with the Basel Core Principles for Effective Banking Supervision.
  • March 2013 (CARTAC): Review a draft Corporate Governance Guidance for ECCB which covers domestic banking operations in St. Lucia
  • December 2013 (CARTAC): Review an Internal Audit Guidance for Banks in the ECCU.
  • February 2011 (IMF/WB/CDB): A Joint Task Force on the ECCU Financial System (FSTF) performed a comprehensive diagnostics on the indigenous banks and delivered recommendations to address critical issues.
  • December 2008 (CARTAC): development of policy proposals for the Single Regulatory Unit (SRU) Act to be drafted by the authorities in St. Lucia;
  • May 2008 (CARTAC): assessment of development needs of the Single Regulatory Unit;
  • October 2007 (CARTAC): participation of St Lucia’s SRU supervisory staff in Off-shore Mutual Funds Supervision Workshop held in St. Kitts and Nevis and St. Vincent;
  • September 2007 (CARTAC): participation of St. Lucia’s SRU supervisory staff in Trust Supervision Workshop held in Turks and Caicos.

Technical assistance on the banking sector is provided to the Eastern Caribbean Central Bank (ECCB) as the supervisor and not to individual countries within the Eastern Caribbean Currency Union (ECCU). Currently, MCM has placed three long-term experts at the ECCB, financed by Canada: (i) a bank resolution advisor; (ii) a bank supervision advisor; and (iii) the manager of the regional asset management company.

CARTAC is working with the ECCB to develop a framework for the implementation of the recommendations of the sixth edition of the balance of payments manual for ECCU members, inclusive of St. Lucia. Additionally, a technical Assistance request from St. Lucia to provide assistance with bank supervision, mutual funds and review of insurance treaties is currently under consideration.

FSAP: A joint IMF/World Bank team performed an assessment of the financial sector of the member states of the ECCU, in two missions–September 1–19 and October 20–31, 2003. The missions assisted the authorities in assessing the development needs and opportunities for the financial sector, identifying potential vulnerabilities of financial institutions and markets to macroeconomic shocks, as well as assessing risks to macroeconomic stability from weaknesses in the financial sector. The Financial System Stability Assessment (FSSA) was discussed by the Executive Board on May 5, 2004, and subsequently published on the IMF’s external website, including the Report on the Observance of Standards and Codes (ROSC) on Banking Supervision.

AML/CFT: A detailed assessment of the AML/CFT regimes of St. Lucia was conducted by the Caribbean Financial Action Task Force (CFATF) in November 2008, and the eighth follow-up report was published in November 2013.

Relations with the World Bank Group

(As of October, 2015)

World Bank Group OECS Regional Partnership Strategy: On November 13, 2014, the Board of the Executive Directors of the World Bank Group has endorsed the new OECS Regional Partnership Strategy ((RPS) which will cover the period FY15-19. The high-level objective of the new RPS is to contribute to lay the foundations for sustainable inclusive growth, in line with the OECS governments’ priorities. In order to achieve this goal, the program is planned to be organized around three main areas of engagement. Under the first one, the WBG is planning to support “competitiveness”. Growth and job creation in the private sector will be supported both horizontally – by improving the business environment– and vertically – by focusing on specific sectors with a high potential to generate inclusive sustainable growth (particularly tourism, agribusiness and their respective linkages). The second area of engagement is “public sector modernization”, with particular focus on public financial management (PFM) and institutional capacity, including for statistics and public private partnerships (PPPs), to better leverage private investment in infrastructure and service provision. The third area is “resilience”, with the objective to address both social vulnerabilities (in education, health and social protection), and exposure to natural disasters. Constrained in general by the small size of investments in the OECS, the IFC and MIGA will contribute to the RPS objectives through selective investment support, depending on opportunities. The IFC will focus on crisis response; job creation and inclusive growth; innovation, competitiveness, and integration; and climate change. MIGA faces limited opportunities for engagement because of the small market size of the OECS countries.

