Press Release No. <a name="P16_75"></a>04/27

The following statement was released in Roseau on February 10, 2004, by an International Monetary Fund (IMF) mission:

"The Government's economic program is supported by the IMF with a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF). The PRGF is the IMF's concessional facility for low income countries. The program aims at re-establishing growth and reducing unemployment by tackling the underlying sources of financial uncertainty and economic stagnation. The IMF Board approved this PRGF for the equivalent to about US$11.25 million in December 2003, of which about US$3.5 million has already been disbursed.

"An IMF mission headed by Mr. Alejandro Santos visited Roseau during February 2-11, 2004 to conduct discussions for the first review under PRGF. A disbursement of about US$450,000 will be made available upon completion of this review by the IMF Board, expected for mid-March 2004. The mission has met with Prime Minister Skerrit, senior government officials as well as representatives from the private sector and public sector trade unions.

"While the work of the mission continues, indications are that all policy targets for end-December 2003 were observed. This positive performance confirms the significant strengthening in policy implementation observed since July 2003 when the program, supported then under the Stand-By Arrangement, was modified and all policy targets were subsequently achieved.

"Performance under the program and recent macroeconomic outcomes are very encouraging. In the mission's view, there is evidence of the economy bottoming out, which marks the end of the economic decline of the last few years and signals an incipient economic recovery as reflected by positive developments in manufacturing and tourism, despite the ongoing downward trend in the banana sector. The authorities are progressively regaining control of the budgetary situation as tax collections strengthened and expenditures are kept in check. Shortfalls in external financing have been reduced.

"The mission commended the authorities for their efforts in adhering with the program under difficult conditions and impressed upon them the need to continue with their decisive implementation of the program at the macroeconomic and structural levels. The authorities reiterated their commitment to the program. For the 2004/05 budget, the authorities will aim to achieve a primary surplus (i.e., the fiscal balance before interest payments) of 0.5 percent of GDP.

"The mission also reviewed progress in implementing the debt strategy and was encouraged to see that consultations were conducted in January in a road show domestically and abroad to elicit creditors' views. The mission encouraged the authorities to continue with their efforts in obtaining a consensual debt restructuring while remaining current on their debt obligations during the restructuring process.

"Looking ahead, the mission identified the need for technical assistance in different areas to strengthen the ability of the authorities to implement the ambitious structural reform agenda in a timely manner. The mission participated in a donors' meeting last week where specific donor agencies were identified to provide the required technical assistance. The donors' meeting also provided an opportunity for the authorities to reiterate their commitment to adhere to the approved public investment program, the performance of which has improved significantly this fiscal year, and to use strict economic criteria in selecting future projects to ensure compliance with the borrowing limits agreed under the program.

"The mission would like to encourage the public at large to read the authorities' letter of intent, memorandum of economic policies and interim poverty reduction strategy paper, as well as the staff report and press release written in December 2003 for the IMF Board discussion of the PRGF. These and other Dominica related documents are available at the IMF web site:

http://www.imf.org/external/country/DMA/index.htm

"The next program review mission is expected in early May 2004."

---