IMF concludes 2018 article IV consultation with St Vincent and the Grenadines

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IMF Executive Board

WASHINGTON, USA — On February 15, 2019, the executive board of the International Monetary Fund (IMF) concluded the article IV consultation with St Vincent and the Grenadines. The 2018 article IV consultation focused on policies to achieve stronger and sustainable growth, build fiscal buffers, bolster resilience to natural disasters, and ensure financial stability.

Executive directors commended the authorities for successfully reinvigorating the St Vincent and the Grenadines’ economy. Nonetheless, they noted the continuing challenges in terms of making economic growth more sustainable, reducing public debt, and increasing resilience to natural disasters.

Directors stressed the importance of advancing structural reforms to raise longer term growth. They urged the authorities to capitalize on the growth opportunities created by the new airport. They recommended vigorously implementing policies to foster private sector activity, by improving the investment climate and strengthening human and physical capital, including investing in climate resilient infrastructure.

Directors emphasized the importance of bolstering fiscal buffers. They welcomed the authorities’ commitment to meeting the 60 percent of GDP debt target by 2030 and underscored the need for fiscal consolidation that does not jeopardize economic growth. They recommended prioritizing capital projects taking into account capacity and budget constraints and seeking concessional financing. Directors also encouraged taking additional fiscal measures, including broadening the tax base and reforming the pension system.

Directors welcomed the establishment of the Contingency Fund as an important instrument to protect public finances from the impact of natural disasters and climate change. They underscored the need to legislate the Contingency Fund’s governance and operational framework to ensure its effectiveness and transparency. Directors also suggested expanding the coverage of disaster insurance, especially against floods.

More generally, they recommended continuing to strengthen disaster preparedness, including reviewing the National Emergency and Disaster Act, updating river basin flood risk maps, and enhancing public education and awareness.

Directors encouraged the authorities to strengthen the institutional fiscal framework. Priorities include adopting a medium-term fiscal framework, strengthening revenue administration by moving toward a risk-based approach and completing the various reform initiatives, issuing regulations to strengthen the oversight of state-owned enterprises, and establishing a legal and institutional framework to assess potential risks from public private partnerships.

Directors highlighted the need to further strengthen financial sector oversight. They urged the authorities to enact pending legislation to strengthen the Financial Services Authority’s enforcement power. Directors urged the authorities to move ahead with preparing a crisis management plan for the non-bank financial sector and setting up a Financial Crisis Management Committee, building on earlier technical assistance provided by CARTAC.

Directors commended progress in addressing remaining legal deficiencies in the AML/CFT framework. Going forward, they recommended focusing on ensuring the effectiveness of AML/CFT preventative measures and completing the National Risk Assessment.

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5 COMMENTS

  1. I just hope that the IMF directors are aware that Ralph Gonsalves has stated he is here to finish the work of Maurice Bishop.

  2. As “Ralph Gonsalves has stated he is here to finish the work of Maurice Bishop” the profoundly good and sound advice of the I.M.F may well get nothing but weasel words of welcome, from his family regime, but in the end, all advice and guidance will surely fall on stone-deaf ears.

    For sure, that ruling family needs reminded not of their commitment to their pseudo socialism mantra, but of that other ism, that distinctive practice, system, and or philosophy, indeed that political ideology that has delivered economic prosperity the world over, namely, Capitalism!
    https://www.bbc.com/ideas/videos/is-capitalism-here-to-stay/p06g9czp?playlist=ideas-that-shaped-the-world

    Indeed good advice, hopes and wishes by the IMF is one thing, the regime’s inertia to change course and their disastrous policies, is quite another! Just take a look at Ralph Gonsalve’s pal Maduro! Or that other of the clan’s people the Ortega family in Nicaragua.

  3. “ … broadening the tax base” is a euphemism for reducing income tax evasion which continues to be rampant especially in small, self-employed enterprises like one-person medical and legal enterprises and small retail establishments across the land, especially grocery stores outside the capital which earn well above the tax threshold but refuse to pay income and business tax.

    • That’s because it is.

      The IMF is a useless, redundant, and overstaffed UN organization that does little or no forensic investigation when it briefly visits these countries on a annual basis where it compiles and reproduces airy-fairy government projections about growth and debt.

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