An IMF mission visited St. Lucia during April 23-May 4, 2018, for the annual Article IV consultation discussions on economic developments and macroeconomic policies.
The following are the important points mentioned in the IMF report
- Favorable external conditions and a mild fiscal stimulus sustained growth in 2017. Continued strong demand from major source markets, the opening of a large new hotel and additional airlift lifted the tourism sector, which experienced the fastest growth in stay-over tourist arrivals in the Caribbean, and benefited from a recovery of cruise-ship visitors.
- Tourism-related FDI and public investment supported strong activity in construction.
- Higher oil prices led to inflation turning positive.
- Agriculture production declined, owing to the lingering impact of Hurricane Matthew.
- Authorities have secured significant concessional borrowing from Taiwan, Province of China. These loans will finance the revamping of the road network and the airport, the latter of which will be repaid with extra budgetary revenues (the Airport Development Charge).
- Public debt now just over 70 percent of GDP and rising, it is necessary to capitalize on the growing economy to reverse this trend.
- St. Lucia is the first Caribbean nation to complete a pilot Climate Change Policy Assessment and has just finalized a comprehensive National Adaptation Plan.
- Financial protection against natural disasters requires a layered approach, involving a broad set of tools, including self-insurance, risk transfer, and financial innovation. Revenues from the Citizenship-by-Investment program (CIP) and the new residency program, together with receipts from a carbon tax, could be used to finance this fund.
- While the loss of correspondent bank relationships (CBR) has been limited, costs for indigenous banks have increased significantly. CBR-related risks would be further reduced by transferring AML/CFT supervisory powers to the ECCB, further strengthening governance and procedures of the Citizenship by Investment Program (CIP), and establishing a plan to meet international standards on tax rules.
Source: IMF
