The International Monetary Fund has said that St. Vincent and the Grenadines is expected to achieve five percent economic growth in 2022.
An IMF Mission, led by Nan Geng visited St. Vincent and the Grenadines from August 18th to 31st for the 2022 Article IV consultation discussions on economic developments and macroeconomic policies.
The mission team benefited from candid and constructive discussions with public and private sector counterparts and other stakeholders.
The team says St. Vincent and the Grenadines is recovering from multiple shocks. The authorities’ decisive policy responses—supported by two IMF Rapid Credit Facility (RCF) disbursements and financing from other International Financial Institutions—have helped protect lives and livelihood and contain economic scars.
It says the outlook is positive but subject to significant downside risks, primarily from the ever-present threat of natural disasters and intensified spillovers from Russia’s war in Ukraine resulting in higher commodity prices.
Policies need to be calibrated to support a resilient and inclusive recovery, while safeguarding debt sustainability and financial sector stability. Near-term priorities are health and reconstruction spending and time-bound targeted fiscal support while maintaining fiscal prudence.
Once the recovery takes hold, fiscal buffers should be rebuilt, including by fully operationalizing the fiscal responsibility framework (FRF), to withstand shocks and reinforce fiscal sustainability. Continued supply-side reforms to improve productivity and competitiveness and building resilience to natural disasters and climate change remain key for sustainable growth, which is critical to public debt sustainability.
According to the IMF, the post-eruption rebuilding activity, continued recovery in tourism and agriculture, and the start of several large-scale investment projects would support real GDP growth of 5 percent this year.
Growth is projected to strengthen to 6 percent in 2023 as major projects get into full swing.