The RPS is grounded in a holistic approach to tackling the long-standing issues of low growth and debt sustainability in the Caribbean: the Comprehensive Debt Framework, developed in 2010 by the Bank at the request of the Heads of Government of CARICOM countries. Structured around four pillars, the Comprehensive Debt Framework (CDF) is designed to address the interdependent structural causes of high debt and low growth in small island states by (i) promoting private-sector led growth, (ii) strengthening fiscal management, (iii) building resilience to natural disasters, and (iv) improving debt management. Governments of the OECS recognize the multifaceted nature of the challenges they face and understand that improvements in competitiveness, reduction in sovereign debt levels, fiscal adjustments to ensure macro sustainability, and enhanced sustainability and resilience to shocks are interrelated aspects that are critical to resume and sustain inclusive growth. As a result, they have used the CDF to frame their own reform strategies and activities.

The indicative IBRD lending program for the six OECS countries is expected to be around US$120 million, or up to a maximum of US$20 million for each OECS country – including for St. Lucia - for the period of the RPS (FY15-19), subject to country and program performance, IBRD’s lending capacity, and exposure management parameters. In addition to the IBRD envelope, four OECS countries (Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines) can also count on an IDA national allocation. The IDA17 (FY15-17) allocation for the OECS is equal to SDR61.3 million, an increase of around 22 percent over the IDA16 OECS allocation (SDR50.3 million). With regard to St. Lucia, its IDA-17 allocation is equal to SDR 17.4 million (roughly USD 24.3mln at today’s exchange rate).

A. Projects

1. The WB portfolio in St. Lucia includes three projects: (i) Regional Disaster Vulnerability Reduction Project-RDVRP (IDA $15 Million; PPCR $41 Million); (ii) Caribbean Regional Communications Infrastructure Project-CARCIP (IDA$6 Million); (iii) Eastern Caribbean Energy Regulatory Authority-ECERA (IDA$2.8 Million). St. Lucia also benefit of US$ 2 million Bank Executed Trust Fund to support geothermal development.

2. Overall, the portfolio quality in St. Lucia is mixed, with CARCIP and ECERA experiencing some problems and therefore proceeding through a restructuring process, while the RDVRP is proceeding in a satisfactory manner.

The Caribbean Regional Communications Infrastructure Program (CARCIP) is a broad umbrella program to include all interested CARIFORUM countries.1 It offers a menu of choices with specific components to be tailored to each country's priorities. The menu of options are: (a) ICT Connectivity—to increase access and affordability of broadband communications networks within region and countries; (b) E-Government—to contribute to improved Government efficiency and transparency through the delivery of e-services, including e-government and e-society applications; and (c) IT Industry—to contribute to the development of the regional and national IT industry. Phase 1 of the Program was approved by the Board on May 22, 2012 with Grenada (US$10 million IDA), St. Lucia (US$6 million IDA) and St. Vincent and the Grenadines (US$6 million IDA) as participating countries. Additional countries can join since this is a comprehensive program that seeks to increase access to regional broadband networks and advance the development of an ICT-enabled services industry in the Caribbean Region. The project is currently going through restructuring.

The Eastern Caribbean Energy Regulatory Authority (ECERA) Project (Grenada and St. Lucia) was approved in June 2011. The objective of this project is to establish and operationalize a regional approach to the development of the electricity sector in the OECS, by supporting the establishment of a regional regulator. Currently, Grenada and Saint Lucia have used IDA credit (with US$2.8 million each, for a total of US$5.6 million) for the design and operationalization of ECERA. The design phase is coordinated by the OECS Secretariat. Component A of this project will facilitate the creation and launching of the ECERA, including carrying out the legal and consultative process leading to the formulation and ratification of the ECERA treaty, and defining the options for the ECERA self-financing mechanism, reviewing tariffs and examining incentive mechanisms to promote renewable energy. Component B will facilitate the initial three years of ECERA’s operations, including the day-to-day operations and execution of core regulatory tasks including: (i) tariff and investment plan reviews; and (ii) defining a regional licensing framework for electricity market participants with a particular focus on facilitating the integration of electricity production from renewable sources into the supply mix. The project is currently going through restructuring.

