## ECCU CBI Programs: Regional Significance and Risks ## Source details **Canonical URL:** [ECCU CBI Programs: Regional Significance and Risks](https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025067.pdf) ## Other formats - [Markdown version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025067.pdf.md) - [Structured JSON version](/-/media/files/publications/selected-issues-papers/2025/english/sipea2025067.pdf.json) --- ### Executive summary - The Citizenship-by-Investment (CBI) programs are an important fiscal revenue source in the Eastern Caribbean Currency Union (ECCU) but their broader economic contributions are less clear due to limited transparency. - Staff estimates indicate total CBI investments substantially exceed government CBI revenue, implying a large, but incompletely documented, role in private construction and tourism development. - Given volatile investor demand and recent international scrutiny, regional coordination and strengthened risk management are essential to mitigate fiscal, macro, and financial integrity risks. ### Scale, transparency, and data limitations - Government CBI revenue for the five ECCU members with programs (“CBI-5”) averaged 6½ percent of GDP between 2019 and 2023 and increased to nearly a third of total non-grant revenue in 2023. - Staff estimates suggest total 2023 CBI inflows may have amounted to around a fifth of the union’s GDP, far exceeding recorded government revenue. - Data availability across members is uneven: - Antigua and Barbuda: Semi-annual reports on applications received, NDF investment contributions, number of passports issued, NDF government transfers, geographic distribution of applications. - Dominica: Fiscal accounts only. - Grenada: Monthly statistics on applications received and processed, passports issued, NTF and real estate investment volumes, fees, NTF government and contingency fund transfers, geographic distribution of applications. - St. Kitts and Nevis: Fiscal accounts only. - St. Lucia: Annual reports on applications received and processed, NEF and bond investment volumes, fees, geographic distribution of approved applications and CIU unit financials. - Limited disclosure on direct project investments (e.g., escrow-organized real estate projects) impedes precise quantification of economic impacts and obscures recording in balance of payments statistics. ### Economic contributions and transmission channels - CBI investment options include donations to government-owned funds and direct investment in government-approved projects, typically tourism real estate managed by external developers; direct project investments are often subject to minimum holding periods. - Estimated 2023 range implications: - Direct CBI project investment in 2023 is estimated at about 100-170 percent of the total recorded FDI inflows (aggregate for ECCU CBI-5). - In 2023, the estimated range of total CBI inflows corresponds to around 40-55 percent of ECCU aggregate tourism exports (tourism exports made up around ¾ of total ECCU exports). - CBI inflows likely provided foreign exchange stability during the Covid-19 tourism shock, when current account deficits widened to nearly 20 percent of GDP and were largely financed by capital account inflows, including government CBI donation and FDI. - High import content of qualifying projects may temper the GDP growth impact; escrow accumulation and pre-construction purchases can delay investment benefits and lead to project valuation uncertainty. ### Risks and recent adverse outcomes - Demand determinants are varied and unpredictable; abrupt demand shortfalls can expose fiscal and macro-stability vulnerabilities. - Example: In St. Kitts and Nevis, a recent sharp decline in CBI revenue widened the 2024 fiscal deficit to 11 percent of GDP. - CBI programs expose host countries to AML/CFT and financial integrity risks; lapses in due diligence could jeopardize correspondent banking relationships and citizens’ international mobility. - International scrutiny (e.g., FATF/OECD findings and EU visa-suspension mechanisms) and reputational risks have intensified. ### Regional reforms, coordination, and regulatory response - Heightened international scrutiny prompted greater regional coordination and substantial regulatory reforms among ECCU CBI-5 members. - Key collective initiatives and status: - US-Caribbean Roundtable Principles (February 2023): items implemented or in progress include collective treatment of denied applications, interview requirement, additional application screening through FIUs, strengthened passport retrieval processes, suspension of new applications from Russia and Belarus (implemented end-March 2023), and training programs. - March 2024 Memorandum of Agreement (MoA): implemented harmonization of minimum investment thresholds to US$ 200,000 (Implemented in Summer 2024); additional elements in progress include strengthened JRCC information sharing, enhanced transparency standards and independent audits, establishment of a regional CBI regulator (interim regulatory commission initiating legislative drafting), additional due diligence for approved citizens, common standards for communication/promotion/regulation of CBI agents, and agreement to facilitate joint training and capacity building initiatives. - Some programs are investigating past irregularities, with a few revoked investor passports. ### Policy recommendations and management measures - Reduce budget reliance on CBI revenues: - Implement clearer provisions for CBI revenues’ budget use to manage volatility and facilitate medium-term fiscal and public investment planning. - Enhance CBI investment transparency and data standards: - Use the planned regional CBI regulator to establish common data transparency standards on all CBI inflows and their use. - Require standardized ex-post CBI project assessments on economic outcomes to inform best practices and optimize program design. - Improve recording of developer escrow account in- and outflows to better capture CBI project financing in BoP statistics (consistent with recent CARTAC recommendations). - Strengthen financial integrity and risk management: - Maintain multi-layered applicant screening (authorized agents, banks’ origin-of-funds assessments, international due diligence firms, JRCC, domestic FIUs). - Conduct annual/biennial program audits and enhance cooperation for revoked passport retrieval. - Prepare contingency plans: - Use improved transparency and standardized reporting to assess systemic significance of CBI flows union-wide and to develop fiscal and external contingency measures. ### Key statistics and figures from the paper - Average government CBI revenue (CBI-5) between 2019–2023: 6½ percent of GDP. - Share of total non-grant revenue in 2023: nearly a third. - Estimated total 2023 CBI inflows: around a fifth of the union’s GDP. - Estimated 2023 direct CBI project investment relative to recorded FDI inflows: about 100-170 percent. - Estimated 2023 total CBI inflows relative to ECCU aggregate tourism exports: around 40-55 percent. - ECCU tourism exports constituted around ¾ of total ECCU exports. - ECCU current account deficits widened to nearly 20 percent of GDP during the tourism collapse in 2020–21. - St. Kitts and Nevis 2024 fiscal deficit widened to 11 percent of GDP due to sharp decline in CBI revenue. - Harmonized minimum investment threshold agreed in March 2024 MoA: US$ 200,000 (Implemented in Summer 2024). - Paper completion date and basis: based on information available at the time it was completed on April 9, 2025. *Prepared by Janne Hukka; IMF Selected Issues Paper SIP/2025/067.* --- _Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025067.pdf_