By CMC -
Tuesday, July 26th, 2011.
WASHINGTON, CMC – The International Monetary Fund (IMF)
has approved two million US dollars for St. Vincent and
the Grenadines under its Rapid Credit Facility (RCF) to
help the Caribbean island meet the urgent balance of
payments need caused by torrential rains, flooding and
landslides in April that caused extensive damage.
The rains were the second natural disaster to hit the
island in less than six months. Last October, Hurricane
Tomas had a similar impact.
The IMF said that preliminary estimates of the
destruction from the flooding and landslides put the
damage at about 3.6 per cent of Gross Domestic Product (GDP).
In February this year the IMF approved a first
disbursement of US$3.26 million under the RCF to help
the country cope with the damages caused by Hurricane
The IMF Deputy Managing Director Nemat Shafik said St.
Vincent and the Grenadines suffered significant damage
to infrastructure, housing, and agriculture as a result
of the flooding and landslides that hit the country in
She said high reconstruction and rehabilitation costs
have weakened the fiscal position and created an urgent
balance of payments need.
“In light of the high public debt, the authorities have
reiterated their intention to rely mainly on grants and
concessional resources to finance budgetary needs, while
enhancing their efforts to increase revenue collections,
including through the recently established Large
Taxpayer Unit. They have also committed to contain wages
and limit other current expenditures,” she said.
“The authorities remain focused on their objective to
secure debt sustainability over the medium term. To this
end, they are strongly committed to generate the needed
primary surpluses to ensure that the debt to GDP ratio
remains on a firmly declining path.”
The IMF official said that the authorities in St.
Vincent and the Grenadines are undertaking further
structural reforms to improve the business climate and
raise the growth potential.
“ In this context, they are strengthening the governance
of state-owned enterprises and reforming the civil
service and the pension system. Legislation to establish
the Single Regulatory Unit will be submitted to
Parliament in the months ahead, paving the way for
enhancing the supervision of the nonbank financial
sector,” Miss. Shafik said.
The RCF, which provides rapid financial assistance for
low-income countries with an urgent balance of payments
need, does not require any programme-based
conditionality or review.