June 20, 2018
GDP growth reached 3 percent in 2017, sustained by robust activity in several sectors.
", "publishDate": "2018-06-20", "sections": [ { "heading": "Economic growth and external sector", "content": "- GDP growth reached 3 percent in 2017, sustained by robust activity in several sectors.\n- Tourism recovered strongly: stay-over arrivals rose by 11 percent, described as the fastest growth in the Caribbean.\n- Favorable external conditions, hotel expansions, and addition of new flights drove the tourism recovery.\n- Continued strong FDI and public investment supported activity in construction, wholesale and retail trade.\n- Agriculture suffered lingering effects of Hurricane Matthew.\n- Backed by strong tourism inflows, the current account balance strengthened.\n- Exports of goods and services: 65.0 (2014), 64.1 (2015), 59.4 (2016), 63.6 (2017), 62.9 (2018 proj.), 62.8 (2019 proj.).\n- Imports of goods and services: -55.9 (2014), -51.3 (2015), -54.5 (2016), -55.8 (2017), -58.1 (2018 proj.), -59.1 (2019 proj.).\n- Net imputed international reserves (months of imports of goods and services): 3.3 (2014), 4.3 (2015), 3.9 (2016), 3.8 (2017), 4.1 (2018 proj.).\n- Current account balance (percent of GDP): 6.9 (2014), 1.3 (2015), -2.5 (2016)." }, { "heading": "Labor market and inflation", "content": "- Unemployment declined from 21.3 percent in 2016 to 20.2 percent in 2017.\n- Youth unemployment remained high at 38.5 percent.\n- Labor force participation has fallen.\n- Inflation turned positive again after two years of oil-price related deflation.\n- Consumer prices, end of period: -2.6 (2014), -3.0 (2015), 2.2 (2016), 1.4 (2017), 1.5 (2018 proj.), (no 2019 figure provided)." }, { "heading": "Fiscal position and public debt", "content": "- Based on preliminary data, the fiscal stance deteriorated slightly in FY2017/18, reflecting additional spending.\n- Overall fiscal deficit and public debt continued to rise.\n- Authorities secured concessional financing from a bilateral creditor; terms not yet finalized.\n- Central government (percent of GDP) — Revenue: 23.3 (2014), 23.6 (2015), 24.3 (2016), 24.9 (2017), 24.8 (2018 proj.), (2019 proj. not specified).\n- Central government (percent of GDP) — Expenditure: 26.7 (2014), 26.3 (2015), 26.0 (2016), 27.1 (2017), 28.8 (2018 proj.), 29.9 (2019 proj.).\n- Primary balance (percent of GDP): 0.2 (2014), 0.8 (2015), 0.6 (2016), -0.4 (2017), -1.5 (2018 proj.).\n- Overall balance (percent of GDP): -3.4 (2014), -2.8 (2015), -1.7 (2016), -3.9 (2017), -5.1 (2018 proj.).\n- Central government debt stock ($EC millions): 2,946 (2014), 2,980 (2015), 3,091 (2016), 3,258 (2017), 3,488 (2018 proj.), 3,789 (2019 proj.).\n- Central government debt (In percent of GDP): 70.7 (2014), 67.8 (2015), 69.2 (2016), 72.2 (2017), 74.6 (2018 proj.).\n- Nominal GDP (EC$ millions): 4,095 (2014), 4,381 (2015), 4,436 (2016), 4,553 (2017), 4,771 (2018 proj.), 5,024 (2019 proj.)." }, { "heading": "Financial sector", "content": "- Banks continued to underperform while the non-bank sector expanded further.\n- Nonperforming loans are at 12.5 percent of total loans.\n- Low profitability and contracting credit to the private sector since 2013.\n- Credit unions expanded, with assets growing by 42 percent since 2014.\n- Indigenous banks maintained corresponding bank relationships, albeit at higher costs.\n- Money and credit (percent change) — Broad money (M2): 1.2 (2014), 5.8 (2015), 2.3 (2016), 4.8 (2017), 5.3 (2018 proj.).\n- Credit to private sector (real): -9.9 (2014), -5.8 (2015), -4.8 (2016), -2.0 (2017), -1.6 (2018 proj.).\n- Credit to private sector (nominal): -6.7 (2014), -6.8 (2015), -7.8 (2016), -1.9 (2017), 0.0 (2018 proj.).\n- Months of imports coverage (percentage of demand liabilities): 89.2 (2014), 91.4 (2015), 90.7 (2016), 91.1 (2017), 91.6 (2018 proj.)." }, { "heading": "Short-term outlook and risks", "content": "- Short-term outlook is favorable: GDP growth expected to remain buoyant in the near term, supported by large infrastructure investment, tourism-related FDI, and continued tourist inflows driven by the global recovery and increased capacity.