Caribbean & Central America - August 2016 (ISSN 1741-4458)

*** DOMINICA STILL RECOVERING FROM TROPICAL STORM ERIKA. The International Monetary Fund (IMF) concluded its latest Article IV consultation with Dominica on 13 July, in which it reported that the Dominican economy had declined by 3.9% in 2015 as a consequence of Tropical Storm Erika. The IMF noted: “While tourism activities have largely normalized following the resumption of full operations at the main airport, other sectors will likely need more time to be fully restored.”

A “protracted decline” in credit offered by banks to the private sector, underpinned by high non-performing loans, was also singled out as a “drag on economic activity”. Growth in 2016 is expected to be 1.3%, although it is noted that this is dependent on donor grants coming through as budgeted. Over the medium-term, growth is expected “to stabilize at 1.7% per year”.

During his annual budget presentation on 26 July, Prime Minister Roosevelt Skerrit said that the total debt to GDP ratio (including guaranteed debts held by statutory institutions and agencies) was 77.8%, with the government debt to GDP ratio at 65.2%. He added: “For the public debt, debt service to current revenue was 22.6%. For central government debt, debt service to current revenue was 16.5%.”

*** JAMAICA TO USE BARTER TO PAY PETROCARIBE DEBTS. On 29 July, Jamaica announced that it is to pay off its PetroCaribe oil debts to Venezuela with food, medication, and fertilizers. The transfers are to begin in the final quarter of this year.

*** HEALTH FEARS FOR TRINIDAD PRIME MINISTER. It was announced on 8 August that Trinidad & Tobago’s prime minister, Dr Keith Rowley, was due to undergo medical tests at a clinic in the United States. It appears that the 66-year-old Rowley has had health issues for many years which he has had to manage “through diligent and disciplined guidance”.

He issued a statement saying: “I have been regularly, even annually, reviewed by them [specialists in Trinidad and California] over the years. This occasion is hardly different except that as a result of the intensity of my activities during the last 36 months or so I have not kept my annual appointments until recently. I did my examinations locally and the results were transmitted to my doctors abroad. There have appeared to be some changes which both sets of doctors conclude should be investigated further. That is what I am here for and that is what I have referred to when I spoke to the public about travel and health as well as vacation.”

*** ST VINCENT & THE GRENADINES AWAITING BOOST FROM NEW AIRPORT. The IMF completed its latest Article IV consultation with St Vincent & the Grenadines in early July. It said that GDP growth is expected to reach 2.2% in 2016 and then to accelerate to 3.1% as the impact of the new international airport is felt. The airport is due to be completed this year.

Public debt, which has steadily increased since the financial crisis in 2008, had reached 74% of GDP by end-2015. However, the government is committed to reducing this ratio to 60% by 2030. In pursuit of this goal, the primary deficit has been reduced from 5% of GDP in 2013 to 1.1% in 2015.

In order to achieve further progress in debt reduction, the IMF said that it “saw scope” to further broaden the tax base, to “restrain” the wage bill, and to “improve the sustainability” of the public pension scheme.