St. Vincent and the Grenadines continues to be affected by the global economic crisis.

KINGSTOWN, St. Vincent – The International Monetary Fund (IMF) says that the local economy has been adversely affected by two natural disasters in the past year, in addition to the impacts of the global slowdown and higher commodity prices.

“As a result, real GDP has contracted and public sector debt has risen,” the IFM Executive Board said in an assessment of the local economy this week.

The international body is therefore projecting that the local economy will register negative growth for a fourth year of consecutive year, a projection that contradict the 0.4 per cent growth forecast by the Eastern Caribbean Central Bank (ECCB) and the 0.8 per cent the government expects.

“After a contraction of 1.8 per cent in 2010, growth in 2011 is expected to remain negative, albeit to [minus] 0.4 per cent, moderated by reconstruction activity after Hurricane Tomas,” the IMF said.

St. Vincent registered significant damage to housing, infrastructure, and agriculture during the passage of Hurricane Tomas last year October while flash floods and mudslides also caused significant damage to infrastructure on the north-eastern corridor.

The IMF further said that inflation has picked up, reflecting higher international commodity prices. Higher food and fuel prices resulted in inflation accelerating to about 2.8 per cent by June this year — compared to the same period of 2010, and 0.5 per cent at the end of last year.

“At the same time, core inflation remained unchanged at 0.6 per cent compared to December last year,” the IMF said.

It further stated that the fiscal deficit is expected to be smaller than last year, mainly reflecting cuts in capital spending to offset shortfalls in revenues and delayed disbursement of external loans.

But current expenditure has been rising, in part, to mitigate the impact of the adverse shocks on the poor and vulnerable.

“Over the medium-term, the authorities remain committed to generating a primary surplus averaging about 2 per cent of Gross Domestic Product (GDP). A more ambitious fiscal consolidation path would allow for a faster reduction in debt and room to build a cushion against future exogenous shocks,” the IMF said.

It further stated that monetary aggregates remain flat, with the year-on-year growth in real private sector credit and broad money supply nearly flat as of June 2011, reflecting banks wariness to make new loans in an uncertain environment.

“With regard to the financial sector, non-performing loans (NPLs) at commercial banks in the country decreased somewhat from 8.5 per cent at end-December 2010 to 7.5 per cent at end-June 2011, but bank profitability has also been declining.

“NPLs remain elevated in the non-banking financial sector, although efforts are ongoing to improve performance. In order to improve supervision in the non-bank sector, the government is planning to establish the Single Regulatory Unit by year-end,” according to the IMF.

It noted that efforts continue to help resolve the fallout from the failure of British American Insurance and CLICO.

Prime Minister Dr. Ralph Gonsalves told Parliament this week that seven companies are interested in buying BAICO’s life insurance policy portfolio.

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8 replies on “Global economic slowdown continues to bite in St. Vincent: IMF”

  1. Franklyn Delpleche says:

    L.Sutton, swallow your pride and ask GOD to grant you wisdom and banish your extreme ignorance from your personality.

  2. “It further stated that the fiscal deficit is expected to be smaller than last year, mainly reflecting cuts in capital spending to offset shortfalls in revenues and delayed disbursement of external loans.”

    –This is interesting. Mr. Leacock asked a question in the parliament this past week. I beiieve the answer given by the prime minister suggested that even though they have budgeted for capital projects in 2010, they haven’t spent a cent of that amount because they don’t have it. If that is the case, what sort of capital spending are they going to cut? Can you cut what you don’t have to spend?

  3. IF WE DONT HELP OURSELVES WILL GOD HELP US, IT REMINDS ME OF THE WOMAN WHO WAS RETURNING FROM THE RIVER TO WASH HER CLOTHES AND A FRIEND MEET HERE AND SAID GIRLFRIEND YOU FINISH EARLY AND SHE SAID WITH THE HELP OF GOD , THE GIRLFRIEND WENT DOWN TO THE RIVER AND PUT THE CLOTHES ON THE STONE AND TELL HERSELF GOD WILL HELP HER , SO SHE LEFT THE CLOTHES THERE GO AWAY AND COME BACK , THE CLOTHES WAS STILL ON THE STONE, WE DONT WANT TO HELP OURSELVES AND WE TO BIG TO ASK FOR HELP WHEN WE CANNOT DO IT OURSELVES , THATS WHAT IS HAPPENING TO THIS GOVERNMENT , THEY HAVE TO MUCH PRIDE THAT IS TAKING THEM NO WHERE THAN TO HELL.

  4. IT IS SO NICE TO SEE ALL THAT ARNHIM EUSTACE WAS SAYING SINCE 2003 IS COMING TO PASS, THIS GOVERNMENT IS A MAUBY SHOP GOVERNMENT BUT THEY WANT TO LIVE LIKE THE HAVE A WINERY, THE CHICKEN NOW COMING TO ROAST. RALPH ACCOUSTOM TO LIVING A BIG LIFE OFF OF HIS OWN MONIES , SO HE WENT INTO GOVERNMENT WITH THAT KIND OF THINKING POINTED HIS GOVERNMENT INTO THAT KIND OF LIFE STYLE AND THERE WHERE THE PROBLEM LIES.

  5. BABY BAM BAM, what has ARNHIM EUSTACE said that this GOVERNMENT has not SAID about the GLOBAL ECONOMIC EFFECTS on this NATION’S ECONOMY?

    As for the REST of the FART you WROTE, there is no need to address them.

  6. You see Eustace was saying it whilst Gonsalves was saying ‘we are on the cusp of a financial take off’, when he was lying about our actual situation, we were already broke.

    Unity Liars Party

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