A Disaster Vulnerability Reduction Project has been approved by the Board in June 2014. The package is in the amount of US$68 million equivalent consisting of (a) an IDA Credit in the amount of 15.57 million SDR (USD$ 24 million equivalent); (b) an IDA Credit from the Crisis Response Window in the amount of 11.03 million SDR (US$17.0 million equivalent); (c) a Loan from the Climate Investment Funds: Pilot Program for Climate Resilience (PPCR) under the Strategic Climate Fund (SCF) for US$15.0 million; and (d) a Grant from the Climate Investment Funds: PPCR-SCF for US$12.0 million. The objective of the Project is to reduce vulnerability to natural hazards and climate change impacts in Saint Lucia. The Project consists of the following five components: Risk Reduction and Adaptation Measures; Technical Assistance for Improved Assessment and Application of Disaster and Climate Risk Information in Decision-making; Climate Adaptation Financing Facility; Contingent Emergency Response; and Project Management and Implementation Support.

In spring 2015 the WB has conducted a Country Portfolio Performance Review in the OECS countries. Some of the main findings regarding the portfolio review in St. Lucia are the following: (i) country context needs to be better understood and taken into account during project preparation; (ii) institutional strengthening of national agencies in charge of monitoring projects, beyond the Project Implementation Unit (PIU), is needed to make sure that projects contribute to build national capacity; (iii) training initiatives are critical, particularly on fiduciary training; (iv) a more comprehensive and flexible approach to facilitate procurement in small states is needed; (v) Government processes are sometimes complex or slow and cause delays; (vi) Collaboration needs to improve both internally, among line ministries, and at the Bank, to ensure consistency of messages and clear communication with the client; and (vii) lack of technical staff is an issue and cause delays in completing activities by the deadline.

B. Economic and Sector Work

The Caribbean Growth Forum (CGF) -The Caribbean Growth Forum (CGF) is a multi-stakeholder platform designed to identify, prioritize and implement a set of activities to improve the growth enabling environment in the Caribbean, while promoting participatory public policy making. It has so far engaged more than 2,500 representatives from business associations, civil society organizations, Government, private sector, media, indigenous groups, and international development agencies on themes such as Logistics and Connectivity; Investment Climate; and, Skills and Productivity.

Low growth, high unemployment, especially for youth and women, high debt ratios (eight of the top twelve most indebted countries in the world are in Caribbean), high incidence of crime, and, growing vulnerability to external shocks characterize the region. In the wake of the global financial crisis, the high debt/low growth challenge has become even more acute.

A number of Caribbean countries reached out to international donors to find an innovative approach to the growth challenge in the region. A suggestion was made to launch a genuinely participatory growth initiative. Following consultations and some preparatory work, the program started in mid-2012 with a regional launch event in Jamaica. The process is supported and facilitated by the World Bank, the Inter-American Development Bank, the Caribbean Development Bank, Compete Caribbean and the European Union.

Key Outcomes

Positive outcomes are tangible: twelve countries formally joined the process by establishing their national CGF chapter and have completed the first phase of national dialogue. This effort has led to the prioritization of concrete and actionable activities and draft action plans are now available, with details on each activity’ implementation plan (e.g., accountabilities, milestones, timeline, funding). The results of each country’s dialogue were presented at three regional forum in The Bahamas in June 2013, in St. Kitts and Nevis in 2014, and in St. Lucia in June 2015. This allowed national stakeholders from government, private sector and civil society to compare notes on each other’s’ priorities and exchange ideas on solutions to each identified challenges with technical specialists and peers. Each government involved in the CGF also committed to follow-up on implementation of the reform agenda, to report back periodically on progress (every 4-5 months) and to enable independent monitoring of the reforms by private sector and civil society representatives.

