## _cr08118 - 2007. At that time, Directors commended the authorities for their continued commitment to

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### Executive summary and key figures
- Hurricane Dean (August 2007) caused estimated damage of about US$60 million (20 percent of GDP).
- Loss of export earnings is estimated at about US$9 million (3 percent of GDP).
- Government expects to spend an additional US$7½ million (2½ percent of GDP) financed by external grants primarily from CARICOM Petroleum Facility.
- Authorities requested a purchase of Emergency Assistance (ENDA) equivalent to SDR 2.05 million (25 percent of quota).
- Government committed to a primary surplus target of 3 percent of GDP over the medium term and will vary the implementation schedule of planned income tax reforms to secure it.
- Risks to the Fund’s resources exist due to very high public debt levels and hurricane effects, but are mitigated by:
  - Authorities’ commitment to prudent policies;
  - Medium-term fiscal targets providing for further reduction in debt levels;
  - Expectation of continued support from the international community.

### Background and immediate aftermath
- Hurricane Dean struck Dominica during August 16–17, 2007, causing torrential rain, landslides, and severe road damage; agriculture (particularly bananas) took the brunt of the damage; tourism largely unscathed.
- Overall damage: about US$60 million, nearly 20 percent of GDP, including loss of export earnings of some US$9 million, 3 percent of GDP.
- CARICOM Petroleum Facility provided an emergency grant of US$7½ million (2½ percent of GDP). Other external donors (including South Korea and the Caribbean Development Bank) provided small disaster relief grants.
- An earthquake on November 29 (7.4 on the Richter scale) triggered a payout of about US½ million under the Caribbean Catastrophe Risk Insurance Facility; damage was minimal.
- Authorities’ letter dated January 17, 2008 requested a purchase equivalent to 25 percent of quota (SDR 2.05 million) under ENDA and a subsidy to reduce the rate of charge down to ½ percent per annum, subject to availability of subsidy resources.

### Economic performance prior to the hurricane
- Real output grew by 4 percent in 2006, the strongest in nearly two decades.
- Inflation was 3½ percent in July 2007.
- Public finances improved under the PRGF-supported program (2003–06): primary surplus rose to 6¾ percent of GDP in FY 2006/07 from -1½ percent of GDP in FY 2002/03.
- Public debt declined to around 100 percent of GDP at the end of the fiscal year.
- 2007/08 budget outlined multiyear reform of personal income tax consistent with a primary surplus of about 3 percent of GDP; reform could result in revenue losses of 1 percent of GDP annually over the short term and possibly rising to about 2 percent of GDP per year over the medium term.
- External current account deficit widened in first half of 2007 due to surge in construction material imports, higher oil bill, and weak regional tourism.
- Net foreign assets of the banking system rose by EC$110 million to EC$500 million through July 2007.
- Credit union sector total assets: EC$367 million (45 percent of GDP); accounts not routinely inspected by any government agency.
- Structural reforms continued: creation of dedicated agencies for tourism and investment promotion, steps toward independent regulatory commission for energy sector, strengthened land registry services, streamlined foreclosure arrangements.

### Economic impact of the hurricane and medium-term outlook
- Preliminary estimate: GDP growth fell to around 1 percent in 2007.
- Expected rebound to pre-hurricane trend growth of about 3 percent in the following year as recovery efforts take effect.
- Fiscal impact largely on expenditure side; additional spending needed for infrastructure rehabilitation and assistance is estimated at 2½ percent of GDP (after expected reallocation of FY 2007/08 budget expenditure).
- Balance of payments and reserves impacts:
  - Exports estimated to have declined by 8 percent (y/y) in 2007 and projected to fall by a further 18 percent in 2008.
  - Imports estimated to have risen by 9 percent in 2007 and projected to grow by 6 percent in 2008.
  - Current account deficit expected to widen by almost 4 percent of GDP in 2007 (relative to 2006) to 23 percent of GDP, rising by another 3½ percent of GDP in 2008.
  - Net foreign assets of the banking system projected to decline by around 8 percent of GDP from the July 2007 level.
- Banking system judged well-positioned to weather effects; credit unions concentrated in banana areas could see increases in past due loans.

