{ "title": "Turks & Caicos Islands: Technical Assistance Report-Financial Stability Report Review, Credit Risk Modelling, and Stress Testing", "publication": "Technical Assistance Reports, April 4, 2025", "sourceUrl": "https://www.imf.org/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873", "canonical": "https://www.imf.org/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873", "overlayPath": "/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/index.md", "summary": "The IMF Caribbean Regional Technical Assistance Centre (CARTAC) conducted two technical assistance (TA) missions in the Turks and Caicos Islands (TCI) between January and March 2024.", "sections": [ { "heading": "Mission overview", "content": "- Two technical assistance (TA) missions by the IMF Caribbean Regional Technical Assistance Centre (CARTAC) in the Turks and Caicos Islands (TCI) between January and March 2024.\n- First mission: January 29 to February 2, 2024 — focused on reviewing the Financial Stability Report (FSR), developing sectoral credit risk models, and training TCIFSC staff on advanced credit risk modeling techniques.\n- Second mission: March 11 to 15, 2024 — focused on building a multi-factor, multi-period bank solvency stress testing tool tailored to TCI, reviewing macroeconomic and regulatory data, refining stress test assumptions, and training TCIFSC staff on the new framework.\n- An illustrative stress test was performed using December 2023 data and incorporated baseline and adverse macroeconomic scenarios." }, { "heading": "Analytical work and tools developed", "content": "- Review and enhancement of the latest Financial Stability Report to improve analytical depth and clarity.\n- Development of sectoral credit risk models to assess the impact of macroeconomic scenarios on bank non-performing loans (NPLs).\n- Construction of a multi-factor, multi-period bank solvency stress testing tool tailored to TCI’s financial sector.\n- Calibration of macroeconomic models with emphasis on risks related to tourism-dependent credit exposures and external economic shocks.\n- Training sessions for TCIFSC staff on credit risk modeling techniques and on implementing the stress testing framework." }, { "heading": "Illustrative stress testing and scenarios", "content": "- Stress test inputs: December 2023 data.\n- Scenarios used: baseline and adverse macroeconomic scenarios.\n- Key risk considerations in scenario design:\n - Tourism-dependent credit exposures.\n - External economic shocks.\n- Multi-period solvency framework designed to evaluate bank resilience under the specified macroeconomic scenarios." }, { "heading": "Key findings and conclusions", "content": "- Enhancing the FSR can improve risk communication and analytical clarity for stakeholders.\n- Sectoral credit risk models and the new stress testing tool allow quantification of macroeconomic scenario impacts on bank NPLs and solvency.\n- Calibrated macroeconomic models highlight the materiality of tourism exposure and external shocks for financial stability in TCI.\n- Training and capacity building conducted to enable TCIFSC staff to apply and maintain the new analytical tools." }, { "heading": "Policy recommendations", "content": "- Further develop the Financial Stability Report to improve risk communication and streamline content.\n- Institutionalize regular stress testing exercises to improve monitoring of financial resilience.\n- Expand financial data collection and management by developing a centralized financial stability database to support ongoing macroprudential analysis.\n- Increase coordination between the Turks and Caicos Islands Financial Services Commission (TCIFSC) and the Ministry of Finance for scenario development in stress testing.\n\n---\n\n Content in this bundle\n\n- Executive Summary\n - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873" } ], "bullets": [ "[Markdown version](/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/index.md)", "[Structured JSON version](/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/index.json)", "[Bundle manifest](/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/bundle-manifest.json)", "Published: April 4, 2025", "Series: Technical Assistance Reports", "DOI: https://doi.org/10.5089/9798229007450.019", "Two technical assistance (TA) missions by the IMF Caribbean Regional Technical Assistance Centre (CARTAC) in the Turks and Caicos Islands (TCI) between January and March 2024.", "First mission: January 29 to February 2, 2024 — focused on reviewing the Financial Stability Report (FSR), developing sectoral credit risk models, and training TCIFSC staff on advanced credit risk modeling techniques.", "Second mission: March 11 to 15, 2024 — focused on building a multi-factor, multi-period bank solvency stress testing tool tailored to TCI, reviewing macroeconomic and regulatory data, refining stress test assumptions, and training TCIFSC staff on the new framework.", "An illustrative stress test was performed using December 2023 data and incorporated baseline and adverse macroeconomic scenarios.", "Review and enhancement of the latest Financial Stability Report to improve analytical depth and clarity.", "Development of sectoral credit risk models to assess the impact of macroeconomic scenarios on bank non-performing loans (NPLs).", "Construction of a multi-factor, multi-period bank solvency stress testing tool tailored to TCI’s financial sector.", "Calibration of macroeconomic models with emphasis on risks related to tourism-dependent credit exposures and external economic shocks.", "Training sessions for TCIFSC staff on credit risk modeling techniques and on implementing the stress testing framework.", "Stress test inputs: December 2023 data.", "Scenarios used: baseline and adverse macroeconomic scenarios.", "Key risk considerations in scenario design:", "Multi-period solvency framework designed to evaluate bank resilience under the specified macroeconomic scenarios.", "Enhancing the FSR can improve risk communication and analytical clarity for stakeholders.", "Sectoral credit risk models and the new stress testing tool allow quantification of macroeconomic scenario impacts on bank NPLs and solvency.", "Calibrated macroeconomic models highlight the materiality of tourism exposure and external shocks for financial stability in TCI.", "Training and capacity building conducted to enable TCIFSC staff to apply and maintain the new analytical tools.", "Further develop the Financial Stability Report to improve risk communication and streamline content.", "Institutionalize regular stress testing exercises to improve monitoring of financial resilience.", "Expand financial data collection and management by developing a centralized financial stability database to support ongoing macroprudential analysis.", "Increase coordination between the Turks and Caicos Islands Financial Services Commission (TCIFSC) and the Ministry of Finance for scenario development in stress testing.", "**Executive Summary**" ], "related": [ { "title": "Executive Summary", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025036-print-pdf.pdf", "summary": { "path": "/-/media/files/publications/tar/2025/english/tarea2025036-print-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/tar/2025/english/tarea2025036-print-pdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/index.md", "json": "/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/index.json", "bundleManifest": "/en/publications/technical-assistance-reports/issues/2025/04/04/turks-caicos-islands-technical-assistance-report-financial-stability-report-review-credit-565873/bundle-manifest.json" }, "generatedAtUtc": "2026-09-19T05:32:56.863Z" }