IMF Staff Country Reports

Dominica : Selected Issues

Author/Editor:

International Monetary Fund. Western Hemisphere Dept.

Publication Date:

July 20, 2016

Electronic Access:

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Summary:

This Selected Issues paper presents a proposal for the creation of savings funds (SF) for rehabilitation and reconstruction after natural disasters (ND) in Dominica. A Monte Carlo experiment is used to calibrate the size of the SF, based on the distribution of ND fiscal shocks estimated from an empirical fiscal model. ND shocks are identified by controlling for other major sources of shock affecting the cyclical fluctuations of output, and government revenue and expenditure, and by calibrating the probability of ND consistent with their historical frequency. It is concluded that under the parameter calibrations proposed, the SF would be financially sustainable with a low probability of depletion.

Series:

Country Report No. 16/245

Subject:

Credit risk Dominica External shocks Financial institutions Government expenditures Interest rates Liquidity Public sector savings Selected Issues Papers Stress testing