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A view of the capital of Dominica, Roseau. (Photo: Global Partnership for Education)

Dominica to address economic freefall with US$20-m loan from CDB

A view of the capital of Dominica, Roseau. (Photo: Global Partnership for Education)

The board of directors of the Caribbean Development Bank (CDB) last Thursday approved a US$20-million loan for Dominica to address financial needs arising from the COVID-19 pandemic.

“This has been a difficult year for the Government and people of Dominica. However, the indications are for improvements in the near term, with reconstruction activity expected to lead the rebound next year,” President of the CDB Dr William Warren Smith commented.

Dr William Warren Smith, president, Caribbean Development Bank (File photo)

“CDB remains committed to supporting Dominica recovery and alleviating the harsh impact of the crisis especially on vulnerable groups, such as single heads of households, children, unemployed youth, the elderly, and people with disabilities,” he added.

Economic decline

So far, for calendar year 2020, Dominica has experienced an estimated 10 per cent downturn in its economy, contributing to an increase in poverty. In addition, the authorities have forecast that remittances from abroad, which account for 8.5 per cent of gross domestic product (GDP) will fall by EC$2 million come the end of the year.

The pandemic has, since its introduction to Dominica, caused disruption in health, social services, and education, and has already stretched the social protection system while the island nation continues to reel from the devastation of Tropical Storm Erika in 2015 and Hurricane Maria in 2017. As a result of the passage of both storms, the country has lost 90 per cent and 226 per cent of GDP respectively.

Roseau, the capital of Dominica, suffered devastating damage from Hurricane Maria. (Photo: STR/AFP/Getty Images)

Tourism, which in 2019 accounted for 36.9 per cent of GDP, came to an abrupt halt as the closure of the country’s borders and the imposition of a lockdown for non-essential workers from mid-March to June 2020 to contain the spread of the virus, caused a sudden stop to commercial flights, cruise ships calls, and the closure of hotels.

At present, there is no indication of a rapid return to pre-crisis levels of economic activity in Dominica, even with reconstruction after the storms that hit the island in recent years, and investments in resilient economic and social infrastructure. However, the CDB estimates that economic growth will return in 2021.