IMF Executive Board Concludes 2022 Article IV Consultation with St. Vincent and the Grenadines
IMF News, November 17, 2022
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- Published: November 17, 2022
Recent economic performance and shock responses
- The Executive Board concluded the Article IV consultation on November 14, 2022.
- St. Vincent and the Grenadines is recovering from the pandemic and 2021 volcanic eruptions.
- Authorities’ policy responses were supported by two IMF Rapid Credit Facility (RCF) disbursements and financing from other International Financial Institutions.
- Output decline in 2020 was the lowest in the ECCU and the economy is estimated to have grown by 0.8 percent in 2021, supported by strong post-volcanic eruption reconstruction activity.
- Public debt increased to about 89 percent of GDP as of end-2021 due to critical responses to the shocks.
- The financial system has weathered the shocks relatively well so far with adequate capital and liquidity buffers.
Outlook and risks
- The economy is projected to grow by 5 percent in 2022, supported by large-scale investment projects and recoveries in tourism and agriculture.
- Growth is projected to strengthen further in 2023 as large-scale construction projects get into full swing.
- External inflation pressures are expected to raise the annual inflation to 5.8 percent in 2022.
- The outlook is subject to significant downside risks:
- Abrupt slowdown in trading partners’ growth.
- Potential delays in investment projects including due to supply chain disruptions.
- The ever-present threat of frequent natural disasters.
Fiscal policy stance and medium-term strategy
- Authorities seek to rebuild fiscal buffers over the medium term while balancing support for the vulnerable, building resilience, and maintaining fiscal prudence.
- The primary deficit is estimated to widen as the port construction starts.
- The primary balance excluding pandemic-, volcano-, and port-related spending is expected to improve from -0.4 percent of GDP in 2021 to 1.6 percent in 2022.
- Authorities remain committed to reaching the regional debt ceiling and the medium-term fiscal strategy set out in the 2021 RCF.
- Directors recommended fully operationalizing and recalibrating the Fiscal Responsibility Framework (FRF) to underpin commitment and signal a credible medium-term fiscal plan.
- Directors called for complementary fiscal institutional reforms, building additional buffers, and preparing contingency plans to increase resilience to external shocks.
Structural reforms, labor policies, and social protection
- Near-term priorities: health and reconstruction spending and supporting the vulnerable, while maintaining fiscal prudence.
- Directors encouraged keeping generalized fiscal relief temporary and enhancing coverage and targeting of the social safety net.
- As the economy recovers, fiscal policy should shift from income support to active labor market policies (ALMP) to facilitate training and employment.
- Directors emphasized continued broad-based structural reforms to support inclusive growth, promote employment, and bolster resilience to natural disasters.
- Key infrastructure projects are instrumental for addressing supply-side constraints and improving structural resilience.
- Directors welcomed efforts to improve the business climate, including the planned new Investment Act.
- Investment into human capital: improve the scope, coverage, and effectiveness of technical and vocational education and training (TVET) programs, complemented by ALMP to facilitate employment.
- Directors supported efforts to further develop the tourism sector.
Financial sector stability and supervision
- Directors noted the financial sector remains broadly stable.
- They stressed the need to closely monitor asset quality following the end of the loan moratoria and bolster provisioning levels.
- Financial authorities should continue to strengthen supervisory and regulatory frameworks and improve crisis preparedness.
- Directors welcomed authorities’ strong efforts to strengthen the AML/CFT framework.
Selected social and economic indicators (exact values as reported)
- Area (sq. km): 389.3
- Population (2022) — Total (thousands): 110.9
- Density (per sq. km.): 284.9
- Life expectancy at birth (years, 2016): 73.0
- Infant mortality (per '000 live births, 2016): 15.2
- Under 5 mortality rate (per '000, 2016): 17.0
- Net enrollment rate, secondary (percent, 2018): 89.0
- Labor market indicators (2017):
- Unemployment rate: 25.8
- Youth unemployment rate: 40.3