### FY 2007/08 fiscal profile (In percent of GDP)
- Revenue and grants: 37.7 (2006), 41.7 (2007 Art. IV), 43.6 (ENDA)
- Revenue: 31.3 (2006), 32.5 (2007 Art. IV), 32.5 (ENDA)
- Grants: 6.5 (2006), 9.2 (2007 Art. IV), 11.5 (ENDA)
- Total expenditure: 36.9 (2006), 40.9 (2007 Art. IV), 43.2 (ENDA)
- Capital expenditure: 8.9 (2006), 10.8 (2007 Art. IV), 13.1 (ENDA)
- Overall balance: 0.8 (2006), 0.8 (2007 Art. IV), 0.8 (ENDA)
- Primary balance: 3.0 (2006), 3.0 (2007 Art. IV), 3.0 (ENDA)

### Policy response and reconstruction strategy
- Two-pronged strategy:
  - Immediate repair of critical infrastructure and provision of hurricane relief with donor assistance.
  - Development of a comprehensive home-grown program to reactivate the economy and address social needs, drawing on the Growth and Social Protection Strategy (GSPS); government considering a PRGF-supported program.
- Fiscal stance:
  - Maintain budgeted primary balance surplus of 3 percent of GDP in FY 2007/08 and over the medium term.
  - Additional hurricane-related spending to be financed by external grants.
  - Public debt/GDP ratio will decline more slowly than pre-hurricane projections because of lower GDP growth, but will continue to decline because primary surplus target is maintained, a large share of reconstruction expenses will be financed through grants, and hurricane impact on output is expected to be short-lived.
- Tax reform and debt policy:
  - Authorities committed to income tax reform but may vary implementation schedule to protect revenue targets.
  - Will resist pressures to dilute the integrity of the VAT.
  - Will stay current on all debt-service payments and continue efforts toward completing collaborative debt restructuring agreements with holdouts as proposed in 2004 and deal with related arrears (Fund’s policy on lending into arrears does not apply to ENDA).
- Structural reform priorities:
  - (i) maintaining prudent fiscal policies;
  - (ii) enhancing investment climate for private sector development;
  - (iii) strengthening oversight of, and resilience in, the financial sector.
  - Plan to introduce a Financial Services Act early in 2008 to establish regulatory and supervisory framework for the nonbank financial sector.

### IMF decision, ENDA access, and loan terms
- Staff supports the authorities’ request for a purchase under the Fund’s policy on emergency assistance for natural disasters.
- Approved purchase: SDR 2.05 million (25 percent of quota — the access limit).
- Emergency loan terms: subsidized interest rate of 0.5 percent per year; repayment in eight equal quarterly installments over 3.25 to 5 years from the disbursement date.
- Rationale for support: severe damage to the economy and associated large balance of payments needs; authorities’ past track record under the recently expired PRGF arrangement; soundness of policies outlined in the authorities’ letter.
- Staff notes risks to Fund resources from large public debt and small‑island economy vulnerabilities, mitigated by authorities’ fiscal commitments and expected donor support.

### Access, capacity to repay, and debt vulnerabilities
- Purchase represents approximately 1 percent of Dominica’s 2007 GDP.
- Staff expects Dominica will be able to discharge obligations to the Fund in a timely manner based on:
  - declining public sector and external debt trajectory before Hurricane Dean;
  - sound fiscal policy underpinned by targeted primary balance of 3 percent of GDP;
  - economic recovery and improved terms from collaborative debt restructuring initiated in 2004.
- Hurricane increased debt-related risks; notable vulnerability is bunching of payments projected for 2009 and 2012, made more burdensome by ENDA repurchases due in 2011 and 2012.
- Staff judges risks mitigated by Dominica’s commitment to fiscal prudence and government’s 3 percent primary surplus target.

