Latest update November 21st, 2024 1:00 AM
IMF grants US$65.6M for Dominica, Grenada and St. Lucia to address COVID-19 Pandemic
– Guyana continues to await assistance from other int’l financial agencies
The Executive Board of the International Monetary Fund (IMF) yesterday approved disbursements to Dominica, Grenada, and St. Lucia following their requests under the Rapid Credit Facility (RCF) mechanism, to help cover their balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
The disbursements total loans of US$65.6 million, designated by the bank as Special Drawing Rights (SDR) 48 million.
For those who may not be familiar with the term, SDR refers to an international type of monetary reserve currency created by the International Monetary Fund (IMF) in 1969. It operates as a supplement to the existing money reserves of member countries.
In a statement to the press yesterday, the IMF said that disbursements to all three countries are set at the maximum available access under the RCF instrument of 100 percent of quota for Grenada (SDR 16.4 million or US$ 22.4 million) and St. Lucia (SDR 21.4 million or US$ 29.2 million), and 89.4 percent of quota for Dominica (SDR 10.3 million or US$14 million).
The Fund said that these countries are small states that are very vulnerable to shocks, including large natural disasters, with Dominica in particular still recovering from the devastation of Hurricane Maria in 2017.
The financial institution said that the pandemic has hit these largely tourism-dependent countries very hard. Expounding further, the IMF said that tourism inflows essentially came to a halt in mid-March 2020, with ripple effects across other sectors.
It said that the closure of the borders, coupled with the curtailment of commercial activity, has had a debilitating impact on these economies while noting that a drop in fiscal revenues, combined with additional direct health and social expenditures, will temporarily increase the fiscal deficit and financing needs.
Kaieteur News understands that IMF support will help cover some of these needs and allow the governments to ease the impact on the population, such as upgrading public health facilities and providing social assistance to the vulnerable and adversely affected sectors.
Following the Executive Board’s discussion of the requests, Mr. Tao Zhang, Deputy Managing Director and acting Chair, said that the COVID-19 pandemic poses a major challenge to Dominica, Grenada, and St. Lucia.
The official said that their key tourism sectors have been hit hard by the shock.
According to Zhang, “The contraction in tourism is expected to have a major impact on their economies, by causing ripple effects across all economic sectors, eroding fiscal revenues, and creating urgent balance of payments pressures. In addition, these three small states are also highly vulnerable to natural disasters.”
He added, “…The authorities have expressed commitment to meeting the regional debt target of 60 percent of GDP by 2030. To this end, they plan to implement necessary adjustment measures to rebuild policy space once the crisis has abated, building on the progress achieved in recent years.”
Looking forward, the IMF official said that the authorities are also committed to implementing policies that support durable economic growth and poverty reduction within a balanced development strategy that includes comprehensive measures to boost resilience to natural disasters.
With respect to the IMF emergency support under the Rapid Credit Facility, the official was keen to note that it will help fill the three countries’ balance of payments needs and create fiscal space for essential health expenditures, income support to workers, and cash transfers to households. Fund financing will also help catalyze further donor support to close the remaining balance of payments needs.
To date, the Government of Guyana has not approached the IMF for funding in this regard. It has however received a commitment of financial assistance of US$1 million from the USA, the lion’s share of a total $4.7 million funding package to the Caribbean.
With a first tranche released of $475,000, the money will go primarily towards pandemic monitoring, prevention and control measures, but does not include economic support and recovery.
Government’s application to the World Bank for US$5M under its Rapid Response Emergency Facility is said to be still being processed over a month after the application was made.
Finance Minister, Winston Jordan has said that other multilateral agencies, of which Guyana is a member, have also been approached.
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