St. Lucia: 2023 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, March 8, 2024

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Canonical URL: St. Lucia: 2023 Article IV Consultation-Press Release; and Staff Report

St. Lucia’s tourist-dependent economy has rebounded strongly after the coronavirus disease 2019 pandemic and the commodity import price shock due to Russia’s war in Ukraine.
Output is currently near the pre-pandemic level.
Gross domestic product growth projection in 2023: 3.2 percent.
Growth in 2023 is lower than 2022 as tourism demand continues the recovery and the economy approaches the existing production capacity.
Projected medium-term path: gradually decline toward a potential rate of 1.5 percent.

Higher government revenue has narrowed the fiscal deficit.
Priority: start rebuilding fiscal and financial buffers as output approaches full recovery.
Objective: place public debt on a solid downward trend, anchored on the regional debt ceiling, through growth-friendly fiscal consolidation and fiscal rules.

Banking sector: important to reach full compliance with the regional central bank’s provisioning requirements.
Reforms underway to address disincentives to bank lending should be maintained.
Draft legislation needed to strengthen the regulation and supervision of credit unions.
Planned asset quality review should be carried forward.

Implement growth-friendly fiscal consolidation and adopt fiscal rules to restore buffers and reduce public debt in line with the regional debt ceiling.
Ensure full compliance with the regional central bank’s provisioning requirements in the banking sector.
Pass legislation to expedite loan collateral appropriation to sustain momentum in addressing disincentives to bank lending.
Pass draft legislation to strengthen the regulation and supervision of credit unions.
Carry forward the planned asset quality review.

Source: St. Lucia: 2023 Article IV Consultation-Press Release; and Staff Report (IMF).