Dominica CBI revenues fell in 2017, says IMF report

Dominica’s CBI revenues fell in 2017  according to the IMF report concluded the Article IV consultation  with Dominica in June 2018.

The Gross Domestic Product (GDP) in Dominica was worth $560 million US dollars in 2017.  IMF said in the report, although CBI revenue has been high, it fell in 2017, raising the debt burden.

As of December 2017, the authorities had deposits in the banking system equivalent to 24 percent of GDP, largely from their Dominica’s Citizenship by investment (CBI) programme.

On September 18, 2017, category 5 Hurricane Maria hit Dominica while the country was still recovering from tropical storm Erika which wiped out 96 percent of GDP. Maria was Dominica’s worst natural disaster with damage estimated at US$1.3 billion (226 percent of GDP).

CBI revenue follows a conservative path and declines gradually from 13.9 percent of GDP in 2017 to near 2.5 percent of GDP over the medium term.  The baseline scenario assumes conservative revenues from the CBI program, which are projected to decline to 2.7 percent of GDP over the medium-term.

The Non tax revenue from CBI program for 2016/17 are 21.6% of GDP and for 2017/18 are 13.9% of GDP  are

IMF recommended Dominica to improve due diligence and sudden stop in CBI revenues,

• Given the importance of CBI revenue, the government should strengthen program integrity with enhanced due diligence process, while continuing to improve transparency, building on the progress since 2017 with on-budget recording of the full amount of program revenues.
• Main risks to the debt sustainability outlook include sudden stop in citizenship-by- investment (CBI) program revenues, financial instability from weakened balance sheets, and recurrent natural disasters.

IMF concluded in the report that Fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, but was partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.

Dominica recently signed visa waiver with Russia in New York, raising hopes the program will be even more popular in 2018. The Citizenship by investment programme has served as a lifeline for Dominica for emergency funds to recover from natural disasters.