September 5, 2018
On June 18, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Dominica.
", "publishDate": "2018-09-05", "sections": [ { "heading": "Background and Hurricane Maria impact", "content": "- On June 18, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Dominica.\n- On September 18, 2017, category 5 Hurricane Maria hit Dominica while the country was still recovering from tropical storm Erika.\n- Damage from Hurricane Maria was estimated at US$1.3 billion (226 percent of GDP).\n- Most economic sectors sustained significant damage and losses, with public infrastructure carrying the brunt.\n- The output collapse and reconstruction costs resulted in large fiscal and current account deficits.\n- Fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.\n- With limited revenue, drawdown of large government deposits, grants, and an insurance payout helped meet financing needs.\n- The hurricane exacerbated weaknesses in the financial sector, particularly of non-bank institutions, which face undercapitalization, low profitability and high non-performing loans.\n- Credit to the private sector has been flat and inflation remains subdued." }, { "heading": "Economic outlook and projections", "content": "- In 2018, output is projected to decline by 14 percent and to take about 5 years to recover to pre-hurricane levels.\n- Signs of recovery, particularly in construction and the public sector, have started to emerge.\n- Risks to the outlook include:\n - the budget becoming financially constrained and unable to sustain adequate investment given high debt, limited buffers, weak revenue, and urgent reconstruction needs;\n - financial instability stemming from undercapitalization of systemic financial institutions;\n - recurrent natural disasters with low resilience;\n - uncertainty regarding CBI and grant income;\n - external competitiveness challenges." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Directors commended the authorities’ response to the humanitarian crisis and devastation wrought by Hurricane Maria.\n- Fiscal policy recommendations:\n - Implement cost effective fiscal policies and reforms to support recovery while containing expansion of public debt.\n - Contain current spending extraneous to recovery.\n - Enhance the efficiency of capital investment while protecting critical social and recovery spending.\n - Invest in resilient infrastructure given Dominica’s vulnerability to natural disasters, despite its higher cost.\n - Create a savings fund for natural disasters.\n - Once output recovers, pursue fiscal consolidation to sustain reconstruction while generating a primary surplus sufficient to set public debt on a downward trajectory.\n- Financial sector recommendations:\n - Strengthen financial sector regulation and supervision to address vulnerabilities exacerbated by Hurricane Maria.\n - Take decisive action to reduce non-performing loans and capital shortfalls.\n - Prepare adequately for possible liquidity pressures in line with recommendations of Fund’s technical assistance.\n - Maintain a proactive stance to mitigate the risk of withdrawal of correspondent banking relationships, including continued strengthening of the AML/CFT framework.\n - Phase out the off-shore bank sector and cease new license issuance (directors welcomed cessation of new license issuance).\n- Growth and business environment recommendations:\n - Increase private sector participation and improve the business environment.\n - Identify and remove costs and barriers that affect investment and profitability.\n - Ensure public sector compensation decisions consider their impact on private wages and competitiveness.\n - Improve the business environment, including efforts to reduce the costs of dealing with the government.\n - Enforce construction and zoning regulations strictly given vulnerability to natural disasters." }, { "heading": "Key statistics and projections (Dominica: Selected Economic and Financial Indicators, 2012-23)", "content": "- Real GDP (percent):\n - 2014: 4.2\n - 2015: -3.7\n - 2016: 2.6\n - 2017: -4.7\n - 2018: -14.1\n - 2019: 9.4\n - 2020: 6.8\n - 2021: 3.6\n - 2022: 2.3\n - 2023: 1.5\n- Nominal GDP (percent):\n - 2014: 3.9\n - 2015: 1.3\n - 2016: 8.7\n - 2017: -4.1\n - 2018: -12.9\n - 2019: 11.2\n - 2020: 5.5\n - 2021: 4.4\n - 2022: 3.2\n- Consumer prices, end of period:\n - 2014: 0.5\n - 2015: -0.5\n - 2016: -0.2\n - 2017: 1.4\n - 2018: 1.8\n - 2019: 2.0\n- Central government balances (percent of GDP, fiscal years July–June):\n - Revenue:\n - 2014: 27.1\n - 2015: 31.5\n - 2016: 47.1\n - 2017: 46.8\n - 2018: 37.0\n - 2019: 34.8\n - 2020: 27.8\n - 2021: 27.2\n - 2022: 27.3\n - Expenditure:\n - 2014: 31.7\n - 2015: 32.4\n - 2016: 43.3\n - 2017: 46.1\n - 2018: 41.0\n - 2019: 38.9\n - 2020: 36.2\n - 2021: 34.2\n - 2022: 26.3\n - 2023: 26.5\n - Primary balance:\n - 2014: -3.0\n - 