\n- Over the medium term, growth is expected to decline gradually as pipeline projects are completed.\n- Downside risks are prevalent.\n- In the absence of corrective fiscal measures, public sector wage negotiations and rising interest rates will add to expenditure pressures and government debt.\n- Structural bottlenecks will continue to limit growth." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Directors welcomed sustained growth and improved short-term outlook, but flagged significant risks including rising public debt and recurrent natural disasters.\n- Fiscal consolidation and structural reforms were emphasized to remove impediments to longer‑term growth, enhance productivity, and reduce high production costs.\n- Directors noted the necessity of infrastructure investment to address constraints but warned the resulting increase in public debt heightens fiscal vulnerabilities.\n- They stressed the need for an adjustment aimed at attaining the ECCU debt target of 60 percent of GDP by 2030.\n- Possible fiscal adjustment measures highlighted:\n - Streamlining tax exemptions.\n - Controlling the government wage bill.\n - Improving financing terms.\n- Consideration of a fiscal rule, together with targeted social assistance, could support the fiscal effort while protecting the most vulnerable.\n- Support for strengthening public financial management, including revising the PFM Act and reviving the Public‑Sector Investment Plan.\n- Climate resilience: Directors welcomed the Climate Change Policy Assessment pilot and urged integration of mitigation and adaptation policies into the macroeconomic framework; donor grants and private investment seen as important.\n- Financial sector recommendations:\n - Swift completion of new legislation on foreclosure and insolvency.\n - Operationalization of the Eastern Caribbean Asset Management Company.\n - Stronger supervision and regulation of credit unions and microfinance companies.\n - Strengthen the AML/CFT regime, reinforce due diligence under the Citizenship‑by‑Investment program, and address gaps in compliance with international tax rules.\n- Structural reforms to improve growth and reduce external vulnerability:\n - Enhance education and professional training.\n - Attenuate labor market rigidities.\n - Reduce costs of doing business, including energy and international trade costs.\n - Strengthen tourism’s backward linkages and develop sectors where scale economies are less important to help diversify the economy." }, { "heading": "Selected economic and financial indicators (2014–19)", "content": "- Real GDP (at market prices, percent change): 3.6 (2014), -0.9 (2015), 3.4 (2016), 3.0 (2017), 3.5 (2018 proj.), 3.7 (2019 proj.).\n- Real GDP (at factor cost, percent change): 0.5 (2014), 1.8 (2015), 1.7 (2016), 2.5 (2017), 3.2 (2018 proj.).\n- Consumer prices, end of period: -2.6 (2014), -3.0 (2015), 2.2 (2016), 1.4 (2017), 1.5 (2018 proj.).\n- Central government revenue (percent of GDP): 23.3 (2014), 23.6 (2015), 24.3 (2016), 24.9 (2017), 24.8 (2018 proj.).\n- Central government expenditure (percent of GDP): 26.7 (2014), 26.3 (2015), 26.0 (2016), 27.1 (2017), 28.8 (2018 proj.), 29.9 (2019 proj.).\n- Primary balance (percent of GDP): 0.2 (2014), 0.8 (2015), 0.6 (2016), -0.4 (2017), -1.5 (2018 proj.).\n- Overall balance (percent of GDP): -3.4 (2014), -2.8 (2015), -1.7 (2016), -3.9 (2017), -5.1 (2018 proj.).\n- Broad money (M2, percent change): 1.2 (2014), 5.8 (2015), 2.3 (2016), 4.8 (2017), 5.3 (2018 proj.).\n- Credit to private sector (real, percent change): -9.9 (2014), -5.8 (2015), -4.8 (2016), -2.0 (2017), -1.6 (2018 proj.).\n- Credit to private sector (nominal, percent change): -6.7 (2014), -6.8 (2015), -7.8 (2016), -1.9 (2017), 0.0 (2018 proj.).\n- FDI (percent of GDP): 4.6 (2014), 7.1 (2015), 8.4 (2016), 10.1 (2017), 7.2 (2018 proj.).\n- Capital and financial account balance: -2.3 (2014), 2.8 (2015), 0.7 (2016).\n- Capital grants: 0.9 (2014).\n- Other (incl. errors and omissions): -1.4 (2014), -8.6 (2015), -8.0 (2016), -7.5 (2017).\n- Nominal GDP (EC$ millions): 4,095 (2014), 4,381 (2015), 4,436 (2016), 4,553 (2017), 4,771 (2018 proj.), 5,024 (2019 proj.).