IMF completes 2007 review of St Vincent economy

WASHINGTON DC, USA, November 30, 2007 – The International Monetary Fund (IMF) says it has just completed talks with St Vincent and the Grenadines with a focus on reducing public debt, increasing revenue, and providing a social security net for the poor.

The fund issued a statement indicating that talks were held during October 25-November 8 to conduct the 2007 Article IV Consultation discussions.

“The mission received excellent cooperation and benefited from a constructive exchange of views with Prime Minister Dr Ralph Gonsalves, opposition leader Arnhim Eustace, director general of the ministry of finance and planning Maurice Edwards, other senior government officials, as well as representatives from the private sector, financial sector, farmers, and trade unions,” it said in statement released on November 27.

The report on the 2007 Article IV Consultation has not yet been released.

A spokesman for the IMF told Caribbean360 that it usually takes a few weeks after the meeting for the staff to prepare a report based on the evaluation of the executive board and it is likely that it could be ready as early as January 2008, though he could not provide a precise date.

In its November 27 press statement, the IMF team, headed by Catherine Pattillo, deputy division chief in the Western Hemisphere Department, said that the “near-term outlook” is “broadly favourable” as the economy appears on target to reach 6.5% economic growth for 2007 – which is due largely to the strong performance of the construction sector.

She also noted that cost of living has increased due to a sharp increase in international commodity prices.

“Looking ahead, St Vincent and the Grenadines now faces the challenge of continuing its rapid growth performance of recent years to further reduce poverty and raise income levels.

“This will require continuing efforts to enhance the country’s underlying growth potential as well as to build up cushions against the significant vulnerabilities to which it remains exposed: in particular, dependence on imported oil, the erosion of trade preferences in bananas, and natural disasters.”

Against this background, she said the IMF mission discussed the importance of further strengthening the fiscal position.

Specifically, creating a favourable investment climate for the private sector, expanding remittance and investment flows from St Vincent and the Grenadines’ large overseas population, and addressing air transportation links and “other structural bottlenecks” in the economy.

The mission also said that given the ending of preferential banana trade with Europe, government must pay attention to creating a social security need for the poor and vulnerable who will be impacted the most by the changes in trade.

Detailed recommendations would be contained in the 2007 Article IV Consultation report expected to be released as early as January 2008.