IMF approves funds for St Lucia

The International Monetary Fund (IMF) has approved US$10.7 million to St. Lucia under the rapid-access component of the Exogenous Shocks Facility (ESF), according to a report on www.cananews.net.



“The global economic slowdown has strongly affected the tourism activity in the Caribbean region. The impact in St. Lucia has been considerable, since government tax revenue, foreign exchange reserves and employment are all closely linked to the tourism industry. The arrangement will help mitigate the impact of the global crisis on the country’s economy,” the IMF said in a statement.



Deputy Managing Director Murilo Portugal said sharp declines in tourism, foreign direct investment (FDI), and remittances from abroad have led to significant pressure on St. Lucia’s fiscal and balance of payments positions.



He said real Gross Domestic Product (GDP) growth is projected to contract by as much as 2.5 per cent and unemployment to increase substantially this year.



“The authorities’ response to the crisis has been broad-based. The fiscal programme for the financial year 2009–10 aims at maintaining macroeconomic stability while protecting social spending, with measures to enhance tax revenue and control expenditures.”



Portugal said among the measures on the revenue side is the introduction of a flexible petroleum pricing mechanism, the implementation of a market-valuation based property tax, and the introduction of a value-added tax in 2010.



“On the expenditure side, the authorities intend to prioritise spending, control costs, and only implement projects for which funding is available. Fund financing will help ease the balance of payments pressures, shore up external reserves, and catalyse support from the international donor community.



“The authorities are committed to placing public debt on a downward path, and to fostering the private sector by improving the business environment and infrastructure. They are committed to strengthening the regulation and supervision of the non-bank financial sector through a package of supportive legislation and the establishment of a Financial Regulatory Supervisory Authority.”



“To date, the Government of St Lucia has provided absolutely no details on the request to the IMF and the terms and conditions attached to the funding by the IMF,” the main opposition St. Lucia Labour Party (SLP) leader, Dr. Kenny Anthony said.



St. Lucia has joined St Vincent and the Grenadines, Dominica and St. Kitts in securing funds from the IMF under the ESF this year.



Jamaica recently announced it was seeking US$1.2 billion from the Washington-based financial institution.