IMF Executive Board Concludes 2025 Article IV Consultation with Dominica
IMF News, June 11, 2025
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- Published: June 11, 2025
Overview and recent developments
- On June 10, 2025, the Executive Board concluded the Article IV consultation with Dominica and endorsed the staff appraisal without a meeting on a lapse-of-time basis.
- The authorities have consented to the publication of the Staff Report prepared for this consultation.
- Dominica’s economy continued to expand: Real GDP grew by 3.5 percent in 2024, supported by a recovery in tourism and targeted development investment.
- Inflation averaged 3.1 percent in 2024, easing from its 2023 peak of 7 percent.
- Tourism arrivals have surpassed pre-pandemic levels by roughly 32 percent, with a shift in composition toward cruise visitors over stayovers.
- The labor market recovery is uneven, with formal employment lagging overall growth.
Fiscal and external positions
- Fiscal balances have improved but remain strained:
- The primary balance improved by 2¼ percentage points (ppts) to a deficit of 2 percent of GDP in FY2023/24.
- Public debt remains elevated at 100 percent of GDP.
- The current account deficit narrowed by 2 ppts to 32¼ percent of GDP in 2024, reflecting higher tourism receipts.
- Projected medium-term developments:
- External imbalances are projected to narrow on the back of increased tourism, a normalization of investment-related imports, and reduced fuel imports with the rollout of geothermal energy.
- Public debt is set to decline gradually in coming years but remains above the prudential currency union debt benchmark and is susceptible to shocks.
Executive Board assessment and growth outlook
- The Board assesses that Dominica’s economic expansion is poised to continue but that risks are elevated and tilted to the downside.
- Real GDP growth is projected to average 3½ percent over the next three years.
- Key downside risks noted include vulnerability to natural disaster shocks and the evolving trade policy and geopolitical environment.
- The external position is assessed to be substantially weaker than implied by medium-term fundamentals and desirable policy settings due to the heavy import content of major capital projects, though gradual improvements are expected as outlays wind down and fiscal consolidation intensifies.
Fiscal policy recommendations and debt targets
- More ambitious fiscal consolidation than under current policies is needed to reduce imbalances and mitigate disaster risks.
- The overall risk of debt distress is assessed as high.
- It is critical to rebuild fiscal buffers by achieving and maintaining a primary surplus of 3½ percent of GDP from 2026 onward to:
- (i) reduce public debt below 60 percent of GDP by 2035; and
- (ii) adequately capitalize the Vulnerability and Resilience Fund to mitigate disaster risks.
- Recommended fiscal strategy elements:
- Broadening the revenue base.
- Optimizing expenditures to preserve space for macrocritical investment.
- Enhancing targeting and sustainability of social protection programs.
Financial sector stability and supervisory priorities
- The financial system is liquid but exhibits mixed credit trends and balance sheet fragilities:
- Bank credit has declined further since 2023 amid de-risking; elevated non-performing loans (NPLs) and fragile provisioning persist.
- The credit union (CU) sector is expanding lending rapidly despite weak capitalization, high NPLs, and limited provisioning.
- Priorities for banks:
- Stricter enforcement of provisioning and NPL standards.
- Managing loan loss allowances.
- Facilitating disposal of impaired assets.
- Closely monitoring sovereign and foreign investment exposures.
- Priorities for credit unions and supervision:
- Modernize the regulatory regime governing credit unions.
- Reinforce the Financial Services Unit’s operational independence.
- Enhance risk-based supervision.
- Update regulatory thresholds, strengthen provisioning and loan management frameworks, and bolster enforcement tools.
Structural reforms and institutional strengthening
- Structural reforms are essential to foster resilient and sustainable growth, with priorities including:
- Addressing impediments to financial intermediation; the upcoming launch of a regional credit bureau is welcomed.
- Modernizing collateral, foreclosure, and bankruptcy frameworks.
- Eliminating gaps in education and training to improve labor market outcomes.
- Fostering innovation and allocative efficiency, including exploiting digitalization and streamlining administrative processes for tax compliance, business registration, and permitting.
- Institutional capacity-building priorities:
- Strengthen AML/CFT legislation and procedures in line with CFATF recommendations to help protect correspondent banking relationships.
- Progress on regional coordination across Citizenship-by-Investment (CBI) programs to improve due diligence and transparency; proactive engagement on CBI concerns is critical to safeguard an essential source of development financing.
- Targeted measures to strengthen statistical capacity and improve public financial management across fiscal reporting, treasury operations, public investment management, and budget processes.
