IMF Executive Board Concludes 2025 Article IV Consultation with St. Lucia

IMF News, January 14, 2026

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IMF Executive Board Concludes 2025 Article IV Consultation with St. Lucia

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Bibliographic details

• Published: January 14, 2026

Overview

• Executive Board concluded the 2025 Article IV consultation with St. Lucia on January 12, 2026, and endorsed the staff appraisal on a lapse of time basis.
• Authorities consented to publication of the Staff Report.
• St. Lucia has staged a robust performance in recent years but faces long-standing challenges: income per capita diverging from the U.S., weak productivity, high public debt stock, and risks from natural disasters.

Macroeconomic Outlook and Inflation

• Real GDP growth:
  • Expanded by 4.7 percent in 2024.
  • Projected to grow by 1.7 percent in 2025.
  • Projected to rebound to 2.3 percent in 2026.
  • Medium-term convergence to potential growth of 1.5 percent.
• Tourism and labor:
  • Stayover tourist arrivals declined by 3.2 percent y/y during January–September 2025.
  • Unemployment: historic low of 10.8 percent in 2024; increased to 13.4 percent in Q2 2025.
• Inflation:
  • Headline CPI fell by 0.5 percent in 2024.
  • Twelve-month moving-average inflation projected to increase by 1.3 percentage points to 0.8 percent in 2025.
  • Gradual convergence to 2 percent over the medium term.
• Price and growth drivers:
  • 2024 expansion driven by robust tourism flows from the U.S. and construction.
  • 2025 growth expected to reflect weaker tourism but strong construction activities, domestic demand, and credit expansion.
  • Tourism pickup expected to support rebound in 2026.

External Sector and Balance of Payments

• Current account:
  • Current account deficit increased in 2024 due to a widening net income deficit but is expected to decline over the medium term.
  • Current account deficit projected to narrow to 1.1 percent of GDP by 2030.
• Trade and investment:
  • Exports of goods and services share and imports share reflect continued openness and import dependence.
  • External risks: geopolitical tensions, escalating trade measures, prolonged policy uncertainty could dampen global activity, weaken tourism and FDI, and raise import costs.
• Balance sheet indicators (selected projections and estimates from table):
  • Current account balance: -1.4 (2024), -1.1 (2025), -1.1 (2030 shown in projections column).
  • Exports of goods and services: 60.1 (2024), 61.5 (2025), 62.9 (2030).
  • Imports of goods and services: -56.2 (2024), -55.2 (2025), -58.3 (2030).
  • External debt (gross): 68.7 (2024), 69.1 (2025), 65.0 (2030).

Fiscal Performance, Public Debt, and Fiscal Policy Priorities

• Fiscal outcomes:
  • Primary balance surpluses recorded for three consecutive years.
  • Overall fiscal deficit excluding natural disaster (ND) costs expected to narrow to -2.3 percent of GDP by FY2030/31.
• Debt dynamics:
  • Total public sector debt: 76.7 (2024), 77.2 (2025), projected to stabilize around 77 percent of GDP in the medium term.
  • Central government debt: 72.4 (2024), 73.1 (2025), 73.6 (2030).
• Fiscal priorities and recommended pillars for adjustment:
  • Overarching priority: reduce public debt and create room for capital spending through revenue-based measures.
  • Three pillars of growth-friendly fiscal adjustment:

1. A comprehensive tax reform and enhanced tax administration—starting now and implemented gradually over the medium term. 2. Improved control and targeting of current expenditures. 3. Adoption of a sound fiscal rule within a fiscal responsibility framework.

• Specific tax and revenue measures suggested (to boost revenue, equity, and reduce distortions):
  • Rationalize corporate income tax incentives.
  • Broaden the VAT base (including digital services) with targeted support to vulnerable households.
  • Improve personal income tax progressivity.
  • Shorten property exemptions.
  • Reform fuel taxes and increase excises on alcohol and tobacco.
• Tax administration priorities:
  • Strengthen audit and inspection.
  • Accelerate digitalization of processes.
  • Enhance compliance and improve transparency.
• Fiscal framework and institutional measures:
  • Publish an MTFF prior to the annual budget with at least three years’ projections, a fiscal risk statement, a debt sustainability analysis, and policy scenarios.
  • Examine potential establishment of operational fiscal rules.
  • Continue to improve Citizenship Investment Program (CIP) governance and transparency.
• Risks without further fiscal action:
  • Under current policies, public debt will fall short of the regional target of 60 percent of GDP by 2035.
  • Development resources may shrink, and debt and borrowing costs could increase further during shocks.

Financial Sector and Non-Bank Institutions

• Banking sector:
  • Well-capitalized and highly liquid, but NPLs remain elevated despite recent improvements.
  • Policy priorities include ensuring full compliance with the ECCB’s 60 percent provisioning requirement for NPLs and avoiding excessive reliance on general reserves.
  • Recent legislation strengthens debtor rights and movable asset financing; next step could be foreclosure legislation balancing market efficiency and borrower protections.
• Non-bank financial institutions:
  • Strengthen resilience of credit unions: develop and enforce prudential standards, streamline provisioning rules to align with ECCB practices, progressively extend Asset Quality Reviews and stress testing.
  • Insurance sector issues: rising reinsurance costs and low property retention ratios constrain profitability and coverage—need for a more integrated regional supervisory framework.
  • Continue efforts to mitigate ML/FT risks.

