ROSEAU, Dominica – The International Monetary Fund (IMF) has approved Dominica’s request for financial assistance to reverse the damage caused by natural disasters caused over the past two years.
Last Friday (Jul. 10), the IMF Executive Board approved a disbursement in the amount of US $5.1 million to Dominica under the Bank’s component of Exogenous Shocks Facility (ESF).
Following two hurricane strikes in 2007 and 2008, Dominica’s economy has suffered from significant damage to major infrastructure. This resulted in marked reductions in tourism earnings, Foreign Direct Investment (FDI) inflows and remittances that led to slower growth and a weaker external current account for the nation.
According to a press release issued by IMF, Deputy Managing Director and Acting Chair Murilo Portugal informed that the local authorities have been dealing with the effects of the exogenous shocks on several fronts. These include post-hurricane rehabilitation, accelerated implementation of capital projects to contain unemployment and increased social spending to protect the most vulnerable groups.
He further stated that a temporary increase in public expenditure was needed to ease the economic effects of natural disasters and, more recently, of the global slowdown.
“The authorities are responding appropriately to this deterioration in the fiscal position. They plan a modest recovery... and have reiterated their commitment to target, in subsequent years, annual primary surpluses of at least 3% of GDP so as to place the still-high public debt on a robustly downward trajectory,” Portugal said.
“This can be achieved by further prioritizing capital projects and financing these projects largely with external concessional resources. Efforts to reduce debt-related vulnerabilities and weaknesses in the non-bank financial sector are also planned to continue,” he further stated.
In the near term, according to Portugal, the funding will help reduce the decline in external reserves and “catalyze support” from the international donor community to help mitigate the exogenous shocks.
“Over the medium term, the government’s economic recovery strategy will improve the business climate and critical infrastructure, so as to place the economy on a path of higher growth and poverty reduction,” Mr. Portugal said.
Dominica News