The government of St. Vincent and the Grenadines should increase resources for the contingencies fund and implement initiatives to build resilience against natural disasters.
This was one of the recommendations of the International Monetary Fund after its Article IV consultations.
The IMF said in a statement this week that the Vincentian authorities have earmarked revenue for the contingencies fund, “but the resources are insufficient”.
“Moreover, the authorities need to promote more resilient infrastructure. It would also be important to move forward with their plans to strengthen and further enforce the Building Code and Physical Planning Law, enhance the powers of the NEMO (National Emergency Management Organisation) through legislation, and articulate and implement a strategy to rezone areas and relocate populations deemed at risk,” the IMF said.
The Washington-based institution said that the external position appears stable but the real effective exchange rate is overvalued relative to fundamentals and desirable policies.
“The private sector would benefit more from enhanced connectivity if competitiveness and the business climate were improved.
“To that end, it would be critical to moderate wage growth and accelerate implementation of risk management practices at Customs and significantly reduce container inspections. It would also be beneficial to move ahead with the preparation of the Investment Act to streamline regulations, development of the vocational training programme, and improvement of land title registration.”
Enhanced labour market flexibility and improved access to credit is essential, the IMF said, adding that enforcement of the government’s new tourism standards is needed.
“In agriculture, swift execution of the World Bank project to reorient the sector from subsistence to agribusiness and strengthen its links to tourism will be important. Furthermore, intensified actions are needed to bridge infrastructure gaps, facilitate access to property by the younger generation, and improve risk-sharing mechanisms.”
While the financial sector remains stable, decisive measures are needed to buttress it and foster credit growth implementing the OECS Harmonised Credit Reporting Act will improve information about borrowers.
“Moreover, the full operationalization of the Eastern Caribbean Asset Management Corporation, combined with the country’s new insolvency law, will help banks unwind their non-performing loads. To strengthen the supervision of non-banks swift approval of implementing regulations to the Financial Supervisory Authority Act is needed. The authorities should continue addressing AML/CFT shortcomings by swiftly issuing a regulation on non-profit organizations and moving towards compliance with the 2012 FATF recommendations, including to reduce correspondent banking relationships risks. Following the recent buyback of the Bank of St Vincent and the Grenadines, which effectively ends an envisaged merger, the authorities are encouraged to redouble their efforts to explore alternative amalgamation options,” the IMF said.