### Selected fiscal, external, and public debt indicators (selected memoranda and projections)
- Emergency assistance approved by IMF Executive Board on February 4, 2008: SDR 2.05 million (about US$3.3 million).
- Damage estimate: EC$162 million (nearly 20 percent of GDP).
- Agriculture earnings forgone: EC$46 million (5 percent of GDP).
- FY 2007/08 fiscal slack limit for net increase in spending: EC$20 million or 2½ percent of GDP.
- Target primary surplus: 3 percent of GDP.
- Net international reserves (US$ millions; end-of-period): 43.6, 44.0, 33.6, 37.6, 51.9, 54.8, 57.0.
- Exports of goods and services (millions of U.S. dollars, memorandum, 2004–12 sample): 129.2, 126.6, 140.4, 144.7, 144.8, 155.3, 162.6, 170.2, 178.4.
- Nonfinancial public sector debt (gross, percent of GDP): 130.8, 130.8, 116.0, 108.1, 101.4, 102.5, 97.6, 92.3.
- External public debt (percent of GDP): 79.6, 84.6, 80.6, 74.8, 70.8, 70.9, 66.7, 62.7, 58.4, 53.4, 48.5, 44.1.
- NPV of public sector debt (percent of GDP): 95.5, 89.3, 85.5, 80.6, 77.2, 74.0, 70.8, 67.7, 52.4.
- NPV of debt-to-revenue ratio (percent): 195.3, 180.2, 165.5, 155.6, 153.7, 147.7, 141.4, 135.1, 104.7, 42.0.
- Debt service-to-revenue ratio (percent): 22.7, 10.2, 13.2, 14.0, 12.2, 13.1, 15.1, 15.2, 14.5, 8.2, 4.3.
- Indicators of financial vulnerability (data refer to September 2007 unless noted):
  - Broad money (percent change, 12-month basis): 7.4, 8.5, 1.0, 5.9, 6.7, 5.7, 3.3.
  - Private sector credit (percent change, 12-month basis): -3.2, -1.4, -2.9, 7.1, 6.0, 4.6, 6.4.
  - Unsatisfactory assets/total loans: 22.6, 19.2, 21.7, 22.5, 22.0, 9.3, 8.4.
  - Total capital/risk weighted assets (locally incorporated banks): 35.4, 34.1, 28.7, 23.5, 26.2, 20.8, 16.4.
  - Net official reserves (in millions of U.S. dollars, end of period): 30.4, 43.6, 44.0, 33.6, 37.6, 51.9, 54.8.
  - Public sector external debt (percent of GDP): 67.5, 79.6, 84.6, 80.6, 74.8, 70.9, 66.7.

### Debt sustainability exercises and stress tests (summary)
- Baseline and sensitivity exercises presented for 2007–27 consider:
  - Baseline NPV of debt-to-GDP and NPV of debt-to-revenue ratios with projected gradual declines.
  - Alternative scenarios and bound tests include: real GDP growth and primary balance at historical averages; primary balance unchanged from 2007; permanently lower GDP growth; one-time 30 percent real depreciation in 2008; 10 percent of GDP increase in other debt-creating flows in 2008.
  - Bound-test outcomes show larger debt ratios under adverse shocks as reflected in tabled NPV debt-to-GDP, NPV debt-to-revenue, and debt service-to-exports ratios.

### Governance, donor coordination, and conditionalities
- Donor response: Government of Trinidad and Tobago through CARICOM Petroleum Fund and Government of the Bolivarian Republic of Venezuela provided immediate assistance; broader donor community expected to provide grants and concessional support.
- Government pledges full accounting and consolidation of donor cash disbursements; intention to work closely with Fund and other donors (EU, World Bank, governments) on reconstruction and reform program development.
- Authorities’ external policy stance: do not intend to impose or intensify restrictions on payments and transfers for current international transactions, introduce multiple currency practices, impose or intensify import restrictions for balance of payments purposes, or conclude bilateral payments agreements inconsistent with Article VIII.