\n- Central government debt stock ($EC millions): 2,946 (2014), 2,980 (2015), 3,091 (2016), 3,258 (2017), 3,488 (2018 proj.), 3,789 (2019 proj.).\n- Central government debt (percent of GDP): 70.7 (2014), 67.8 (2015), 69.2 (2016), 72.2 (2017), 74.6 (2018 proj.).\n\nIMF Executive Board press release, June 20, 2018.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Staff Report\n- St. Lucia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json)", "Published: June 20, 2018", "GDP growth reached 3 percent in 2017, sustained by robust activity in several sectors.", "Tourism recovered strongly: stay-over arrivals rose by 11 percent, described as the fastest growth in the Caribbean.", "Favorable external conditions, hotel expansions, and addition of new flights drove the tourism recovery.", "Continued strong FDI and public investment supported activity in construction, wholesale and retail trade.", "Agriculture suffered lingering effects of Hurricane Matthew.", "Backed by strong tourism inflows, the current account balance strengthened.", "Exports of goods and services: 65.0 (2014), 64.1 (2015), 59.4 (2016), 63.6 (2017), 62.9 (2018 proj.), 62.8 (2019 proj.).", "Imports of goods and services: -55.9 (2014), -51.3 (2015), -54.5 (2016), -55.8 (2017), -58.1 (2018 proj.), -59.1 (2019 proj.).", "Net imputed international reserves (months of imports of goods and services): 3.3 (2014), 4.3 (2015), 3.9 (2016), 3.8 (2017), 4.1 (2018 proj.).", "Current account balance (percent of GDP): 6.9 (2014), 1.3 (2015), -2.5 (2016).", "Unemployment declined from 21.3 percent in 2016 to 20.2 percent in 2017.", "Youth unemployment remained high at 38.5 percent.", "Labor force participation has fallen.", "Inflation turned positive again after two years of oil-price related deflation.", "Consumer prices, end of period: -2.6 (2014), -3.0 (2015), 2.2 (2016), 1.4 (2017), 1.5 (2018 proj.), (no 2019 figure provided).", "Based on preliminary data, the fiscal stance deteriorated slightly in FY2017/18, reflecting additional spending.", "Overall fiscal deficit and public debt continued to rise.", "Authorities secured concessional financing from a bilateral creditor; terms not yet finalized.", "Central government (percent of GDP) — Revenue: 23.3 (2014), 23.6 (2015), 24.3 (2016), 24.9 (2017), 24.8 (2018 proj.), (2019 proj. not specified).", "Central government (percent of GDP) — Expenditure: 26.7 (2014), 26.3 (2015), 26.0 (2016), 27.1 (2017), 28.8 (2018 proj.), 29.9 (2019 proj.).", "Primary balance (percent of GDP): 0.2 (2014), 0.8 (2015), 0.6 (2016), -0.4 (2017), -1.5 (2018 proj.).", "Overall balance (percent of GDP): -3.4 (2014), -2.8 (2015), -1.7 (2016), -3.9 (2017), -5.1 (2018 proj.).", "Central government debt stock ($EC millions): 2,946 (2014), 2,980 (2015), 3,091 (2016), 3,258 (2017), 3,488 (2018 proj.), 3,789 (2019 proj.).", "Central government debt (In percent of GDP): 70.7 (2014), 67.8 (2015), 69.2 (2016), 72.2 (2017), 74.6 (2018 proj.).", "Nominal GDP (EC$ millions): 4,095 (2014), 4,381 (2015), 4,436 (2016), 4,553 (2017), 4,771 (2018 proj.), 5,024 (2019 proj.).", "Banks continued to underperform while the non-bank sector expanded further.", "Nonperforming loans are at 12.5 percent of total loans.", "Low profitability and contracting credit to the private sector since 2013.", "Credit unions expanded, with assets growing by 42 percent since 2014.", "Indigenous banks maintained corresponding bank relationships, albeit at higher costs.", "Money and credit (percent change) — Broad money (M2): 1.2 (2014), 5.8 (2015), 2.3 (2016), 4.8 (2017), 5.3 (2018 proj.).", "Credit to private sector (real): -9.9 (2014), -5.8 (2015), -4.8 (2016), -2.0 (2017), -1.6 (2018 proj.).", "Credit to private sector (nominal): -6.7 (2014), -6.8 (2015), -7.8 (2016), -1.9 (2017), 0.0 (2018 proj.).", "Months of imports coverage (percentage of demand liabilities): 89.2 (2014), 91.4 (2015), 90.7 (2016), 91.1 (2017), 91.6 (2018 proj.).", "Short-term outlook is favorable: GDP growth expected to remain buoyant in the near term, supported by large infrastructure investment, tourism-related