Front Matter Page
IMF Country Report No. 18/179
ST. LUCIA
2018 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR ST. LUCIA
June 2018
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2017 Article IV consultation with St. Lucia, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Director as expressed during its June 13, 2018 consideration of the staff report that concluded the Article IV consultation with St. Lucia.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on June 13, 2018, following discussions that ended on May 4, 2018 with the officials of St. Lucia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 31, 2018.
An Informational Annex prepared by the IMF Staff.
A Statement by the Executive Director for St. Lucia.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623–7430 • Fax: (202) 623–7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2018 International Monetary Fund
Front Matter Page
ST. LUCIA
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION
May 31, 2018
Key Issues
Context. Robust growth is supported by strong tourism, FDI inflows, and infrastructure investment, but the medium-term outlook presents significant challenges. Reflecting increased spending, the fiscal position has weakened, and public debt remains well above the ECCU target and continues to rise. The financial sector continues to be impaired by high nonperforming loans, and structural bottlenecks, including high costs of energy, limit growth prospects
Reaching fiscal sustainability and resilience to climate change. Attaining the ECCU debt target requires an ambitious fiscal effort, possibly supported by a fiscal rule. Appropriate mitigation and adaptation policies, described in the Climate Change Policy Assessment (CCPA) pilot, will help build resilience to natural disasters and generate a growth dividend that would contribute to fiscal consolidation.
Financial recovery and strengthening. Prompt action is needed to remove remaining obstacles to the resolution of bank non-performing loans (NPLs). Rapid growth of the non-bank financial sector calls for strengthened regulation and supervision.
Boosting sustainable growth, diversifying the economy, and reducing structural unemployment. Reforms are needed to address tourism infrastructure and linkages to the rest of the economy, labor market weaknesses, renewable energies, and the business climate.
Approved By
Krishna Srinivasan (WHD) and Mary Goodman (SPR)
Discussions for the 2018 consultation took place in Castries on April 23 – May 4, 2018. The team comprised Messrs. Bonato (head), Salinas, Vargas (all WHD), Ms. Sola (SEC), and Ms. Wickham (local IMF economist). Messrs. Srinivasan (WHD) and Williams (OED) joined the final policy discussions. The mission met with the Honorable Prime Minister Chastanet, the Honorable Minister in the Department of Finance Raymond, Director of Finance Thomas and other senior government officials, representatives of the opposition, the private sector, and labor unions. Ms. Tibung and Ms. El Kawkabi and Messrs. Brito and Vasquez assisted in the preparation of the staff report.
Contents
RECENT DEVELOPMENTS AND OUTLOOK
A. Context
B. Current Trends
C. Outlook and Risks
POLICY DISCUSSIONS
A. Attaining Fiscal Sustainability and Resilience to Climate Change and Natural Disasters
B. Strengthening the Financial Sector
C. Removing Structural Obstacles to Growth
D. The Authorities’ Position
STAFF APPRAISAL
FIGURES
1. Stronger Growth and External Balance on Account of Rising Tourism Inflows
2. Persistent Weaknesses in the Financial Sector
3. Baseline Passive and Adjustment Scenarios
4. External Competitiveness and Structural Weaknesses
5. Unemployment
TABLES
1. Selected Social and Economic Indicators, 2014–2023
2a. Central Government Operations, 2014–2023 (In millions of EC dollars)
2b. Central Government Operations, 2014–2023 (In percent of GDP)
3. Balance of Payments Summary, 2014–2023
4. Monetary Survey, 2014–2018
5. Banking System Summary Data, 2010–2017
6. Selected Labor Market Indicators, 2010–2017
ANNEXES
I. Implementation of Previous Staff Advice
II. Risk Assessment Matrix
III. External Sector Assessment
IV. Debt Sustainability Analysis
V. Sensitivity of Public Debt Profile to Changes in International Interest Rates
VI. Policy Trade-Offs in Building Resilience to Natural Disasters
Front Matter Page
ST. LUCIA
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
May 29, 2018
Prepared By
Western Hemisphere Department (in consultation with other departments and the Caribbean Regional Technical Assistance Center, CARTAC)
Contents
FUND RELATIONS
RELATIONS WITH OTHER INTERNATIONAL FINANCIAL INSTITUTIONS
STATISTICAL APPENDIX
Front Matter Page
Press Release No. 18/248
FOR IMMEDIATE RELEASE
June 20, 2018
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202–623–7100
Fax 202–623–6772
