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IMF Concludes Article IV Consultation With Dominica

by Amanda Banks,, London

11 May 2007

The International Monetary Fund announced on Wednesday that it has concluded its visit to Dominica as part of its Article IV Consultation with that country.

Goohoon Kwon, chief of the International Monetary Fund's (IMF) mission to Dominica, issued the following statement earlier this week in Roseau:

"An IMF staff mission from the Western Hemisphere Department visited Dominica during April 26-May 8 to conduct the 2007 Article IV Consultation discussions. The discussions covered recent developments and current economic policies, as well as the medium-term economic outlook. The mission received excellent cooperation from the government and benefited from a constructive exchange of views with Prime Minister the Honorable Roosevelt Skerrit, the Cabinet, and senior government officials, as well as representatives of the private sector and labor unions."

He went on to observe that:

"Dominica's economic performance has been strong and its short-term outlook is largely positive. The economy grew by an estimated 4 percent last year, the strongest in nearly two decades, while inflation was below 2 percent."

According to Mr Kwon:

"Discussions centered on fiscal and financial sector policies and structural reforms that are crucial for sustaining macroeconomic stability and fostering continued strong growth while reducing poverty. The mission discussed with the authorities challenges on the fiscal front, in particular the prospects for aid and its management as well as tax and expenditure policies."

"The mission welcomed the authorities' intention to target a primary surplus of 3 percent of GDP under their Growth and Social Protection Strategy. Given upcoming wage increases, fiscal flexibility is constrained for the next year and hence a delicate balance needs to be struck between tax reductions or exemptions, on the one hand, and investment spending on the other."

"As regards the financial sector, the recent pace of credit expansion, while anticipated from the successful fiscal consolidation, may require further enhanced supervision, including on-site inspection. In addition, further progress is needed in establishing a regulatory and supervisory system over nonbank financial intermediaries. The mission also discussed key areas that could help reduce costs of doing business, including reforms of public entities, utilities, the judiciary, and customs."

The IMF official concluded:

"The IMF mission thanks the government and the people of Dominica for their warm hospitality, and wishes them every success in their ongoing efforts to sustain economic growth and reduce poverty."

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