International Monetary Fund staff published a concluding statement for the 2026 Article IV consultation with Dominica, reporting continued economic expansion alongside elevated external and debt vulnerabilities and setting out a reform agenda focused on fiscal consolidation, disaster resilience, and financial-sector supervision. The statement notes that major public investment has interrupted recent fiscal adjustment, while the growing credit union sector poses supervisory challenges. Real GDP growth accelerated to 4.5 percent in 2025 and inflation eased to 2.3 percent, but the current account deficit remained high at 38 percent of GDP and the primary deficit widened to 4.5 percent of GDP in FY2024/25. Public debt is estimated at 103 percent of GDP this fiscal year, and staff assesses debt as sustainable but at high risk of debt distress. To meet Dominica’s fiscal rule and the Disaster Resilience Strategy, staff estimates that roughly EC$60 million of additional consolidation is needed over the next two fiscal years to reach and sustain a 3.4 percent of GDP primary surplus from FY2027/28, including about EC$25 million next fiscal year to comply with the rule’s minimum primary surplus floor. Recommended measures include reducing reliance on citizenship-by-investment revenues, limiting discretionary import duty exemptions, improving value-added tax yields, introducing a solid waste fee, strengthening tax administration, and better targeting large social programs, alongside pension reforms and improved public financial management and fiscal disclosure. On financial stability, banks are described as adequately capitalized but with elevated sovereign and overseas exposures and persistently high non-performing loans, while credit unions now account for 53 percent of private sector credit amid high non-performing loans, limited provisioning buffers, and capitalization below regulatory requirements. Staff calls for stricter enforcement of provisioning and loan classification standards, completion of ongoing asset quality reviews, and strengthened risk-based capital and supervisory frameworks for credit unions, including participation in the Eastern Caribbean Central Bank’s regional minimum standards initiative. IMF staff will prepare a report, subject to management approval, for presentation to the IMF Executive Board for discussion and decision.
International Monetary Fund 2026-03-27
International Monetary Fund staff conclude Dominica Article IV mission urging EC$60 million fiscal consolidation and stronger credit union oversight
The IMF's 2026 Article IV consultation with Dominica highlights economic growth but notes external and debt vulnerabilities, recommending fiscal consolidation and enhanced financial-sector supervision. Real GDP growth was 4.5% in 2025, with public debt at 103% of GDP, necessitating EC$60 million in fiscal consolidation over two years to meet fiscal rules. The IMF advises reducing reliance on citizenship-by-investment revenues, improving tax yields, and strengthening credit union oversight due to high non-performing loans and inadequate capitalization.