Press Release: IMF Executive Board Completes Seventh Review of Dominica's PRGF Arrangement, Approves US$1.8 Million Disbursement
December 14, 2006Press Release No. 06/275
The Executive Board of the International Monetary Fund (IMF) has completed the seventh and last review of Dominica's performance under its three-year Poverty Reduction and Growth Facility (PRGF) arrangement. As a result of the Executive Board's completion of the review, Dominica can draw an amount equivalent to SDR 1.2 million (about US$1.8 million) under the PRGF arrangement, which will bring total disbursements to SDR 7.7 million (about US$11.6 million). The Executive Board approved Dominica's three-year PRGF arrangement on December 29, 2003 (see Press Release No. 03/228).
Following the Executive Board's discussion of Dominica, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, made the following statement:
"The Dominican authorities have continued to implement their economic program successfully, and macroeconomic performance has strengthened further. Economic activity is expanding strongly in almost all sectors, with buoyant domestic demand and indications of a rebound in private sector confidence. Progress has also been made with structural reforms.
"The strong fiscal performance in FY2005/06 and the stance of the FY 2006/07 budget reflect the authorities' commendable commitment to implement prudent fiscal policies. The primary surplus envisaged in the FY 2006/07 budget will allow further progress toward the medium-term sustainability of public finances and debt. Measures to streamline public sector employment and strengthen public financial management are being implemented. The authorities are committed to expanding revenue reforms. The value-added tax (VAT) regime is operating well; and the authorities are committed to continued monitoring going forward to avoid its weakening.
"Key reforms in the economic program are the recent amendments to the Electricity Supply Act and related legislation, and the approval of measures to eliminate the unfunded liability of the Dominica Social Security (DSS) and to strengthen the AID Bank. The authorities recognize that these reforms need to be supplemented by other structural measures, including amendments to the Finance Administration Act, approval of the Financial Services Unit Act, and reform of the Dominica Export Import Agency (DEXIA). Accelerating the implementation of these structural reforms will help bolster private sector-led growth.
"Significant progress has been made recently in debt restructuring, and the authorities are making good-faith efforts to reach collaborative restructuring agreements with their remaining creditors.
"The approach taken in the authorities' Growth and Social Protection Strategy (GSPS) to reduce poverty and unemployment appears appropriate. Continued collaboration between donors and the authorities should facilitate timely donor support," Mr. Portugal said.