*Source: IMF staff report text provided in the supplied content unit.*

### 2007. At that time, Directors commended the authorities for their continued commitment to

### _cr08118 - 2007. At that time, Directors commended the authorities for their continued commitment to

### Executive Summary
- Hurricane Dean (August 2007) caused estimated damage of about US$60 million (20 percent of GDP).
- Loss of export earnings is estimated at about US$9 million (3 percent of GDP).
- Government expects to spend an additional US$7½ million (2½ percent of GDP) financed by external grants primarily from CARICOM Petroleum Facility.
- Authorities requested a purchase of Emergency Assistance (ENDA) equivalent to SDR 2.05 million (25 percent of quota) to help cushion the impact on external reserves.
- Government committed to a primary surplus target of 3 percent of GDP over the medium term and will vary the implementation schedule of planned income tax reforms to secure it.
- Risks to the Fund’s resources exist due to very high public debt levels and hurricane effects, but are mitigated by:
  - Authorities’ commitment to prudent policies;
  - Medium-term fiscal targets providing for further reduction in debt levels;
  - Expectation of continued support from the international community.

### Background
- Hurricane Dean struck Dominica during August 16–17, 2007, causing torrential rain and landslides with severe road damage; agriculture (particularly bananas) took the brunt of the damage; tourism largely unscathed.
- Overall damage: about US$60 million, nearly 20 percent of GDP, including loss of export earnings of some US$9 million, 3 percent of GDP.
- CARICOM Petroleum Facility (funded by Trinidad and Tobago) provided an emergency grant of US$7½ million (2½ percent of GDP). Other external donors (including South Korea and the Caribbean Development Bank) provided small disaster relief grants.
- An earthquake on November 29 (7.4 on the Richter scale) triggered a payout of about US$½ million under the Caribbean Catastrophe Risk Insurance Facility; damage was minimal.
- In an attached letter dated January 17, 2008, authorities requested a purchase equivalent to 25 percent of quota (SDR 2.05 million) under Fund policy on emergency assistance for natural disaster and requested subsidy to reduce the rate of charge down to ½ percent per annum, subject to availability of subsidy resources.

### Economic Performance Prior to the Hurricane
- Real output grew by 4 percent in 2006, the strongest in nearly two decades.
- Inflation was 3½ percent in July 2007.
- Public finances improved under the PRGF-supported program (2003–06): primary surplus rose to 6¾ percent of GDP in FY 2006/07 from -1½ percent of GDP in FY 2002/03.
- Public debt declined to around 100 percent of GDP at the end of the fiscal year.
- 2007/08 budget outlined multiyear reform of personal income tax consistent with a primary surplus of about 3 percent of GDP; reform could result in revenue losses of 1 percent of GDP annually over the short term and possibly rising to about 2 percent of GDP per year over the medium term.
- External current account deficit widened in first half of 2007 due to surge in construction material imports, higher oil bill, and weak regional tourism.
- Net foreign assets of the banking system rose by EC$110 million to EC$500 million through July 2007.
- Credit union sector total assets: EC$367 million (45 percent of GDP); accounts not routinely inspected by any government agency.
- Structural reforms continued: creation of dedicated agencies for tourism and investment promotion, steps toward independent regulatory commission for energy sector, strengthened land registry services, streamlined foreclosure arrangements.

