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International Monetary Fund. Western Hemisphere Dept.

IMF Country Report No. 22/346

International Monetary Fund. Western Hemisphere Dept.
St. Vincent and the Grenadines is recovering from the pandemic and 2021 volcanic eruptions. Despite the authorities’ strong efforts to contain deficits, critical fiscal responses to these shocks pushed up public debt, which—while assessed as sustainable—remains at high risk of distress should future shocks materialize. The economy is projected to grow by 5 percent in 2022, supported by large-scale investment projects and recoveries in tourism and agriculture. Surging commodity prices, fueled by Russia’s war in Ukraine, are expected to raise inflation sharply to 5.8 percent in 2022, adding to fiscal and external pressures and weighing on the recovery. So far, the financial system has weathered the shocks relatively well. The outlook is subject to significant downside risks primarily from an abrupt slowdown in trading partners’ growth, potential delays in investment projects including due to supply chain disruptions, and the ever-present threat of frequent natural disasters.
International Monetary Fund. Western Hemisphere Dept.

1. Prior to the pandemic, the authorities had made great strides with strengthening fundamentals. The authorities had implemented policies in line with past Fund advice (Annex I). Significant efforts were made to diversify the export base, strengthen human capital, improve the investment climate, and build climate resilience, benefiting from the relatively sound governance compared with peer averages. A new airport opened in 2017 improved tourism prospects and further plans for upgrading essential economic infrastructure were instituted, including the port modernization project and the new hospital, both with climate resilient features and financed by concessional loans (Annex II).

International Monetary Fund. Western Hemisphere Dept.

ST. VINCENT AND THE GRENADINES