IMF advises Montserrat to reduce dependence on UK grants
The International Monetary Fund says grants from the United Kingdom are used to finance around half of Montserrat’s expenditure.
BRADES, Montserrat, Friday January 6, 2012 - The International Monetary Fund (IMF) has encouraged the island to reduce its dependence on recurrent and capital grants from the United Kingdom.
In a report issued in the wake of Article IV consultations that concluded here last November the IMF board said this should be a key fiscal policy objective.
The grants finance around half of Montserrat’s expenditure and buffered the impact of the global crisis on the British Overseas Territory, the report said.
The IMF urged the authorities to reach agreement with the UK on a “revised fiscal framework and timetable for reforms in light of implementation delays in key projects and the current economic environment.”
“Directors welcomed the development of a strategy for addressing financial vulnerabilities and the initial progress in implementing it.
“They supported pre-emptive action to minimize costs and risks and preparation of an action plan spelling out the roles of the key players. They urged the authorities to further improve regulation and supervision of the nonbank financial sector and bringing the building society under the purview of the Financial Services Commission.
“Directors encouraged the authorities to take advantage of a range of opportunities to promote long-run growth. They noted that improving access to the island would remove an important bottleneck that impedes economic growth generally and tourism in particular. In addition, construction of a new capital would provide a focal point for private and public activity,” the report stated.