### Economic Impact of the Hurricane
- Preliminary estimate: GDP growth fell to around 1 percent in 2007.
- Expected rebound to pre-hurricane trend growth of about 3 percent in the following year as recovery efforts take effect.
- Fiscal impact largely on expenditure side; additional spending needed for infrastructure rehabilitation and assistance is estimated at 2½ percent of GDP (after expected reallocation of FY 2007/08 budget expenditure).
- FY 2007/08 key fiscal indicators (In percent of GDP)
  - Revenue and grants: 37.7 (2006), 41.7 (2007 Art. IV), 43.6 (ENDA)
  - Revenue: 31.3 (2006), 32.5 (2007 Art. IV), 32.5 (ENDA)
  - Grants: 6.5 (2006), 9.2 (2007 Art. IV), 11.5 (ENDA)
  - Total expenditure: 36.9 (2006), 40.9 (2007 Art. IV), 43.2 (ENDA)
  - Capital expenditure: 8.9 (2006), 10.8 (2007 Art. IV), 13.1 (ENDA)
  - Overall balance: 0.8 (2006), 0.8 (2007 Art. IV), 0.8 (ENDA)
  - Primary balance: 3.0 (2006), 3.0 (2007 Art. IV), 3.0 (ENDA)
- Balance of payments impact significant in 2007 and 2008:
  - Exports estimated to have declined by 8 percent (y/y) in 2007 and projected to fall by a further 18 percent in 2008.
  - Imports estimated to have risen by 9 percent in 2007 and projected to grow by 6 percent in 2008.
  - Current account deficit expected to widen by almost 4 percent of GDP in 2007 (relative to 2006) to 23 percent of GDP, rising by another 3½ percent of GDP in 2008.
  - Net foreign assets of the banking system projected to decline by around 8 percent of GDP from the July 2007 level.
- Banking system judged well-positioned to weather effects; credit unions concentrated in banana areas could see increases in past due loans.

### The Policy Response
- Two-pronged strategy:
  - Immediate repair of critical infrastructure and provision of hurricane relief with donor assistance.
  - Development of a comprehensive home-grown program to reactivate the economy and address social needs, drawing on the Growth and Social Protection Strategy (GSPS); government considering a PRGF-supported program.
- Fiscal stance:
  - Maintain budgeted primary balance surplus of 3 percent of GDP in FY 2007/08 and over the medium term.
  - Additional hurricane-related spending to be financed by external grants.
  - Public debt/GDP ratio will decline more slowly than pre-hurricane projections because of lower GDP growth, but will continue to decline because:
    - primary surplus target maintained;
    - large share of reconstruction expenses financed through grants;
    - hurricane impact on output expected to be short-lived.
- Tax reform and debt policy:
  - Authorities remain committed to income tax reform but may vary implementation schedule to protect revenue targets.
  - Will resist pressures to dilute the integrity of the VAT.
  - Will stay current on all debt-service payments and continue efforts toward completing collaborative debt restructuring agreements with holdouts as proposed in 2004 and deal with related arrears (Fund’s policy on lending into arrears does not apply to ENDA).
- Structural reforms:
  - Main priorities: (i) maintaining prudent fiscal policies; (ii) enhancing investment climate for private sector development; (iii) strengthening oversight of, and resilience in, the financial sector.
  - Plan to introduce a Financial Services Act early in 2008 to establish regulatory and supervisory framework for the nonbank financial sector.

### Access and Capacity to Repay
- Authorities requested a purchase equivalent to SDR 2.05 million (25 percent of quota) under ENDA with a subsidy request to reduce rate of charge to ½ percent per annum.
- Purchase represents approximately 1 percent of Dominica’s 2007 GDP.
- Expected that Dominica will be able to discharge obligations to the Fund in a timely manner based on:
  - declining public sector and external debt trajectory before Hurricane Dean;
  - sound fiscal policy underpinned by targeted primary balance of 3 percent of GDP;
  - economic recovery and improved terms from collaborative debt restructuring initiated in 2004.
- Hurricane increased debt-related risks; notable vulnerability is bunching of payments projected for 2009 and 2012, made more burdensome by ENDA repurchases due in 2011 and 2012.
- Staff judges risks mitigated by Dominica’s commitment to fiscal prudence and government’s 3 percent primary surplus target.

*Source: IMF staff report text provided in the supplied content unit.*

### 21.      The impact of the hurricane on the Dominica economy has been severe. Staff

### 21.      The impact of the hurricane on the Dominica economy has been severe. Staff

### Economic impact and medium-term outlook
- The economy slowed in 2007 due primarily to extensive damage to agriculture.
- While the medium-term outlook remains positive, it will take considerable efforts and resources to put the economy back to the above-trend growth of 3 percent.
- Investment needs have increased due to the damage to public infrastructure, further reducing room for maneuver.

