In concluding a recent consultation with Dominica, Executive Directors of the Board said Dominica has managed the crisis well, but the recovery has been lackluster and growth prospects remain weak.
Analysts said a “lack of clear growth drivers have led to a slow recovery and will constrain future growth.” But they advised that improving growth prospects will require wide-ranging structural reforms.
These should focus on increasing the country’s capacity to attract and absorb private investments, especially through swift reforms of the regulatory environment for investments, Board directors said.
“Increased vigilance is needed to safeguard against financial stability risks. Impaired investments in the failed insurance companies and other regional institutions are creating solvency and potential liquidity pressures,” said the IMF. “The authorities’ efforts to improve the regulation and supervision of nonbank institutions are commendable, but renewed efforts to identify and counteract sources of risks in the financial system are needed, including through (i) strengthened monitoring of credit unions, and a stricter enforcement of the newly legislated provisioning and capital requirements; and (ii) improved information-sharing arrangements with the Eastern Caribbean Central Bank, the bank supervisor, to allow the authorities to monitor risks in the banking system.”