Roseau, Dominica – February 5, 2010……….. In the grip of the worst financial and economic crisis since the Great Depression of the 1930s, the Dominican economy seems to be faring better than most.
A Mission from the International Monetary Fund (IMF) was in Dominica recently for the Annual Article IV Consultation on economic developments and macroeconomic policies.
In a Statement issued at the end of their Mission, the IMF highlighted the negative impact of the global crisis on the economy through lower stay-over tourist arrivals, lower foreign direct investment inflows and reduced remittances from Dominicans abroad all of which would have contributed to lower than expected growth.
Despite the unfavourable global economic situation, the Fund said in their Statement that, “Dominica has benefited from a relatively favourable fiscal position, which allowed room for countercyclical government action”. This allowed the Government to continue to pursue the implementation of an ambitious capital programme as a means of generating economic activity and employment.
Despite rising prices exacerbated by rising fuel and food prices, inflation remains in check. Prices rose 3.2 percent in the 12 months to December 2009 but there was little change in average prices for 2008 and 2009.
Looking into the near to medium-term, the IMF predicts a positive outlook for the Dominican economy but warns much depends on the economic situation in the advanced economies.
“The near to medium term economic outlook is positive. With the recovery of the global economy and expected improvements in international trade and tourism activities, the Dominican economy is expected to grow by 1.5 percent in 2010. There are downside risks, however, if weaknesses in advanced economies adversely affect tourism demand in Dominica’s key source markets,” the Fund said in their Statement.
The structural reform agenda of the Roosevelt Skerrit-led Government will, according to the Fund, bring benefits to the economy in the near future.
“The country will reap the benefits of reforms reaching fruition in the near future, including the automation of customs and land titling and expanded airport facilities to handle larger aircraft and flights arriving after sunset. The appointment of a second judge has already shortened the time required to hear civil matters such as contract enforcement.”
In their Statement the IMF also said that “financial vulnerabilities emanating from the nonbank sector have heightened uncertainty and warrant close monitoring”.
“The collapse of the CL Financial Group and the large role played by credit unions underscore the need to strengthen the supervision of non-bank financial institutions including credit unions.”
The IMF is commending the efforts of the Roosevelt Skerrit-led administration in the face of this global economic crisis.
“The Mission commends the authorities for continuing with sound economic policies, which have provided them space to manage the fall-out of the global crisis,” the Mission Statement concluded.