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International Monetary Fund. Western Hemisphere Dept.

surveys. NSOs of most of ECCU’s member countries have access to relevant tax information available at the country’s inland revenue department. Supported by CARTAC, increased number of NSOs and/or the tourism authorities conduct sound visitor expenditure surveys (VES). 3 Recent CARTAC missions to the ECCB and the NSOs are assisting in developing suitable backcasting techniques to address significant breaks in the balance of payments for years prior 2014. In coordination with the debt management offices of the ministries of finances, the ECCB has also posted aggregated

.9 Rationalizing spending on goods and services 0.1 0.3 0.4 0.5 0.5 Source: Fund staff estimates. 1/ Active policy scenario. Savings compared to the 2012 level. 2/ Improvements in efficiency of tax collections, including through reduction of tax exemptions. Fiscal Measures and Expected Savings 1/ (In percent of GDP) ©International Monetary Fund. Not for Redistribution ST. VINCENT AND THE GRENADINES INTERNATIONAL MONETARY FUND 11  Improving compliance and enforcing tax laws: A recent CARTAC mission found that tax compliance has declined by about 20 percentage points

International Monetary Fund. Western Hemisphere Dept.

discontinued compilation of BPM5 data. With the shift to the new methodology, St. Lucia’s current account improved markedly, moving from large deficits to large surpluses in 2014 and 2015. The bulk of this adjustment is explained by the balance of services, in which travel expenditures are now based on updated tourist expenditure surveys and include students at offshore universities. The balances on trade and net income have worsened with the move to the new classification, but not sufficiently to offset the improvement in services. However, a recent CARTAC mission has

International Monetary Fund. Western Hemisphere Dept.
This 2018 Article IV Consultation highlights that the GDP growth in St. Lucia reached 3 percent in 2017, sustained by robust activity in several sectors. Favorable external conditions, coupled with hotel expansions and the addition of new flights, generated a strong recovery in tourism, with stay-over arrivals rising by 11 percent, the fastest growth in the Caribbean. Backed by strong tourism inflows, the current account balance strengthened. Unemployment declined from 21.3 percent in 2016 to 20.2 percent in 2017, but youth unemployment remains high at 38.5 percent and labor force participation has fallen. The short-term outlook is favorable, but prospects beyond that are sobering. GDP growth is expected to remain buoyant in the near term.
International Monetary Fund. Western Hemisphere Dept.
This paper presents IMF’s 2019 Discussion on Common Policies of Member Countries of the Eastern Caribbean Currency Union (ECCU). ECCU’s gross domestic product (GDP) growth accelerated from 3/4 percent in 2017 to 3 3/4 percent in 2018, reflecting buoyancy in the tourism sector, sizable Citizenship-by-Investment (CBI) inflows, and a recovery from the 2017 hurricanes in Anguilla and Dominica, which were supported by large public investments in reconstruction. Fiscal deficits increased in 2018–2019, but they have remained moderate. Efforts are needed to streamline, and re-balance tax incentives based on clear principles consistent with international best practices. External imbalances are sizable and significant financial sector vulnerabilities affect both banks and non-banks. Growth is projected to gradually moderate toward its long-term average of 2 1/4 percent as the cyclical momentum normalizes and CBI inflows ease. These trends would also contribute to wider fiscal deficits, ending the downward drift in public debt dynamics. The outlook is clouded by downside risks, including a possible intensification of natural disasters and financial sector weaknesses.
International Monetary Fund. Western Hemisphere Dept.
KEY ISSUES Background: Activity is slowly recovering after a cumulative decline of about 5 percent during 2008–10. Expansionary fiscal policies—largely to counteract the impact of the global slowdown and the two successive natural disasters—led to a deterioration in fiscal balances, with public debt up by about 10½ percent of GDP over this period. The fiscal deficit, however, is expected to narrow this year, largely reflecting cuts in capital spending. In the financial sector, non performing loans remain above prudential guidelines; provisioning and profitability are low; and supervision remains weak. Policy Challenges: Further fiscal consolidation—including by rebalancing government expenditure toward growth and employment generating public sector projects—is required to ensure medium-term sustained growth as well as keep public sector debt on a downward trajectory. In this regard, improving the efficiency of revenue collection and reducing current spending—especially on the wage bill, which is high relative to revenues—will be crucial to allow the government to maneuver fiscal policy. Financial sector weaknesses also need to be addressed, including through strengthening of supervisory and regulatory standards, to promote effective financial intermediation that supports private sector growth. Structural reforms, including infrastructure enhancements and labor market reforms are critical to improve competitiveness and ensure medium-term growth and current account sustainability.