### Reconstruction financing and fiscal stance
- The reconstruction effort is being addressed primarily through external grants and the reallocation of public investment, in view of the large public debt.
- The staff supports the strategy to keep the primary surplus target of 3 percent of GDP.
- Staff concurs with the authorities’ view that the pursuit of sound macroeconomic policies and structural reforms offer the best prospect for sustainable growth over the medium term.

### Tax policy and revenue considerations
- The staff supports the authorities’ intention to maintain the integrity and stability of the newly-introduced VAT and the strategy for implementing the personal tax cuts.
- The VAT, which was introduced in March 2006, is consistent with international practices and has become a strong and stable source of revenue.
- Given the still fragile fiscal situation and large expenditure needs, the planned income tax cuts need to be undertaken gradually and consistent with the primary surplus target.

*Dominica—Staff Report for the 2007 Article IV Consultation, IMF Country Report No. 07/322.*

### 24.      Staff supports the authorities’ request for a purchase under the Fund’s policy on

### _cr08118 - 24.      Staff supports the authorities’ request for a purchase under the Fund’s policy on

### IMF decision and assistance
- Staff supports the authorities’ request for a purchase under the Fund’s policy on emergency assistance for natural disasters.
- Approved purchase: SDR 2.05 million (25 percent of quota — the access limit).
- Emergency loan terms: subsidized interest rate of 0.5 percent per year; repayment in eight equal quarterly installments over 3.25 to 5 years from the disbursement date.
- Rationale for support: severe damage to the economy and associated large balance of payments needs; authorities’ past track record under the recently expired PRGF arrangement; soundness of policies outlined in the authorities’ letter.
- Risks to Fund resources: large public debt and inherent vulnerability of a small-island economy; mitigating factors cited: authorities’ resolve to sustain fiscal consolidation and foster private sector-led growth, expected continued international community support, and commitment to cooperate with the Fund on reform strategy.

### Damage assessment and economic impact
- Initial estimate of overall damage: about EC$162 million, nearly 20 percent of GDP.
- Earnings forgone in agriculture sector (banana, in particular): some EC$46 million, 5 percent of GDP.
- Estimated slowdown in economic growth: economy could stall or contract in the year of the hurricane; economic growth estimated to have slowed to around 1 percent in 2007 from a pre-hurricane forecast of 3 percent growth.
- Loss in export earnings in 2007 and 2008: estimated at 4 percent of GDP.
- Tourism sector: largely unaffected.

### Authorities’ requests and financing approach
- Authorities requested a purchase equivalent to SDR 2.05 million (25 percent of quota) and requested a subsidy on the rate of charge on such purchase.
- Government intention: limit total net increase in spending compared with the FY 2007/08 budget to EC$20 million or 2½ percent of GDP to adhere to the primary surplus target of 3 percent of GDP.
- Financing of increased spending: primarily by external grants and, where necessary, with concessional or near-concessional loans; without any external commercial borrowing.
- All cash disbursements from donors to be channeled through the consolidated fund.
- Government will stay current on all debt-service payments and continue good-faith efforts toward collaborative debt restructuring with remaining holdout creditors.

### Short-term response and reconstruction strategy
- Immediate priorities: repair critical infrastructure (roads, bridges, seawalls) and provide assistance to those who suffered abrupt losses in earnings.
- Medium-term strategy: develop a comprehensive home-grown program to reactivate the economy and address large social needs, drawing on the existing Growth and Social Protection Strategy (GSPS).
- Structural reform priorities (post-immediate needs): (i) maintain prudent fiscal policies to reduce high public debt; (ii) enhance the investment climate for private sector development; (iii) strengthen oversight of and resilience in the financial sector.
- Authorities’ external policy stance: do not intend to impose or intensify restrictions on payments and transfers for current international transactions, introduce multiple currency practices, impose or intensify import restrictions for balance of payments purposes, or conclude bilateral payments agreements inconsistent with Article VIII.

