By Staff Writer
WASHINGTON, May 29, CMC -The executive board of the International Monetary Fund (IMF) is welcoming Dominica’s economic expansion, supported by strategic infrastructure investment, while noting that fiscal and external imbalances remain elevated amid significant downside risks, including war-related spillovers, geopolitical and trade tensions, and natural disaster threats.
The board said that against this background, the directors are emphasizing the importance of continued prudent policies and structural reforms to modernize the economy and boost diversified, climate-resilient growth.
The board members concurred on the need for additional fiscal consolidation to reduce economic imbalances and risks, support compliance with the fiscal rule, and build buffers to confront natural disasters.
The IMF said that real gross domestic product (GDP) accelerated to 4.5 percent in 2025 from 3.5 percent in 2024, supported by robust tourism, now 36 percent above pre-pandemic levels, and strategic infrastructure developments. Inflation continued to ease, averaging 2.3 percent in 2025, reflecting softening prices of imported goods.
But fiscal and external imbalances remain large. The current account deficit was elevated at 38 percent of GDP in 2025, primarily reflecting high construction-related imports tied to macro-critical infrastructure projects.
The primary deficit widened to 4 percent of GDP in FY2024/25, as strong execution of resilient roads and geothermal transmission line projects interrupted the steady fiscal adjustment of recent years.
Public debt has declined sharply from its post-pandemic peak of 118 percent of GDP but remains high at 103 percent, well above the 60 percent regional benchmark.
The IMF executive board is recommending boosting revenues by broadening the tax base, limiting exemptions, and improving expenditure efficiency to preserve macroeconomic investment.
The directors also underscored the need to strengthen the efficiency and sustainability of the social protection framework, including by improving targeting and payments.
They encouraged the authorities to advance a comprehensive strategy to clear domestic arrears, stressing the importance of addressing financial system vulnerabilities.
“For banks, priorities include stricter enforcement of provisioning and non-performing loan standards while closely monitoring sovereign and foreign investment exposures. For credit unions, completion of the ongoing regulatory modernization involving enhanced risk-based capital, provisioning, and loan classification frameworks, and strengthened supervisory enforcement tools will be important.”
The IMF executive board encouraged continued progress in strengthening the Anti-Money Laundering and Combating the Financing of Terrorism (CFT) framework, and welcomed continuing efforts to enhance the citizenship by investment programme, while noting scope for further improvements in data reporting and governance.
The directors emphasized the need for coordinated structural reforms to alleviate impediments to growth. In particular, they underscored the merits of improving trade integration and connectivity, advancing digital transformation, and strengthening vocational training to address skills gaps in line with market needs.
‘They underscored that enhancing institutional capacity and data quality is critical to effective policy design and implementation, and urged the authorities to address persistent weaknesses in economic data compilation and public financial management systems, encouraging the Dominican authorities to leverage IMF technical assistance to support their reform efforts.
CMC/ag/ir/2026