FDI, and continued tourist inflows driven by the global recovery and increased capacity.", "Over the medium term, growth is expected to decline gradually as pipeline projects are completed.", "Downside risks are prevalent.", "In the absence of corrective fiscal measures, public sector wage negotiations and rising interest rates will add to expenditure pressures and government debt.", "Structural bottlenecks will continue to limit growth.", "Directors welcomed sustained growth and improved short-term outlook, but flagged significant risks including rising public debt and recurrent natural disasters.", "Fiscal consolidation and structural reforms were emphasized to remove impediments to longer‑term growth, enhance productivity, and reduce high production costs.", "Directors noted the necessity of infrastructure investment to address constraints but warned the resulting increase in public debt heightens fiscal vulnerabilities.", "They stressed the need for an adjustment aimed at attaining the ECCU debt target of 60 percent of GDP by 2030.", "Possible fiscal adjustment measures highlighted:", "Consideration of a fiscal rule, together with targeted social assistance, could support the fiscal effort while protecting the most vulnerable.", "Support for strengthening public financial management, including revising the PFM Act and reviving the Public‑Sector Investment Plan.", "Climate resilience: Directors welcomed the Climate Change Policy Assessment pilot and urged integration of mitigation and adaptation policies into the macroeconomic framework; donor grants and private investment seen as important.", "Financial sector recommendations:", "Structural reforms to improve growth and reduce external vulnerability:", "Real GDP (at market prices, percent change): 3.6 (2014), -0.9 (2015), 3.4 (2016), 3.0 (2017), 3.5 (2018 proj.), 3.7 (2019 proj.).", "Real GDP (at factor cost, percent change): 0.5 (2014), 1.8 (2015), 1.7 (2016), 2.5 (2017), 3.2 (2018 proj.).", "Consumer prices, end of period: -2.6 (2014), -3.0 (2015), 2.2 (2016), 1.4 (2017), 1.5 (2018 proj.).", "Central government revenue (percent of GDP): 23.3 (2014), 23.6 (2015), 24.3 (2016), 24.9 (2017), 24.8 (2018 proj.).", "Central government expenditure (percent of GDP): 26.7 (2014), 26.3 (2015), 26.0 (2016), 27.1 (2017), 28.8 (2018 proj.), 29.9 (2019 proj.).", "Primary balance (percent of GDP): 0.2 (2014), 0.8 (2015), 0.6 (2016), -0.4 (2017), -1.5 (2018 proj.).", "Overall balance (percent of GDP): -3.4 (2014), -2.8 (2015), -1.7 (2016), -3.9 (2017), -5.1 (2018 proj.).", "Broad money (M2, percent change): 1.2 (2014), 5.8 (2015), 2.3 (2016), 4.8 (2017), 5.3 (2018 proj.).", "Credit to private sector (real, percent change): -9.9 (2014), -5.8 (2015), -4.8 (2016), -2.0 (2017), -1.6 (2018 proj.).", "Credit to private sector (nominal, percent change): -6.7 (2014), -6.8 (2015), -7.8 (2016), -1.9 (2017), 0.0 (2018 proj.).", "FDI (percent of GDP): 4.6 (2014), 7.1 (2015), 8.4 (2016), 10.1 (2017), 7.2 (2018 proj.).", "Capital and financial account balance: -2.3 (2014), 2.8 (2015), 0.7 (2016).", "Capital grants: 0.9 (2014).", "Other (incl. errors and omissions): -1.4 (2014), -8.6 (2015), -8.0 (2016), -7.5 (2017).", "Nominal GDP (EC$ millions): 4,095 (2014), 4,381 (2015), 4,436 (2016), 4,553 (2017), 4,771 (2018 proj.), 5,024 (2019 proj.).", "Central government debt stock ($EC millions): 2,946 (2014), 2,980 (2015), 3,091 (2016), 3,258 (2017), 3,488 (2018 proj.), 3,789 (2019 proj.).", "Central government debt (percent of GDP): 70.7 (2014), 67.8 (2015), 69.2 (2016), 72.2 (2017), 74.6 (2018 proj.).", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Staff Report](https://www.imf.org/en/publications/cr/issues/2018/06/20/st-lucia-2018-article-iv-consultation-press-release-staff-report-and-statement-by-the-46003)", "[St. Lucia and the IMF](http://www.imf.org/external/country/LCA/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "json": "/en/news/articles/2018/06/20/pr18248-st-lucia-imf-executive-board-concludes-2018-article-iv-consultation/index.json", "bundleManifest": 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