Key statistics (selected figures from Table 1)
- Real GDP growth: 2020: -16.6; 2021: 6.9; 2022: 5.6; 2023: 4.7; 2024: 3.5; 2025: 4.2; 2026: 3.3; 2027: 2.9; 2028: 2.7; 2029: 2.4; 2030: 2.5.
- Nominal GDP growth: 2020: -17.5; 2021: 10.1; 2022: 9.3; 2023: 7.7; 2024: 6.7; 2025: 7.2; 2026: 5.7; 2027: 4.9; 2028: 4.8; 2029: 4.5; 2030: 4.9.
- Consumer prices, period average: 2021: 1.6; 2022: 3.1; 2023: 2.8; 2024: 2.3; 2025: 2.0.
- Central government revenue (percent of GDP): 2020: 59.1; 2021: 58.8; 2022: 62.3; 2023: 54.5; 2024: 47.5; 2025: 38.4; 2026: 37.8; 2027: 37.6; 2028: 37.5; 2029: 37.2.
- Taxes (percent of GDP): 2020: 23.3; 2021: 22.3; 2022: 22.4; 2023: 21.5; 2024: 20.9; 2025: 19.7; 2026: 19.1; 2027: 18.9; 2028: 18.8; 2029: 18.5.
- Expenditure (percent of GDP): 2020: 66.6; 2021: 67.0; 2022: 69.5; 2023: 63.6; 2024: 57.4; 2025: 50.2; 2026: 40.6; 2027: 39.4; 2028: 39.0; 2029: 38.5.
- Primary balance (percent of GDP): 2020: -5.4; 2021: -5.6; 2022: -4.3; 2023: -2.0; 2024: 0.1; 2025: 0.4; 2026: 0.7; 2027: 1.0; 2028: 1.2; 2029: 1.0.
- Overall balance (percent of GDP): 2020: -7.5; 2021: -8.2; 2022: -7.2; 2023: -4.5; 2024: -2.9; 2025: -2.7; 2026: -2.2; 2027: -1.6; 2028: -1.3; 2029: -1.0; 2030: -0.6.
- Central government debt (incl. guaranteed, percent of GDP): 2020: 112.5; 2021: 108.5; 2022: 104.3; 2023: 99.8; 2024: 100.6; 2025: 96.9; 2026: 94.1; 2027: 91.5; 2028: 89.0; 2029: 86.4; 2030: 83.4.
- Current account balance (percent of GDP): 2020: -37.0; 2021: -33.5; 2022: -27.0; 2023: -34.2; 2024: -32.2; 2025: -30.4; 2026: -23.1; 2027: -17.1; 2028: -14.1; 2029: -14.3; 2030: -13.3.
- Exports of goods and services (percent of GDP): 2020: 20.0; 2021: 21.2; 2022: 28.6; 2023: 28.9; 2024: 31.8; 2025: 35.0; 2026: 33.9; 2027: 35.8; 2028: 35.9; 2029: 36.2.
- Imports of goods and services (percent of GDP) 4/: 2020: 60.0; 2021: 57.1; 2022: 58.3; 2023: 63.8; 2024: 65.5; 2025: 66.5; 2026: 58.1; 2027: 52.1; 2028: 51.0; 2029: 51.2; 2030: 50.5.
- Citizenship by Investment (percent of capital transfers): 2020: 23.2; 2021: 30.2; 2022: 33.1; 2023: 34.8; 2024: 26.7; 2025: 19.5; 2026: 15.7.
- External debt (gross, percent of GDP) 6/: 2020: 107.6; 2021: 87.5; 2022: 100.2; 2023: 86.9; 2024: 89.7; 2025: 82.1; 2026: 83.5; 2027: 83.1; 2028: 84.3.
- Nominal GDP (EC$ millions): 2024: 1,885; 2025: 2,020; 2026: 2,135; 2027: 2,240; 2028: 2,348; 2029: 2,453; 2030: 2,563.
- Net imputed international reserves, end-year (millions of U.S. dollars): 2020: 165.6; 2021: 165.2; 2022: 182.3; 2023: 164.2; 2024: 168.3; 2025: 179.8; 2026: 192.2; 2027: 203.9; 2028: 216.3; 2029: 228.6; 2030: 241.7.
- Months of imports of goods and services: 2022: 4.4; 2023: 4.3; 2024: 5.9; 2025: 6.0.
- Holdings of SDRs (millions of SDRs): 2020: 0.2; 2021: 11.1; 2022: 9.6; 2023: 8.0; 2024: 7.9.
Source: IMF Executive Board press release, June 11, 2025.