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IMF Country Report No. 20/157
ST. LUCIA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY—PRESS RELEASE; AND STAFF REPORT
May 2020
In the context of the Request for Disbursement Under the Rapid Credit Facility, the following documents have been released and are included in this package:
A Press Release.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on April 28, 2020, following discussions that ended on April 15, with the officials of St. Lucia on economic developments and policies underpinning the IMF disbursement under the Rapid Credit Facility. Based on information available at the time of these discussions, the staff report was completed on April 21, 2020.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the World Bank.
The documents listed below will be released.
Letter of Intent sent to the IMF by the authorities of St. Lucia*
*Also included in the Staff Report.
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
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© 2020 International Monetary Fund
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ST. LUCIA
REQUEST FOR DISBURSEMENT UNDER THE RAPID CREDIT FACILITY
April 21, 2020
Executive Summary
Context. St. Lucia, a tourism-dependent economy in the Caribbean, has been hit hard by the COVID-19 pandemic. Tourism exports, which in a typical year would account for nearly 90 percent of the country’s foreign exchange earnings, have come to an abrupt halt with widespread cancellations spreading out into the foreseeable future. The economy is now projected to contract by 8.5 percent in 2020. More severe local outbreaks of COVID-19 could cause additional widespread and prolonged disruptions to economic activity.
Request for Fund support. Reflecting the large external financing gaps arising from the sharp contraction of net exports and the significant fiscal needs to immediately increase public health spending, the authorities are seeking financial assistance under the Rapid Credit Facility (RCF) exogenous shock window of SDR 21.4 million, equivalent to 100 percent of quota, to be used for budget support. Staff supports this request.
Macroeconomic policies. Near-term policies should focus on mobilizing external financing and maintaining macroeconomic stability. Given the large common shock to the ECCU, regional policy coordination is key to ensure resources are available for member states to respond to the crisis. The authorities will monitor the economic, fiscal and financing conditions in the coming months. Should conditions deteriorate beyond expectations, they will consider requesting a follow up longer-term upper credit tranche arrangement with the Fund. The authorities are committed to meeting their 2030 public debt target and have indicated that they intend to underpin fiscal sustainability by introducing revenue-enhancing measures once the immediate crisis has moderated, adopting a fiscal rule to guide the pace and composition of the medium-term fiscal consolidation, and increasing public investments over the medium-term on health, education and resilience against natural disasters and climate change. The authorities are also committed to further strengthening financial supervision and regulation in order to safeguard macro-financial stability.
Approved By
Nigel Chalk (WHD) and Craig Beaumont (SPR)
Discussions took place via conference calls on April 13–15, 2020. The team comprised Messrs. Ding (head), Hukka, Timmer, Vargas (all WHD) and Wu (ICD). Mr. Mooney (OED) joined the meetings. The IMF team held meetings with the Honorable Prime Minister Chastanet, Permanent Secretary Rigobert, other senior government officials and representatives of financial institutions. Mr. Landeta and Ms. Vishvesh assisted in the preparation of the staff report.
Contents
RECENT DEVELOPMENTS
IMPACT OF COVID -19
AUTHORITIES’ POLICIES TO ADDRESS THE CRISIS
RISKS
DEBT SUSTAINABILITY
MODALITIES OF SUPPORT
AUTHORITIES’ VIEWS
STAFF APPRAISAL
FIGURES
1. Recent Developments
2. External Sector Developments
TABLES
1. Selected Social and Economic Indicators, 2016–25
2a. Central Government Operations, 2016–25 (In millions of EC Dollars)
2b. Central Government Operations, 2016–25 (In percent of GDP)
3. Balance of Payments Summary, 2016–25
4. Indicators of Capacity to Repay the Fund 2020–30
ANNEX
I. Debt Sustainability Analysis
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