Press Release No. <a name="P16_75"></a>04/97

The following statement was released in Roseau on May 14, 2004, by an International Monetary Fund (IMF) mission:

"An IMF mission was in Roseau during May 4-13, 2004 to conduct discussions for the second review under the Poverty Reduction and Growth Facility (PRGF) arrangement. The mission was headed by Mr. Alejandro Santos. Pending IMF Executive Board completion of this review in early July, disbursements of about US$450,000 would be available to Dominica. The mission met with Prime Minister Roosevelt Skerrit, senior government officials, as well as representatives from civil society, including the public sector labor unions.

"The main findings of the mission were:

• There are increasing signs of an emerging but broad-based growth. After a long period of economic contraction, the mission expects GDP to recover and grow by 1 percent in 2004.

• All performance criteria for end-March 2004 have been observed. The mission was pleased to see a very strict implementation of the program and a rebound in public sector investment. The mission commended the authorities for successfully implementing the program under very difficult conditions, and at the same time urged them to continue executing the program with strong determination.

• Significant progress has been made in restructuring the public debt. Negotiations continue with different classes of creditors. The mission was encouraged by the seriousness of the negotiations and the efforts made by all parties to resolve this difficult situation in an orderly manner, to prevent future difficulties in servicing the public debt. The mission hopes that these discussions will be successfully completed in the coming weeks.

• Budget preparations are well advanced and in line with the program. The mission discussed with the authorities the implementation of the fiscal package equivalent to 2½ percent of GDP agreed in November of 2003, including: (i) reduction in the wage bill by 5 percent through labor retrenchment; (ii) significant reduction in discretionary tax exemptions; (iii) budgetary expenditure cuts; (iv) gradual increase in the retirement age of public employees from 55 to 60 years; (v) strengthening of the vacation and study leave policy for public employees; and (vi) broadening the tax base for professional license fees. Discussions continue on certain technical elements of the program, these discussions are expected to be satisfactorily resolved shortly.

"The mission would like to take this opportunity to thank the authorities and the citizens of Dominica for their hospitality and open dialogue. As in the past, we would like to encourage the public at large to read all the IMF documents related to Dominica, which can be found at our website: http://www.imf.org/external/country/DMA/index.htm."

---