The Executive Board of the International Monetary Fund (IMF) on December 15, 2017, concluded the Article Four consultation with St. Vincent and the Grenadines, and considered and endorsed the staff appraisal without a meeting.
Growth in 2017 is expected to remain relatively flat, with a projected boost in tourism arrivals in the second half of the year from new air connections offsetting a decline in the first half of the year.
Consumer inflation rose from 1 percent in 2016 to 1.9 percent year-on-year in September 2017, reflecting increases in the VAT and minimum wages.
The IMF said current account deficit is expected to narrow reflecting additional profit repatriation by telecommunication companies. The report further stated that the domestic banking system remains stable, but credit to the private sector has been flat.
The fiscal situation is projected to worsen substantially in 2017 due to a projected decline in tax revenue after exceptional receipts in 2016 and higher outlays for transfers, subsidies and public investment. Reflecting debt relief obtained from a bilateral creditor, public sector debt is expected to decline but remain elevated at 77.5 percent of GDP in 2017.
Growth is expected to pick up to 2.1 percent in 2018 and reach its potential over the medium-term, reflecting improved connectivity and supported by the expected reopening of the large hotel.