APPENDIX OECS: Relations with the World Bank Group
(As of December 20, 2002)
The OECS has articulated a long-term sub-regional development strategy, contained in the OECS Development Charter and recent communiqués regarding the formation of an Economic Union. The IMF will continue to take the lead in helping the OECS to design regional and national macroeconomic programs aimed at maintaining fiscal sustainability and supporting growth. The IMF will lead the dialogue in macroeconomic policy, including the establishment of fiscal benchmarks, tax and banking reform. The Bank’s program will focus on structural reforms aimed at raising international competitiveness and helping to managing volatility at the macroeconomic and household levels. The Bank will also take the lead on public sector reforms with a particular focus on efficiency of public spending, social expenditures (including safety nets) and disaster and environmental management. The Bank and Fund will work jointly on issues concerning the financial sector, both domestic and offshore. The Bank and the Fund will continue to collaborate with other donors in supporting the OECS, including through the Caribbean Technical Assistance Center in Barbados.
Based on central government balances, including grants.
Grenada and St. Vincent and the Grenadines remain on the FATF list of non-cooperative jurisdictions. Dominica, and St. Kitts and Nevis were removed from the list in 2002.
OECS Heads of government met in early October 2002, followed by a meeting later in the month by finance ministers at a Monetary Council meeting.
The mission did not meet with finance officials. However, issues arising from these discussions have been raised in subsequent Article IV and other discussions including with St. Vincent and the Grenadines, St. Kitts and Nevis and St. Lucia.
As elaborated in Selected Issues Chapter III, January 13, 2003, http://www.imf.org, the ECCB’s benchmarks are based on 1990-1998 averages of these data for member countries that met the criterion of public sector investment of 10-12 percent of GDP, as recommended by the CDB.
In June 2002, Grenada floated a US$100 million bond, and has been using most of the proceeds to retire older more expensive debt and financial leases, and for the repayment of arrears.
St. Kitts and Nevis issued the first government bond on the RGSM in November 2002.
Data on the maturity structure of domestic debt was not available.
In St. Lucia, clearance of tax arrears is required before approval is granted for profit remittances above EC$250,000.
The preferential tariff and quota regime for banana exports to the EU will be phased out and be replaced by WTO-compatible tariff regime by 2006. The regime for sugar exports will be phased out by 2009.
The final phase stipulates lowering the common external tariff (CET) to a maximum of 20 percent for non-agricultural products, while agricultural products attract a maximum tariff of 40 percent. Antigua and Barbuda and St. Kitts and Nevis have yet to reach the final phase, by lowering their non-agricultural tariffs from a maximum of 25 percent.
The Fund’s trade restrictiveness indices for ECCU countries are: Antigua and Barbuda, 7; Dominica, 6; Grenada, 6; St. Kitts and Nevis, 6; St. Lucia, 5; and St. Vincent and the Grenadines, 5. These indices indicate that the trade regimes are moderately restrictive.
Unemployment data in the region are especially weak. Recent estimates of the unemployment rate range from 8 percent in Antigua and Barbuda, 12 percent in Grenada, 16 percent in Dominica, 18 percent in St. Lucia, and 20 percent in St. Vincent and the Grenadines.
The regional perspective of such discussions is intended to strengthen the bilateral discussions that the IMF holds with the members in the region under Article IV of the IMF’s Articles of Agreement. A staff team staff team visits the region, collects economic and financial information, and discusses with officials of the regional institutions the region’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarized the views of Executive Directors, and this summary is transmitted to the country authorities in the region.