Comprehensive Debt Framework - At the request of the Heads of Government of CARICOM, the Bank put together a Comprehensive Debt Framework that proposes a strategy for addressing the high debt challenge faced in the OECS in a sustainable way. This Framework proposes a holistic approach around four interdependent pillars (Supporting private sector led growth, including private sector development and financial sector stability; Enhancing fiscal sustainability; Improving climate change resilience and Disaster Risk Management; and Debt resolution). The Framework has been rolled out in all the OECS, including Dominica. The Governments expressed interest in principle, in continue to work with the World Bank and other development partners to develop policy measures that could help stimulate growth and reduce debt in the country.

In terms of analytical products, the Bank has completed a series of studies related to public expenditure, fiscal and debt sustainability, growth and competitiveness, the financial sector, public sector management and social protection. The ongoing dissemination of these reports represents a key instrument for policy dialogue with the OECS governments, including St. Lucia.

The Bank’s program in St. Lucia is further supported by a comprehensive series of completed, ongoing and planned analytical and advisory activities, including the following: “Towards a New Agenda for Growth” – OECS growth and competitiveness study (2005); an OECS Skills Enhancement Policy Note (2006); a Caribbean Air Transport Report (2006); a regional study on Crime, Violence, and Development: Trends, Costs, and Policy Options in the Caribbean (2007); an OECS Private Sector Financing Study (2008); the OECS Tourism Backward Linkages Study (2008); the report titled “Caribbean – Accelerating Trade Integration: Policy Options for Sustained Growth, Job Creation and Poverty Reduction” (2009); a study on the Nurse Labor & Education Markets in the English-Speaking CARICOM: Issues and Options for Reform (2009); and Caribbean Regional Electricity Supply Options: Toward Greater Security, Renewable and Resilience (2011). A number of recent analytical works have also been disseminated in the context pf the CGF process. A number of knowledge products are expected to be disseminated this year, including “Driving tourism in the Eastern Caribbean: The case for a regional Ferry”; “Trade matters: new opportunities for the Caribbean”; “Linking farmers and agro-processors to the tourism industry in the OECS”; and the “OECS Growth report”.

Relations with the Caribbean Development Bank (CDB)

1. The Caribbean Development Bank (CDB) has been an important development partner in St. Lucia (STL) and is currently the island’s largest multilateral donor. Interventions have been aimed at facilitating sustainable development by supporting investments in social and economic infrastructure, as well as creating a more enabling policy environment. Specifically, CDB has been involved in areas such as: (i)development of physical infrastructure; (ii) public financial management; (iii) human resource development; (iv)support to the productive sectors; and (v) community-based poverty reduction.

2. In 2012, the Bank approved a country assistance strategy with an indicative resource envelope of $88.5 mn to guide operations in STL over the period 2013-16. Given STL’s vulnerability to economic shocks and natural hazards, the main strategic objective of the programme was to assist in building social and economic resilience by: (i) improving efficiency of social and economic infrastructure; (ii) increasing the contribution of the agricultural sector; (iii) enhancing youth outcomes; (iv) enhancing the viability of small and medium-sized enterprises (SMEs); and (v) improving management capacity in order to reduce vulnerability to natural hazards and economic shocks. Importantly, recognising the impact of gender and environmental/climate change factors on a country’s ability to achieve sustainable development outcomes, these issues are treated as cross-cutting themes in the assistance strategy.

3. STL has utilised the Bank’s resources extensively over the years and at the end of 2014, was the third largest recipient of CDB assistance. Cumulative loans, contingent loans and equity and grants totalled $409.2 mn between 1970 and 2014. Of this amount, just over half was approved from Ordinary Capital Resources (OCR) with the remainder being sourced from the “soft” window.