### Selected fiscal, external, and public debt indicators (as presented)
- Emergency assistance approved by IMF Executive Board on February 4, 2008: SDR 2.05 million (about US$3.3 million).
- Damage estimate: EC$162 million (nearly 20 percent of GDP).
- Agriculture earnings forgone: EC$46 million (5 percent of GDP).
- FY 2007/08 fiscal slack limit for net increase in spending: EC$20 million or 2½ percent of GDP.
- Target primary surplus: 3 percent of GDP.
- Key balance of payments and reserves (selected memoranda and projections):
  - Net international reserves (US$ millions; end-of-period): 43.6, 44.0, 33.6, 37.6, 51.9, 54.8, 57.0 (years shown in table sequence).
  - Exports of goods and services (millions of U.S. dollars, memorandum, 2004–12 sample): 129.2, 126.6, 140.4, 144.7, 144.8, 155.3, 162.6, 170.2, 178.4.
  - Debt and debt service indicators (selected):
    - Nonfinancial public sector debt (gross, percent of GDP): 130.8, 130.8, 116.0, 108.1, 101.4, 102.5, 97.6, 92.3 (calendar-year sequence in Table 1).
    - External public debt (percent of GDP): 79.6, 84.6, 80.6, 74.8, 70.8, 70.9, 66.7, 62.7, 58.4, 53.4, 48.5, 44.1 (multi-year projections).
    - NPV of public sector debt (percent of GDP): 95.5, 89.3, 85.5, 80.6, 77.2, 74.0, 70.8, 67.7, 52.4 (selected years).
    - NPV of debt-to-revenue ratio (percent): 195.3, 180.2, 165.5, 155.6, 153.7, 147.7, 141.4, 135.1, 104.7, 42.0 (selected years).
    - Debt service-to-revenue ratio (percent): 22.7, 10.2, 13.2, 14.0, 12.2, 13.1, 15.1, 15.2, 14.5, 8.2, 4.3 (selected years).
- Indicators of financial vulnerability (selected, data refer to September 2007 unless noted):
  - Broad money (percent change, 12-month basis): 7.4, 8.5, 1.0, 5.9, 6.7, 5.7, 3.3.
  - Private sector credit (percent change, 12-month basis): -3.2, -1.4, -2.9, 7.1, 6.0, 4.6, 6.4.
  - Unsatisfactory assets/total loans: 22.6, 19.2, 21.7, 22.5, 22.0, 9.3, 8.4.
  - Total capital/risk weighted assets (locally incorporated banks): 35.4, 34.1, 28.7, 23.5, 26.2, 20.8, 16.4.
  - Net official reserves (in millions of U.S. dollars, end of period): 30.4, 43.6, 44.0, 33.6, 37.6, 51.9, 54.8.
  - Public sector external debt (percent of GDP): 67.5, 79.6, 84.6, 80.6, 74.8, 70.9, 66.7.

### Debt sustainability and stress tests (high-level summary)
- Baseline and sensitivity exercises presented for 2007–27 consider:
  - Baseline NPV of debt-to-GDP and NPV of debt-to-revenue ratios with projected gradual declines (e.g., baseline NPV of debt-to-GDP ratio values shown such as 85.5 in 2007 declining across projection horizon).
  - Alternative scenarios and bound tests include: real GDP growth and primary balance at historical averages; primary balance unchanged from 2007; permanently lower GDP growth; one-time 30 percent real depreciation in 2008; 10 percent of GDP increase in other debt-creating flows in 2008.
  - Bound-test outcomes show larger debt ratios under adverse shocks (examples in tables for NPV debt-to-GDP, NPV debt-to-revenue, and debt service-to-exports ratios).

### Governance and donor coordination
- Donor response: Government of Trinidad and Tobago through CARICOM Petroleum Fund and Government of the Bolivarian Republic of Venezuela provided immediate assistance; broader donor community expected to provide grants and concessional support.
- Government pledges full accounting and consolidation of donor cash disbursements; intention to work closely with Fund and other donors (EU, World Bank, governments) on reconstruction and reform program development.

*Source: IMF staff report and attachment, including authorities’ letter (January 17, 2008) and IMF Press Release No. 08/19 (February 5, 2008).*

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