The International Monetary Fund (IMF) has approved a US$16 million disbursement to St Vincent and the Grenadines to assist with its financial needs amid the coronavirus (COVID-19) pandemic.
Approval for the funds was made public today, when the financial institution Executive Board said it agreed to provide the funds to the country to aid it in covering its balance of payment and fiscal requirements stemming from the virus outbreak.
The funds are being provided under the Rapid Credit Facility which provided the nation with the maximum available to it.
Noting that St Vincent and the Grenadines is a small state, vulnerable to external shocks, the global financial body said it has been hit hard by the coronavirus. It says tourism receipts have dried up with arrivals coming to a complete stop.
“The authorities are committed to ensuring transparency and good governance in the use of COVID-19-related spending.”– IMF Deputy Managing Director and acting Chair, Tao Zhang
The economic result of this will be sharp, as St Vincent and the Grenadines’ economy is projected to contract 5.5 per cent, with its fiscal revenues falling. This will cause the territory’s fiscal deficit and financial needs to increase, as further health and social expenditures affect its position. However, the IMF said its support will assist in covering some of those needs and ease the impact on the population.
The IMF’s Deputy Managing Director and acting Chair, Tao Zhang, said “The COVID-19 pandemic poses a major challenge to St Vincent and the Grenadines. The tourism sector, a key driver of economic growth in the country, has come to a complete halt with ripple effects across the economy.
“Lower tourism receipts and remittance inflows, coupled with decreased foreign direct investment, have given rise to an urgent balance of payments need. The authorities also face large fiscal needs to immediately increase public health spending and support the most vulnerable.”
Zhang continued that “The authorities have responded to the pandemic by swiftly implementing containment measures and a fiscal package, which includes an increase in funding for the health sector, various public construction projects to generate jobs, financial support to agriculture and fishery sector, and programs to support displaced workers and the most vulnerable.
“The Eastern Caribbean Central Bank (ECCB) also took measures to facilitate the provision of credit and safeguard financial stability. The ECCB and national supervisors are also working closely and keep intensified monitoring of financial sector vulnerabilities.
“The authorities are committed to meeting the regional debt target of 60 per cent of GDP by 2030. Once the crisis has abated, they plan to reprioritise capital spending, contain the growth of the wage bill, enhance taxpayer compliance, and rationalise exemptions from import duties and VAT on imports.
“IMF emergency support under the Rapid Credit Facility will help fill St Vincent and the Grenadines’ balance of payments needs. Fund financing will also help catalyze additional donor support. The authorities are committed to ensuring transparency and good governance in the use of COVID-19-related spending.”