IMF has concluded Article IV consultation with St Lucia. In its concluding statement, IMF said
St. Lucia projected to grow by 1.9% and near-term growth prospects are favorable, supported by large infrastructure investments and robust tourist inflows. Growth picked up in 2019 with record growth in tourism activities more than offsetting a contraction in construction.
Prudent fiscal policies in recent years, supported by revenues from the citizenship-by-investment program (CIP), have helped to stabilize public debt as a share of GDP. The still elevated level of public debt, currently at 65 percent of GDP, leaves the government with little fiscal space to react to shocks.
IMF warned that The need to invest in climate resilience and the uncertainty over future CIP revenues pose additional challenges to public finances. IMF further advised St Lucia to use surplus CIP revenues on a self insured fund for economic resilience against natural disasters.
The fiscal measures that have been announced—including reforms to the personal income tax and the residential property tax—are expected to be budget neutral in the near term, said IMF.
The St Lucia CIP is the youngest CIP in the caribbean launched in 2015. During the 2018/19, the scheme has earned $22.5 m revenues for Government, according to the latest statistics.
St Lucia is yet to attract significant real estate investment, until now only one hotel project has been a approved under the citizenship scheme. The neighboring countries Dominica and St Kitts have significantly benefited from attracting five star luxury hotel investments funded by CBI scheme.