- Labor force participation rate: 67.8
- Rate of growth (percent per year): 0.1
- Gross domestic product (2021):
- (millions of US dollars): 872
- (millions of EC dollars): 2,355
- (US$ per capita): 7,879
- Output and Prices (Percent change) — Real GDP (market prices) by year:
- 2018: 3.2
- 2019: 0.7
- 2020: -3.7
- 2021: 0.8
- 2022 (Prel.): 5.0
- 2023 (Proj.): 6.0
- 2024 (Proj.): 4.8
- 2025 (Proj.): 3.5
- 2026 (Proj.): 2.7
- Nominal GDP (market prices) — percent change:
- 2018: 3.0
- 2019: -4.6
- 2020: 0.4
- 2021: 8.5
- 2022 (Prel.): 10.6
- 2023 (Proj.): 6.9
- 2024 (Proj.): 5.6
- Consumer prices, end of period:
- 2018: 1.4
- 2019: 0.5
- 2020: -1.0
- 2021: 3.4
- 2022 (Prel.): 8.0
- 2023 (Proj.): 2.1
- 2024 (Proj.): 2.0
- Consumer prices, period average:
- 2018: 2.3
- 2019: 0.9
- 2020: -0.6
- 2021: 1.6
- 2022 (Prel.): 5.8
- 2023 (Proj.): 4.6
- Banking System:
- Broad money, percent change:
- 2018: 1.7
- 2019: 9.9
- 2020: -4.5
- 2021: 12.8
- 2022 (Prel.): 1.2
- 2023 (Proj.): 5.7
- Credit to private sector:
- 2018: -0.5
- 2019: 1.1
- 2020: 3.3
- 2021: 0.0
- 2022 (Prel.): 4.2
- Central Government Finances (Percent of GDP):
- Total revenue:
- 2018: 26.7
- 2019: 27.7
- 2020: 30.5
- 2021: 31.4
- 2022 (Prel.): 30.0
- 2023 (Proj.): 30.7
- 2024 (Proj.): 29.3
- 2025 (Proj.): 29.6
- 2026 (Proj.): 29.4
- Tax revenue:
- 2018: 23.1
- 2019: 22.6
- 2020: 23.7
- 2021: 25.0
- 2022 (Prel.): 24.6
- 2023 (Proj.): 24.8
- Grants:
- 2018: 3.7
- 2019: 2.2
- 2020: 2.4
- Total expenditure and net lending:
- 2018: 27.5
- 2019: 30.3
- 2020: 35.8
- 2021: 38.8
- 2022 (Prel.): 38.2
- 2023 (Proj.): 36.8
- 2024 (Proj.): 38.0
- 2025 (Proj.): 31.9
- 2026 (Proj.): 28.8
- 2027 (Proj.): 28.5
- Current expenditure:
- 2018: 24.0
- 2019: 24.4
- 2020: 27.4
- 2021: 29.5
- 2022 (Prel.): 27.3
- 2023 (Proj.): 26.2
- 2024 (Proj.): 25.5
- 2025 (Proj.): 24.2
- Of which: Wages and salaries:
- 2018: 12.1
- 2019: 12.4
- 2020: 13.8
- 2021: 14.3
- 2022 (Prel.): 13.6
- 2023 (Proj.): 12.3
- 2024 (Proj.): 12.0
- 2025 (Proj.): 11.8
- Interest:
- 2018: 2.6
- 2019: 2.5
- Capital expenditure:
- 2018: 5.9
- 2019: 9.3
- 2020: 10.9
- 2021: 12.6
- 2022 (Prel.): 7.1
- 2023 (Proj.): 4.4
- Overall balance:
- 2018: -0.8
- 2019: -2.7
- 2020: -5.3
- 2021: -7.3
- 2022 (Prel.): -8.2
- 2023 (Proj.): -6.1
- 2024 (Proj.): -8.7
- 2025 (Proj.): -2.4
- 2026 (Proj.): 0.6
- 2027 (Proj.): 1.0
- Overall balance (excl. grants):
- 2018: -2.5
- 2019: -5.7
- 2020: -8.0
- 2021: -8.9
- 2022 (Prel.): -10.9
- 2023 (Proj.): -9.8
- 2024 (Proj.): -4.8
- 2025 (Proj.): -1.6
- 2026 (Proj.): -1.2
- Primary balance:
- 2018: -0.4
- 2019: -3.1
- 2020: -3.4
- 2021: -6.0
- 2022 (Prel.): 0.3
- External Sector (Percent of GDP unless indicated otherwise):
- External current account:
- 2018: -10.2
- 2019: -15.1
- 2020: -22.8
- 2021: -26.5
- 2022 (Prel.): -27.6
- 2023 (Proj.): -19.8
- 2024 (Proj.): -13.8
- 2025 (Proj.): -9.0
- Exports of goods and services:
- 2018: 36.4
- 2019: 36.0
- 2020: 21.7
- 2021: 15.9
- 2022 (Prel.): 22.5
- 2023 (Proj.): 36.7
- 2024 (Proj.): 38.7
- 2025 (Proj.): 39.2
- 2026 (Proj.): 39.7
- Imports of goods and services:
- 2018: 51.2
- 2019: 46.7
- 2020: 43.0
- 2021: 47.7
- 2022 (Prel.): 54.4
- 2023 (Proj.): 60.9
- 2024 (Proj.): 59.2
- 2025 (Proj.): 55.8
- 2026 (Proj.): 53.0
- 2027 (Proj.): 52.4
- Public sector external debt (end of period):
- 2018: 49.3
- 2019: 48.1
- 2020: 54.8
- 2021: 66.3
- 2022 (Prel.): 68.9
- 2023 (Proj.): 72.6
- 2024 (Proj.): 75.4
- 2025 (Proj.): 76.0
- 2026 (Proj.): 73.5
- 2027 (Proj.): 70.3
- External public debt service 1/:
- 2018: 14.0
- 2019: 23.8
- 2020: 23.4
- 2021: 18.2
- 2022 (Prel.): 14.4
- 2023 (Proj.): 15.1
- Memorandum Items:
- Holdings of SDRs (in millions of EC$): 3.1
- Holdings of SDRs (in millions of EC$) [other line]: 44.5
- Gross public sector debt (in percent of GDP):
- 2018: 69.4
- 2019: 68.1
- 2020: 79.5
- 2021: 89.3
- 2022 (Prel.): 87.8
- 2023 (Proj.): 88.0
- 2024 (Proj.): 89.2
- 2025 (Proj.): 83.2
- 2026 (Proj.): 79.2
- Nominal GDP (market prices; in millions of EC$) 2/:
- 2018: 2,388
- 2019: 2,459
- 2020: 2,347
- 2021: 2,556
- 2022 (Prel.): 2,826
- 2023 (Proj.): 3,022
- 2024 (Proj.): 3,189
- 2025 (Proj.): 3,341
- 2026 (Proj.): 3,500
- Note: The authorities rebased GDP to 2018 and improved methodology with support from CARTAC (2021). As a result, nominal GDP in 2018 increased by 9 percent.
- Footnotes in original table:
- 1/ In percent of exports of goods and services.
- 2/ The authorities rebased GDP to 2018 and improved methodology with support from CARTAC (2021).
IMF Communications Department — Press Release No. 22/390