2015: 1.0\n - 2016: 5.4\n - 2017: -2.1\n - 2018: -2.3\n - 2019: -6.6\n - 2020: -5.2\n - 2021: 2.9\n - Overall balance (incl. ND cost buffers):\n - 2014: -4.6\n - 2015: -0.9\n - 2016: 3.8\n - 2017: 0.7\n - 2018: -5.5\n - 2019: -5.6\n - 2020: -9.9\n - 2021: -8.5\n - 2022: -0.7\n- Central government debt (incl. guaranteed, percent of GDP):\n - 2014: 78.7\n - 2015: 75.3\n - 2016: 71.7\n - 2017: 82.7\n - 2018: 87.7\n - 2019: 83.3\n - 2020: 86.1\n - 2021: 87.8\n - 2022: 87.1\n - 2023: 85.2\n - External:\n - 2014: 61.0\n - 2015: 58.1\n - 2016: 54.7\n - 2017: 66.0\n - 2018: 71.1\n - 2019: 68.1\n - 2020: 72.8\n - 2021: 75.8\n - 2022: 75.7\n - 2023: 74.7\n - Domestic:\n - 2014: 17.7\n - 2015: 17.1\n - 2016: 16.7\n - 2017: 16.6\n - 2018: 15.2\n - 2019: 13.2\n - 2020: 12.1\n - 2021: 11.4\n - 2022: 10.5\n- Balance of payments:\n - Current account balance, of which:\n - 2014: -7.1\n - 2015: -1.9\n - 2016: 0.8\n - 2017: -12.5\n - 2018: -31.7\n - 2019: -22.1\n - 2020: -20.4\n - 2021: -21.3\n - 2022: -14.2\n - 2023: -11.9\n - Exports of goods and services (percent of GDP):\n - 2014: 51.6\n - 2015: 50.1\n - 2016: 48.3\n - 2017: 42.6\n - 2018: 33.2\n - 2019: 41.4\n - 2020: 44.2\n - 2021: 43.4\n - 2022: 43.7\n - Imports of goods and services 5/ (percent of GDP):\n - 2014: 63.4\n - 2015: 58.8\n - 2016: 54.0\n - 2017: 67.2\n - 2018: 83.1\n - 2019: 81.0\n - 2020: 70.3\n - 2021: 61.5\n - 2022: 58.5\n- External debt (gross) 6/ (percent of GDP):\n - 2014: 83.7\n - 2015: 86.5\n - 2016: 77.9\n - 2017: 88.8\n - 2018: 99.6\n - 2019: 95.6\n - 2020: 99.7\n - 2021: 101.9\n - 2022: 102.2\n - 2023: 101.0\n- Net imputed international reserves:\n - End-year (millions of U.S. dollars):\n - 2014: 99.9\n - 2015: 125.4\n - 2016: 220.9\n - 2017: 210.9\n - 2018: 210.7\n - 2019: 208.9\n - 2020: 206.5\n - 2021: 202.1\n - 2022: 210.6\n - 2023: 215.3\n - Months of imports of goods and services:\n - 2014: 4.8\n - 2015: 8.4\n - 2016: 6.3\n - 2017: 5.7\n - 2018: 5.6\n - 2019: 6.4\n - 2020: 6.6\n- Saving-Investment Balance (percent of GDP):\n - Saving:\n - 2014: 7.6\n - 2015: 14.3\n - 2016: 20.0\n - 2017: 10.8\n - 2018: -6.3\n - 2019: -1.0\n - 2020: -2.2\n - 2021: -6.7\n - 2022: -5.0\n - 2023: -6.0\n - Investment:\n - 2014: 14.8\n - 2015: 16.2\n - 2016: 19.2\n - 2017: 23.3\n - 2018: 25.4\n - 2019: 21.1\n - 2020: 18.2\n - 2021: 14.6\n - 2022: 9.2\n - 2023: 5.9\n\nIMF Executive Board Concludes the 2018 Article IV Consultation with Dominica, September 5, 2018.\n\n---\n\n\n References\n\n- Dominica 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/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/bundle-manifest.json)", "Published: September 5, 2018", "On June 18, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Dominica.", "On September 18, 2017, category 5 Hurricane Maria hit Dominica while the country was still recovering from tropical storm Erika.", "Damage from Hurricane Maria was estimated at US$1.3 billion (226 percent of GDP).", "Most economic sectors sustained significant damage and losses, with public infrastructure carrying the brunt.", "The output collapse and reconstruction costs resulted in large fiscal and current account deficits.", "Fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.", "With limited revenue, drawdown of large government deposits, grants, and an insurance payout helped meet financing needs.", "The hurricane exacerbated weaknesses in the financial sector, particularly of non-bank institutions, which face undercapitalization, low profitability and high non-performing loans.", "Credit to the private sector has been flat and inflation remains subdued.", "In 2018, output is projected to decline by 14 percent and to take about 5 years to recover to pre-hurricane levels.", "Signs of recovery, particularly in construction and the public sector, have started to emerge.", "Risks to the outlook include:", "Directors commended the authorities’ response to the humanitarian crisis and devastation wrought by Hurricane Maria.", "Fiscal policy recommendations:", "Financial sector recommendations:", "Growth and business environment recommendations:", "Real GDP (percent):", "Nominal GDP (percent):", "Consumer prices, end of period:", "Central government balances (percent of GDP, fiscal years July–June):", "Central government debt (incl. guaranteed, percent of GDP):", "Balance of payments:", "External debt (gross) 6/ (percent of GDP):", "Net imputed international reserves:", "Saving-Investment Balance (percent of GDP):", "[Dominica and the IMF](http://www.imf.org/external/country/DMA/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/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/index.md", "json": "/en/news/articles/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2018/09/05/pr18335-dominica-imf-executive-board-concludes-the-2018-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T22:09:28.121Z" }