The executive directors of the International Monetary Fund (IMF) have noted that the economy of St. Vincent and the Grenadines faces a challenging economic environment.
In a statement following the Article IV Consultation for the island they said the economy has shown resilience in the face of repeated shocks, but vulnerabilities remain significant. ‘Repeated external shocks have widened fiscal deficits, placed public debt on an unsustainable path, and increased external imbalances, while the war in the Middle East has worsened the near term outlook.
‘Against this background, Directors welcomed the authorities’ commitment to tackling high and rising debt. They encouraged them to swiftly translate this commitment into concrete and feasible measures to reduce debt, while complementing them with growth-promoting structural reforms,’ the statement noted.
It said that most directors called for ‘urgent, upfront, and sustained fiscal consolidation’ to restore debt sustainability; while a few directors would favour a more gradual adjustment to mitigate the social and economic impact.
The directors agreed that the fiscal adjustment should rely primarily on expenditure rationalization, while protecting the vulnerable and safeguarding health and education spending.
On the revenue side, preserving and broadening the tax base, enhancing tax administration, and carefully designing the planned Citizenship by Investment (CBI) programme will also be important.
Under the CBI programme, St. Vincent and the Grenadines will provide citizenship to foreign investors in return for making a substantial investment in the island’s socio-economic development.
Noting the recent emergency package to mitigate the impact from the war in the Middle East, the directors stressed that any support measures should remain timebound, well-targeted, and calibrated.
Directors supported the authorities’ plan to update the Fiscal Responsibility Framework, which would help anchor fiscal consolidation. Noting that fiscal consolidation alone will not be sufficient to restore debt sustainability, the directors called for a comprehensive strategy that also includes stronger public debt management, growth promoting structural reforms, and support from multilateral and bilateral partners.
Directors stressed the importance of advancing structural reforms to boost growth and employment, improve debt dynamics, and reduce external imbalances. They agreed that the energy transition would lower electricity costs, reduce exposure to volatile energy prices, and strengthen resilience.
They also noted that improving the business environment would further support private sector development. They welcomed the authorities’ commitment to addressing skills mismatches and enhancing data adequacy. Directors stressed the importance of continued capacity building to support the authorities’ efforts.
The IMF recommended stronger oversight of credit unions and reforms to support adequate credit growth by strengthening existing intermediation channels. It also agreed that reducing the sovereign bank nexus through fiscal consolidation would support private credit growth. While supporting the authorities’ financial development goals, the directors encouraged careful consideration of the establishment of a national development bank given the associated fiscal risks.
Earlier, a staff mission to the island had noted that over the past six years, St. Vincent and the Grenadines has been hit by theCOVID-19 pandemic and two major natural disasters and is now facing an oil price shock stemming from the war in the Middle East.
‘Consequently, the fiscal position has deteriorated markedly: deficits have widened and public debt has risen by 45 percentage points of gross domestic product (GDP) since 2019, with roughly half of the increase occurring in the last two years, to 113 per cent of GDP in 2025.
Growth moderated to 3.7 per cent in 2025 as the post-pandemic rebound faded, although tourism and construction remained strong. Inflation continued to ease, averaging 0.9 per cent, reflecting the unwinding of earlier external price shocks and smaller contributions from food, transport, and housing.