4. One loan amounting to $14.8mn was approved in 2015 for the rehabilitation of the John Compton Dam. Fundamentally, the project seeks to improve the reliability and sustainability of the water supply to the north of island by: (a) increasing the storage capacity of JCD through sediment removal; (b) establishing operational procedures for sediment removal and management; (c) rehabilitating JCD structure and monitoring equipment; and (d) reducing the potential for landslides within the Roseau watershed. The project also provides inter alia institutional strengthening for the utility provider by building capacity in financial management, support for a climate action plan and the mainstreaming of gender concerns in provider’s polices and operations. Other interventions during the year were direct poverty reduction support and capacity enhancement for small and medium sized enterprises.

5. Notwithstanding the Bank’s significant involvement in St. Lucia, net resource flows have been negative over the 2010 to 2014 period and preliminary indications are that 2015 will follow the trend (see Table 1 below). This has largely been due to implementation capacity issues and the availability of alternative funding sources. The most significant disbursements during the period 2013 to 2015 were for lines of credit to support private sector development, reconstruction following the passage of Hurricane Tomas, education sector enhancement, and a policy based loan in support of macroeconomic reforms.

Table 1.Portfolio Flows
Item2010201120122013201420152
(a) Disbursements20.44.47.211.116.07.6
(b) Principal Repayments10.511.711.412.312.013.2
(c) Net Disbursements (a-b)9.9(7.3)(4.2)(1.2)4.0(5.6)
(d) Interest Payments6.05.44.84.74.74.5
(e) Other charges0.10.20.20.20.20.1
(f) Net cash flow (c-d-e)3.8(12.9)(9.2)(6.1)(0.9)(10.2)

Statistical Appendix

As of October 22, 2015
I. Assessment of Data Adequacy for Surveillance
General: Data provision has some shortcomings, but is broadly adequate for surveillance. Although the statistical database compares well and in some areas has a broader coverage than those of its Eastern Caribbean Central Union (ECCU) peers, the accuracy and timeliness of macroeconomic statistics should be improved in order to achieve more effective economic analysis and policy formulation. There are weaknesses in coverage, frequency, quality, and timeliness, in particular regarding the national accounts, data on the public sector beyond the central government, and the balance of payments.
National Accounts: Nominal GDP data are compiled using the production and expenditure approaches on an annual basis. Real GDP data are compiled only using the production approach. Since 2011, real GDP estimates are compiled with 2006 as the new base year. GDP estimates are available about four months after the end of the year and are usually finalized with a two-year lag. Household final consumption expenditure is derived residually. No explicit changes in inventories series are disseminated.

No official quarterly GDP estimates are disseminated, but a pilot project is currently underway, with technical assistance from CARTAC, to compile these. CARTAC has provided technical assistance since May 2011 on quarterly GDP compilation, with St. Lucia serving as a pilot for the ECCU countries..

