IMF Report: Believe it or not

The content originally appeared on: Sun Dominica

Sociologist Simeon Joseph has sounded the alarm after analyzing the International Monetary Fund’s (IMF) March 16th report on Dominica’s economic outlook. Expressing deep-seated concerns, Joseph has called on officials responsible for assessing the nation’s economic health and the financial well-being of its citizens to conduct comprehensive studies, census, and surveys. He emphasizes the critical need for accurate and up-to-date data to inform and improve economic policies for the betterment of all Dominicans.

In a recent development, the IMF unveiled a forecast for Dominica’s economic expansion, predicting an average growth rate of 4.5 per cent from 2024 to 2025. This revelation coincides with the Staff Concluding Statement stemming from the 2024 Article IV Mission, which took place in Dominica from March 5 to March 14.

The IMF credits various factors for this anticipated growth, notably the expected resurgence of stayover tourism to levels seen before the pandemic, expansions in the agricultural sector, and advancements in critical infrastructure projects across the nation.

The IMF’s statement underscores an optimistic perspective, hinting at various factors. These include the complete recovery of stayover arrivals, the successful execution of pivotal investment strategies, and responsible fiscal governance. Moreover, it foresees inflation stabilizing at approximately 2 per cent, aligning with trends observed in trading partner countries.

Critical initiatives, such as the shift towards geothermal production, new airport and hotel ventures to augment tourism capabilities, and infrastructure undertakings to reinforce resilience, are poised to yield long-term growth dividends while tackling external imbalances.

The IMF observes a noteworthy decline in inflation, plummeting from its peak of 9.7 per cent in 2022 to a modest 2.3 per cent by the close of 2023, primarily attributed to softer global commodity prices. Additionally, favourable terms of trade and robust service exports have significantly contributed to reducing the current account deficit to 26.2 per cent.

The organization envisions gradually narrowing the current account deficit over the medium term. This is expected to be propelled by an uptick in tourism exports and a corresponding decrease in imports of investment goods and fuel. Although public debt is forecasted to decrease in the forthcoming years, the IMF underscores the vital importance of sustained efforts to consolidate public finances to support and perpetuate this positive trend.

However, Joseph argues that merely reading reports does not fully convey the country’s economic reality. He points out that the most important report isn’t about the state of our economy or legal system; rather, it’s about the condition of our people.

“What is the state of our young people, our elders? What is the state of our public servants? What is the state of our unemployed? What is the state of farmers and fishermen, our carpenters, our plumbers? What is our current state? What is the report that these people can now say about Dominica? “

The senior educator emphasized that the conversation should centre around stability, focusing on Dominica’s economic and political stability, which are fundamental pillars for the development of any nation.

Former IMF Financial Economist and United Workers Party (UWP) Leader Dr Thomson Fontaine provided context to the report by emphasizing that the IMF suggests some growth in the three years following the pandemic, helping to recover and offset the 16.6 per cent loss experienced during that period.

However, he asserts that the primary concern among the average individual is the perceived lack of observable growth.

According to the economist,

“This government has failed to develop the productive sectors of this economy. We have the issues that we are having. They fail to invest in agriculture, they fail to put the farmer in the field, they deliver empty promises, they never revive the agriculture sector.”
“If you’re talking about stability, you’re speaking about pillars of the economy that can sustain you so that in difficult times, you are sustained. If those pillars are rotten or if those pillars are not solid, then the economy is wobbly, and it increases the number of persons who are now depending upon a handout from government,” Dr Fontaine added.

Kent Vital, another economist and Chairman of the National Joint Action Movement (NJAM), shares similar sentiments. He has voiced grave concerns about Dominica’s current state of affairs, asserting that the nation is evidently undergoing a significant decline. Vital believes the current administration is steering the country towards ruin and emphasizes the urgent need to revitalize the economy for sustainable growth and progress.

“It’s no secret; everybody knows our country is in trouble. It is like we are a failed state, and our country is being run down, and this can be seen everywhere. The good news is that our country can do better,” he declares.” Our education system is in ruins, and our health care as well.”

Drawing from the report, Lennox Linton, President of the UWP, cautions of ‘tight days ahead’. While acknowledging the recommendations as sound, he highlights the potential negative impact of some measures on the public. Linton further delves into the misuse of Citizenship-by-Investment (CBI) revenues, as cited by the IMF report, which contributed to a modest improvement in the primary balance due to record-high CBI revenues and reduced current expenditures.

Pastor Randy Rodney, President of the Dominica Association of Evangelical Churches (DAEC), urges Dominicans to heed the IMF’s report on the nation’s economic outlook and the accompanying recommendations. He underscores that based on these recommendations, Dominicans should brace themselves for a further increase in the cost of living following the 2024 to 2025 National Budget presentation.

Addressing concerns about the economy, Prime Minister Roosevelt Skerrit emphasizes Dominica’s resilience amidst global challenges. He acknowledges the impacts of imported inflation and geopolitical tensions on the nation’s price structure but remains optimistic about the future.

“I think we can take comfort from these numbers as we look ahead to 2025,” he said.

Skerrit, echoing sentiments similar to those of the IMF, emphasizes the government’s long-standing acknowledgement of the risks associated with Dominica’s CBI program amid a volatile global environment and the looming threat of climate change. He underscores his prior emphasis on the adverse effects of geopolitical tensions, which have impacted global financial conditions and trade and commodity prices.

The head of government further highlights Dominica’s susceptibility to natural disasters, which, as he suggests, have historically resulted in significant economic losses and widespread devastation, impeding the island’s growth. However, he maintains that despite these challenges, the IMF’s report portrays Dominica positively and adds that despite enduring numerous economic shocks since 2015, Dominica continues progressing towards genuine sustainable growth and recovery.

He acknowledged the IMF’s proposal of ambitious measures to safeguard Dominica against disaster risks and expand the revenue base, such as implementing investment projects with high economic returns. He expresses pride and optimism in the government’s investments, anticipating their beneficial impact on the island’s future.