Above: St Vincent (CJ Photo)
By the Caribbean Journal staff
The International Monetary Fund’s Executive Board has approved a $6.4 million disbursement to St Vincent and the Grenadines, the organization announced Friday.
The funding will be drawn from a Rapid Credit Facility and a Rapid Financing Instrument; it will go toward helping the country meet “an urgent balance-of-payments need due to severe flooding and landslides in December 2013 that caused massive damage to infrastructure, housing and agriculture.”
Those floods were caused by a large trough system on Christmas Eve of 2013 that led to severe damage across several Eastern Caribbean countries including St Lucia and Dominica.
“St. Vincent and the Grenadines suffered massive damages to infrastructure, housing, and agriculture as a result of severe floods in December 2013,” said Min Zhu, deputy managing director and acting chair of the IMF’s Executive Board. “Emergency relief and high rehabilitation costs have weakened the fiscal position and created an urgent balance of payments need at a time when the economy is striving to recover from previous natural disasters and the global economic downturn.”
Spending to rehabilitate and rebuild in the country is expected to widen the deficit this year, the IMF said.
“Mindful of the high and growing public debt, the authorities have reiterated their intention to rely mainly on grants and concessional resources to finance the recovery,” the IMF’s deputy managing director said. “At the same time, they will step up their efforts to mobilize budgetary resources by increasing revenue collection, containing the wage bill, and reducing transfers to state-owned enterprises.”
In the medium term, St Vincent and the Grenadines’ government is aiming to generate a primary surplus of at least 2 percent of GDP, with the aim of ensuring that the country’s debt-to-GDP ratio is “put on a declining path,” Zhu said.
“The authorities are also stepping up structural reforms to enhance resilience to natural disasters and climate change, and to ensure strong and lasting growth,” Zhu said. “They are developing programs to improve emergency responses and to strengthening physical infrastructure. Efforts are also ongoing to enhance the business environment, improve access to the country by air, and streamline customs clearance. The authorities also intend to carry out civil service and pension reforms, which will boost competitiveness and employment.”