Additional technical and human resources are required to implement the new developmental work in the area of National Accounts.
Price Statistics: The rebasing exercise of the CPI has been completed—the new CPI basket (base January 2008) is based on the 2006 Household Expenditure Survey. No export and import price indices are compiled, nor a producer price index.
Government Finance Statistics: Reporting of central government data has improved over the last few years, but deficiencies remain in the compilation of both government and public sector statistics. The authorities report monthly data on the central government’s current revenue and expenditure, using a non GFSM 2001 presentation with lags of a couple of months. Fiscal data for publication in the GFS Yearbook or in IFS have been reported to STA in 2013 and 2014, which were converted to a GFSM 2001 presentation by IMF staff. The authorities would thus benefit from moving to a complete GFSM framework for the compilation of Government Finance Statistics. Additionally, frequent and substantial revisions suggest that there is a need for further refinement, including improvements to accounting systems for capital expenditures to record outlays associated with grant-financed projects as they are realized. Data for the rest of the public sector (financial and nonfinancial public corporations) are not readily available and should be compiled on a regular basis to improve fiscal monitoring of the overall general government.
Monetary and Financial Statistics: Monthly monetary statistics (for central bank and other depository corporations) are compiled and reported to the Fund by the ECCB, based on the standardized report forms, since July 2006. In April 2007, a data ROSC mission assessed the monetary statistics with reference to the GDDS and the Data Quality Assessment Framework (DQAF, July 2003). It indicated that the institutional coverage of other depository corporations is incomplete, as data for mortgage companies, finance companies, building societies, and credit unions—all of which accept deposits—are excluded. Also, accrued interest is not incorporated in the value of the interest-bearing assets and liabilities, and valuation adjustments are included in other liabilities. In addition, source data for the commercial banks do not provide the disaggregation recommended by the Monetary and Financial Statistics Manual and Compilation Guide. Close coordination between the ECCB and the single regulatory unit (which supervises financial corporations other than those licensed under the Banking Act) is crucial.. Monetary and financial statistics missions visited the ECCB in November 2009 and November 2014. As a result, the quality of monetary statistics improved, but coverage of the ODC sector continues to be incomplete, including only commercial banks.
Financial sector surveillance: The ECCB compiles financial soundness indicators (FSIs) for its member countries, including St. Lucia, but does not report FSIs to STA for dissemination on the IMF’s website due to confidentiality reasons.
External sector statistics: The ECCB reports annual balance of payments data of its eight members (including St. Lucia) for publication in the Balance of Payments Statistics Yearbook (BOPSY) and the International Financial Statistics (IFS). The compilation of balance of payments statistics for the ECCU and member states is a joint exercise between the ECCB and its members. The quality of major components of the balance of payments in the region needs to be improved, including the recording of goods imports, travel credits, private transfers, and direct investment transactions.. Timeliness of balance of payments statistics should be improved as well. CARTAC has provided technical assistance to the ECCB and the member economies to improve the quality of external sector statistics and to introduce new survey forms, which were used to collect 2014 data. The new survey forms are aligned with the sixth edition of the Balance of Payments and International Investment Position Statistics Manual (BPM6) and also collected, for the first time, data for the production of international investment position (IIP) statistics. It is expected that 2014 data based on the results of the surveys will be disseminated by December 2015. The Ministry of Finance has a detailed statistics for public sector external debt and publicly guaranteed private sector external debt (St. Lucia reports public and publicly guaranteed external debt data to the Quarterly External Debt Statistics (QEDS) database). Data on private external debt are not available yet.
II. Data Standards and Quality
St. Lucia is a participant in the General Data Dissemination System (GDDS), which has been superseded by the enhanced GDDS (e-GDDS) since May 2015. Its metadata, which include detailed plans for statistical development in the main macroeconomic areas over the short and medium term, have been posted on the Fund’s Dissemination Standards Bulletin Board (http://dsbb.imf.org) since September 1, 2004, although updates are needed.A Data ROSC for the monetary sector was conducted in 2007, covering the ECCB and ECCU member countries, including St. Lucia.
Appendix I: Table of Common Indicators Required for Surveillance
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of Publication7
Exchange RatesFixed rateNANANANA
International Reserve Assets and Reserve Liabilities of the Monetary Authorities17/20159/18/15MMM
Reserve/Base Money10/7/2015MMM
Broad Money10/7/2015MMM
Central Bank Balance Sheet10/7/2015MMM
Consolidated Balance Sheet of the Banking System10/7/2015MMM
Interest Rates27/201510/7/2015MMM
Consumer Price Index6/20158/28/2015MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government412/201310/9/2015MMH
Revenue, Expenditure, Balance and Composition of Financing3– Central GovernmentQ1/201410/8/2014MMM
Stocks of Central Government and Central Government-Guaranteed Debt53/20156/11/2015QHH
External Current Account Balance20142/27/2015AHH
Exports and Imports of Goods and Services20142/27/2015AQQ
GDP/GNP20147/2/2015AAA
Gross External Debt
International Investment Position6

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

1

CARIFORUM comprises the 15 Caribbean countries of CARICOM (i.e., Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago), and the Dominican Republic.

2

As at Dec 10

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