Structural Policies, Supply-Side Constraints, and Competitiveness

• Key supply-side bottlenecks:
  • High financing costs, limited credit access, regulatory burdens, and infrastructural constraints hinder productivity and raise cost of living.
• Policy recommendations:
  • Rebalance spending to create space for growth- and equity-enhancing expenditures; ensure social protection is well-targeted and budgeted.
  • Strengthen PPP framework through transparent reviews and sound institutional structures to support infrastructure without undermining fiscal discipline.
  • Monitor the recent minimum wage introduction to protect vulnerable groups without harming employment or competitiveness.
  • Continue digitalization: expand internet access, improve digital literacy, and foster innovation to create jobs and attract investment.
  • Continue climate adaptation, energy transition, and climate insurance efforts.
  • Expand trade relationships, improve connectivity, and strengthen regional cooperation (OECS and CARICOM) to enhance resilience and affordability; streamline customs, reduce freight costs, and enhance market competition.
  • Broaden the economic base beyond tourism into human capital-intensive services such as digital and professional services.

Risks and Scenarios

• Downside risks (tilted to the downside):
  • External: geopolitical tensions, escalating trade measures, prolonged policy uncertainty, weaker global activity affecting tourism and FDI, increased import costs.
  • Domestic: weaker-than-expected performance in tourism and construction, natural disasters, climate change risks.
• Upside risks:
  • Stronger-than-expected growth in tourism, construction, and public investment.

Key Social and Economic Indicators (selected exact figures)

• Area (sq. km): 616
• Infant mortality (per thous. live births, 2023): 14.3
• Human Development Index ranking (of 189 countries, 2023): 103
• Population total (thousands, 2024, UN): 179.7
• Gross Domestic Product (2024, millions of US dollars): 2,574
• GDP rate of growth (average 2014-2024): 0.34
• Population density (per sq. km., 2024): 291.8
• Gross Domestic Product (2024, millions of EC dollars): 6,951
• Secondary education enrollment (percent, 2023): 90.41
• US$ per capita (2024): 14,323
• Life expectancy at birth (years, 2024): 72.8

• Selected table values (annual percent change / shares where indicated):
  • Real GDP: -23.8 (2020), 11.3 (2021), 20.6 (2022), 3.3 (2023), 4.7 (2024), 1.7 (2025), 2.3 (2026), 1.8 (2027), 1.6 (2028), 1.5 (2029), 1.5 (2030 noted as long-run potential).
  • Consumer prices, period average: -1.8 (2020), 2.4 (2021), 6.4 (2022), 4.5 (2023), -0.5 (2024), 0.8 (2025), 1.9 (2026), 2.0 (2027).
  • Unemployment rate (% annual average): 21.7 (2020), 21.9 (2021), 16.5 (2022), 14.0 (2023), 10.8 (2024).
  • Central government revenue (percent of GDP): 21.6 (2020), 21.3 (2021), 22.1 (2022), 22.6 (2023), 22.4 (2024), 22.5 (2025), 22.3 (2026), 22.2 (2027), 22.1 (2028), 22.0 (2029), 22.0 (2030 as table continues).
  • Tax revenue (percent of GDP): 18.9 (2020), 18.0 (2021), 18.1 (2022), 18.7 (2023), 19.7 (2024), 19.3 (2025), 19.2 (2026), 19.1 (2027), 19.0 (2028).
  • Expenditure (percent of GDP): 33.1 (2020), 26.7 (2021), 23.8 (2022), 25.3 (2023), 24.4 (2024), 25.2 (2025), 25.1 (2026), 24.9 (2027), 24.8 (2028), 24.6 (2029).
  • Interest payments (percent of GDP): 3.8 (2020), 3.2 (2021), 3.5 (2022), 3.4 (2023), 3.6 (2024), 3.9 (2025).
  • Capital expenditure (percent of GDP): 6.2 (2020), 4.2 (2021), 3.0 (2022), 4.6 (2023), 3.1 (2024), 2.9 (2025), 2.7 (2026), 2.5 (2027).
  • Overall balance excl. ND cost: -11.5 (2020), -5.4 (2021), -2.5 (2022), -3.2 (2023), -2.9 (2024), -2.7 (2025), -2.6 (2026), -2.3 (2030 projection point noted).
  • Total public sector debt (percent of GDP): 94.4 (2020), 81.9 (2021), 73.9 (2022), 75.2 (2023), 76.7 (2024), 77.2 (2025), 77.1 (2026), 77.0 (2027).
  • Domestic debt (percent of GDP): 49.2 (2020), 39.3 (2021), 35.9 (2022), 31.8 (2023), 31.5 (2024), 30.9 (2025), 30.5 (2026), 30.2 (2027), 29.9 (2028), 29.7 (2029), 29.5 (2030).
  • External debt (percent of GDP): 45.3 (2020), 42.6 (2021), 38.0 (2022), 43.5 (2023), 45.1 (2024), 46.3 (2025), 46.7 (2026), 47.0 (2027), 47.2 (2028), 47.4 (2029).
  • Broad money (M2) annual change (eop): -6.6 (2020), 14.9 (2021), 4.3 (2022), 4.4 (2023), 4.1 (2024).
  • Credit to private sector (nominal): -0.1 (2020), 2.8 (2021), 5.1 (2022), 4.0 (2023).
  • Net imputed international reserves: Months of imports of goods and services: 3.7 (most recent memorandum item).

Source: IMF press release “IMF Executive Board Concludes 2025 Article IV Consultation with St. Lucia” (January 14, 2026).

References

• St. Lucia and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• www.imf.org/countries/lca
• https://www.imf.org/en/home