{
  "title": "Public Information Notice: IMF Executive Board Concludes 2009 Article IV Consultation with St. Vincent and the Grenadines",
  "publication": "IMF News, May 20, 2009",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0963",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2009-05-20",
  "sections": [
    {
      "heading": "Background",
      "content": "- Economic growth and shocks\n  - Real output growth estimated to have fallen from 7 percent in 2007 to around 1 percent in 2008, far below potential (estimated at 4½ percent).\n  - Tourism sector weakened owing to the U.S. and global growth downturn; construction lost dynamism with completion of major phases in some public sector projects.\n- Inflation and prices\n  - Inflation peaked at 11.6 percent in September and declined to 8.7 percent by end-2008, reflecting declines in world food and fuel prices.\n- External sector\n  - External current account deficit improved modestly in 2008 as lower imports offset lower foreign exchange revenues from tourism and a larger food and fuel import bill.\n- Credit and banking\n  - Private sector credit growth slowed to 3 percent in 2008, compared to 15 percent in 2007.\n  - Banking sector largely unaffected by the global financial crisis and remains well capitalized; ratio of nonperforming to total loans remained low.\n  - Strains from the fallout of the Trinidad and Tobago-based CL Financial Group created uncertainty in the local financial system; international financial services sector also suffered shocks.\n  - An update of a 2004 AML/CFT assessment took place in February–March 2009.\n- Fiscal position and public debt\n  - Overall deficit reduced to 1.7 percent of GDP in 2008.\n  - Factors: larger grants, efforts at tax arrears collection, one-off non-tax revenue, and solid VAT performance leading to a primary surplus (first since 2002).\n  - VAT exceeded expectations both in revenue and compliance, surpassing replaced taxes despite growth slowdown.\n  - Lower capital expenditure helped contain total government spending.\n  - Public sector debt-to-GDP ratio declined to 67½ percent of GDP at end-2008.\n- Fund support request\n  - Authorities requested support under the Fund’s Exogenous Shocks Facility (ESF): rapid-access component of the ESF (SDR 3.735 million, 45 percent of quota).\n  - Fund financing expected to partly offset balance of payments impact and contribute to financing of the fiscal deficit."
    },
    {
      "heading": "Executive Board Assessment",
      "content": "- Overarching assessment\n  - Executive Directors noted a marked decline in real GDP growth due to sharply weaker activity in the tourism and construction sectors following the global slowdown.\n  - Balance of payments adversely affected by declines in tourism receipts, foreign direct investment and remittances.\n  - Directors welcomed authorities’ commitment to mitigate the external shock with ESF support and to enhance growth potential while ensuring fiscal and debt sustainability.\n- Fiscal policy and reforms\n  - Directors commended recent steps toward fiscal consolidation and solid progress on social and poverty reduction goals.\n  - Welcomed ongoing tax reform, including establishment of a Tax Reform Commission, and commitment to maintain VAT integrity and stability.\n  - Recommended continued spending restraint through a prudent public sector wage policy and prioritization of capital expenditure.\n  - Encouraged reforms to support medium-term fiscal consolidation: tax and customs reform, civil service reform, and adoption of a medium-term expenditure framework.\n- Competitiveness and investment\n  - Staff assessed the real exchange rate as broadly in line with macroeconomic fundamentals.\n  - Directors encouraged steps to improve external competitiveness by easing infrastructure bottlenecks, reducing institutional rigidities, and lowering the cost of doing business.\n  - Noted construction of a new international airport as necessary to develop tourism and improve medium-term growth potential.\n  - Stressed importance of sustained fiscal consolidation and timely availability of concessional financing to accommodate the airport project without compromising debt sustainability.\n  - Suggested a more flexible timetable for implementation of the airport project, to the extent technically feasible, to help alleviate a possible 2009 financing bottleneck given tight liquidity.\n- Financial sector governance\n  - Emphasized improving regulatory and supervisory framework for nonbanks as a high priority in light of shocks to offshore and insurance sectors.\n  - Encouraged establishment of a single regulatory unit for domestic nonbanks and the international financial service sector.\n  - Welcomed authorities’ coordination with other regional governments to address regional financial turmoil from the CL Financial Group fallout."
