Tourism Rebounding & Debt to Stabilise at 90% GDP In The Medium Term For St Lucia
- The International Monetary Fund (IMF) Article IV consultation with Saint Lucia concluded that having “been severely affected by the Covid-19 pandemic and the increase in import prices due to the war in Ukraine, tourist arrivals have rebounded significantly in 2021–22, but the recovery remains incomplete”
- However, the public balance sheet remains under considerable strain, with a sizeable fiscal deficit and a significant increase in public debt since 2019. On the other hand, the financial sector has remained stable, but nonperforming loans have risen during the pandemic.
- Output is projected to gradually recover to the pre-pandemic level by 2024, slowed by the impacts of the war in Ukraine and the tightening of global financial conditions. However, public and private investments are constrained by weak balance sheets, as well as higher input costs and supply constraints.
- The fiscal outlook is challenging due to high public debt and large refinancing needs which lead to financing constraints. Without additional policy measures, public debt is projected to stabilize at around 90% of GDP in the medium term, limiting the space for public infrastructure and social investments.
- Downside risks dominate, mainly from higher global food and energy prices, global inflation and tightening of financial conditions, supply bottlenecks, and the ongoing pandemic. The natural disaster risk remains a near-term challenge and is expected to intensify with climate change.
(Source: Caribbean News Global)