IMF Executive Board Concludes 2024 Article IV Consultation with St. Lucia

IMF News, March 13, 2025

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Published: March 13, 2025

Overview

On February 7, 2025, the Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV consultation with St. Lucia and considered and endorsed the staff appraisal.
St. Lucia’s tourism-dependent economy has normalized after the pandemic, with GDP growth returning to positive levels.

Recent performance and key statistics

Real GDP growth: 3.7 percent in 2024 (driven by tourism, construction, and manufacturing).
Unemployment: 14 percent (noted as decade lows but still elevated).
Inflation: peaked at 6.4 percent y/y in 2022; fell to 0.8 percent in June (driven by utilities and energy prices, and a VAT reduction).
Current account deficit: narrowed to 1.9 percent of GDP in 2023.
Fiscal deficit: widened to 2.6 percent of GDP (year not explicitly restated in text).
Debt: ticked up to 74.5 percent of GDP.
Banking sector: banks are liquid and profitable; credit growth is weak; credit unions are growing rapidly.

Selected social and demographic indicators (as reported)

Area (sq. km): 616
Infant mortality (per thous. live births, 2023): 14.4
Human Development Index ranking (of 189 countries, 2022): 108
Total population (thousands, 2023, UN): 179.3
Gross Domestic Product (2023, millions of US dollars): 2,430
Population density (per sq. km., 2023): 291.0
Gross Domestic Product (2023, millions of EC dollars): 6,561
Secondary education enrollment (percent, 2022): 88.1
US$ per capita (2023): 13,555
Life expectancy at birth (years, 2023): 72.7

Medium-term projections and outlook

Growth: projected to slow to a modest 1.5 percent over the medium term once planned infrastructure and hotel investments approach completion.
Inflation: expected to rise to 2 percent over the medium term as global input costs normalize.
Fiscal balance (excluding natural disasters cost): forecast to narrow to -1.3 percent of GDP in FY2024 but widen thereafter to -2.2 – -2.9 percent of GDP due to higher capital expenditures.
Debt trajectory: projected to stabilize around 74 percent of GDP, above the regional debt ceiling of 60 percent of GDP.
Current account: anticipated to narrow further over the medium term on account of stronger tourism and lower fuel prices.
Bank credit to the private sector: projected to remain anemic because of high NPLs, the lack of foreclosure legislation, and concerns about the fiscal outlook.

Selected macro-financial projections from Table 1 (selected rows and values preserved)

Real GDP (at market prices): 2020: -24.4; 2021: 11.6; 2022: 20.4; 2023: 2.2; 2024: 3.7; 2025: 2.8; 2026: 2.4; 2027: 1.9; 2028: 1.5.
Consumer prices, period average: 2021: 6.4; 2022: 4.5; 2023: 1.3; 2024: 1.8; 2025: 2.0.
Unemployment rate (% annual average): 2020: 21.7; 2021: 21.9; 2022: 16.5; 2023: 14.0.
Central Government revenue (percent of GDP): 2023: 22.2; 2024: 22.1; 2025: 22.0.
Tax revenue (percent of GDP): 2020: 19.0; 2021: 18.0; 2022: 19.6; 2023: 19.5; 2024: 19.4; 2025: 19.3; 2026: 19.2.
Expenditure (percent of GDP): 2020: 33.2; 2021: 25.8; 2022: 22.7; 2023: 24.0; 2024: 23.6; 2025: 24.4; 2026: 25.0; 2027: 24.9; 2028: 24.5; 2029: 24.1.
Interest payments (percent of GDP): 2020: 3.8; 2021: 3.1; 2022: 2.9; 2023: 3.4; 2024: 3.3; 2025: 3.5; 2026: 3.6.
Capital expenditure (percent of GDP): 2020: 5.6; 2021: 2.5.
Overall balance excluding natural disaster cost (percent of GDP): 2020: -11.4; 2021: -4.8; 2022: -1.6; 2023: -2.6; 2024: -1.3; 2025: -2.2; 2026: -2.9.
Total public sector debt (percent of GDP): 2020: 95.0; 2021: 81.9; 2022: 73.4; 2023: 74.5; 2024: 72.3; 2025: 73.2; 2026: 73.6; 2027: 73.6 (table shows continuation in similar range).
External debt (gross) (percent of GDP): 2020: 79.0; 2021: 70.0; 2022: 63.0; 2023: 68.0; 2024: 67.1; 2025: 66.7; 2026: 66.0; 2027: 65.3; 2028: 64.7; 2029: 63.9.
Net imputed international reserves: Months of imports of goods and services: 3.2.

Risks and vulnerabilities

Downside risks: investment delays and large debt rollover needs.
External vulnerabilities: exposure to a global slowdown and supply disruptions.
Climate and disaster risks: vulnerability to natural disasters and climate change.
Financial sector constraints: high NPLs, lack of foreclosure legislation, concerns about fiscal outlook limiting credit growth.
Upside potential: stronger-than-expected growth in tourism and construction could boost the economy.

Executive Board assessment and recommendations

Directors agreed with the staff appraisal and welcomed strong near-term performance driven by tourist arrivals and a supportive fiscal stance.
Fiscal policy:
- Recommended sustained fiscal consolidation, while safeguarding space to support capital projects and resilience against natural disasters.
- Called for comprehensive tax policy reform, enhanced tax administration, and improved control and targeting of current expenditures, including the wage bill.
- Welcomed the authorities’ commitment to achieving the regional debt target and recommended the adoption of a sound fiscal rule.
- Recommended further improvements in transparency of the Citizenship‑by‑Investment Program.
Financial sector and credit:
- Recommended steps to further reduce banks’ NPLs and enact foreclosure legislation to support credit growth.
- Urged improved compliance with ECCB provisioning requirements for banks.
- Welcomed the new Co‑operative Societies Act and encouraged continued efforts to strengthen credit union regulation.
- Highlighted the need to enhance risk monitoring of the insurance sector and continue progress to address AML/CFT regulatory gaps.
Structural and resilience reforms:
- Emphasized structural reforms and natural disaster‑resilient investment to diversify the economy and boost potential growth.
- Recommended improving credit access, reducing operating and tax compliance costs, and addressing labor force skill mismatches.
- Urged careful calibration of the minimum wage, in close consultation with stakeholders, noting implications for external competitiveness.
- Encouraged measures to enhance the natural‑disaster insurance framework and develop geothermal energy.

IMF Communications Department; Press Release No. 25/60; March 13, 2025.