    },
    {
      "heading": "Selected Economic Indicators, 2004–09 (est./proj.)",
      "content": "- Output and prices (Annual percentage change, unless otherwise specified)\n  - Real GDP (factor cost): 2004: 6.8; 2005: 2.6; 2006: 7.6; 2007: 7.0; 2008: 0.9; 2009: 0.1\n  - Nominal GDP (market price): 2004: 8.3; 2005: 7.5; 2006: 11.9; 2007: 9.7; 2008: 10.0; 2009: 3.5\n  - Consumer prices, end of period: 2004: 1.7; 2005: 3.9; 2006: 4.8; 2007: 8.7; 2008: 2.9\n  - Consumer prices, period average: 2004: 3.0; 2005: 3.7; 2006: 6.9; 2007: 10.1; 2008: 4.2\n- Banking system\n  - Net foreign assets 1/: 2004: 15.7; 2005: -4.6; 2006: 4.5; 2007: -8.1; 2008: 3.2; 2009: -3.4\n  - Net domestic assets 1/: 2004: -2.0; 2005: 11.0; 2006: 15.2; 2007: -0.7; 2008: 5.6\n  - Of which: Credit to private sector 1/: 2004: 0.8; 2005: 4.3; 2006: 11.1; 2007: 12.4; 2008: 1.2\n  - Broad money: 2004: 13.7; 2005: 6.4; 2006: 7.1; 2007: 2.5; 2008: 1.3\n- Public sector (In percent of GDP, unless otherwise specified)\n  - Total revenues and grants: 2004: 29.5; 2005: 30.1; 2006: 30.9; 2007: 32.4; 2008: 29.8\n  - Total expenditure and net lending: 2004: 33.1; 2005: 35.1; 2006: 34.0; 2007: 34.6; 2008: 34.1; 2009: 33.7\n  - Current expenditure: 2004: 25.9; 2005: 27.1; 2006: 26.4; 2007: 25.6; 2008: 26.6; 2009: 26.2\n  - Capital expenditure: 2004: 8.0; 2005: 8.9\n  - Overall balance: 2004: -3.6; 2005: -5.6; 2006: -3.9; 2007: -1.7; 2008: -3.8\n  - Of which: Primary balance: 2004: -1.1; 2005: -2.6; 2006: -0.6; 2007: -0.9\n  - Gross public sector debt 2/: 2004: 78.6; 2005: 80.2; 2006: 77.5; 2007: 69.5; 2008: 67.5; 2009: 73.2\n- External sector\n  - External current account: 2004: -24.8; 2005: -22.3; 2006: -24.1; 2007: -35.1; 2008: -33.7; 2009: -28.9\n  - Stayover arrivals (percentage change): 2004: 10.4; 2005: 9.5; 2006: -6.1; 2007: -14.0\n  - Public sector external debt (end of period): 2004: 52.9; 2005: 52.0; 2006: 46.4; 2007: 37.0; 2008: 35.0; 2009: 37.2\n  - External public sector debt service (In percent of exports of goods and services): 2004: 11.6; 2005: 13.4; 2006: 12.8; 2007: 13.6; 2008: 18.5\n  - Real effective exchange rate (- = depreciation) (Annual percentage change): 2004: -3.5; 2005: 0.0; 2006: 0.3; 2007: ...\n  - External terms of trade (- = depreciation): 2004: 4.4; 2005: -13.8; 2006: -7.3; 2007: 2.0\n- Sources: ECCB; Ministry of Finance and Planning; and Fund staff estimates and projections.\n- Notes:\n  - 1/ Annual changes relative to the stock of broad money at the beginning of the period.\n  - 2/ Net of intra-public sector debt (mainly central government debt to the National Insurance Scheme (NIS)).\n\nPublic Information Notice (PIN) No. 09/63 — May 20, 2009.\n\n---\n\n\n References\n\n- St. Vincent and the Grenadines and the IMF\n- Public Information Notices\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn0963"
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    "Published: May 20, 2009",
    "Economic growth and shocks",
    "Inflation and prices",
    "External sector",
    "Credit and banking",
    "Fiscal position and public debt",
    "Fund support request",
    "Overarching assessment",
    "Fiscal policy and reforms",
    "Competitiveness and investment",
    "Financial sector governance",
    "Output and prices (Annual percentage change, unless otherwise specified)",
    "Banking system",
    "Public sector (In percent of GDP, unless otherwise specified)",
    "External sector",
    "Sources: ECCB; Ministry of Finance and Planning; and Fund staff estimates and projections.",
    "Notes:",
    "[St. Vincent and the Grenadines and the IMF](http://www.imf.org/external/country/VCT/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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