Gov’t revenue might take years to reach pre-hurricane levels says IMF

Hurricane Maria devastated Dominica in September 2017

The International Monetary Fund (IMF) has said that the revenue of the government of Dominica might take years to reach pre-Hurricane Maria levels.

A report published in the IMF’s newsletter for the Caribbean region said that although the government has “large reserves” from its Citizenship-By-Investment program and has received a payout of US$20 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), its revenue will decline sharply in the near-term.

It said that reconstruction costs are likely to put unprecedented strain on public finances.

“Large government reserves from the Citizenship-By-Investment program, on top of the CCRIF payout, provide an immediate source of funds,” the report stated. “Nevertheless, government revenues are expected to decline sharply in the near-term, and to recover only gradually, lagging the recovery in economic activity and possibly taking years to reach pre-hurricane levels.”

The report added, “The success of the reconstruction effort will depend on meticulous prioritization, planning, and sequencing of action, and the availability of sufficient financing on appropriate terms.”

The report pointed out that debt financing alone is not enough to cover rehabilitation cost and might leave the island with an excessive burden of debt.

“Debt financing alone is unlikely to be sufficient to cover rehabilitation and reconstruction costs without leaving the country with an excessive debt burden. This highlights the importance of coordinated action by donors, international creditors, and development organizations to mobilize grants and concessional financing,” the report said. “To this end, Prime Minister Roosevelt Skerrit met with senior management of the International Monetary Fund and The World Bank during the 2017 Annual Meetings in Washington, DC.”

Hurricane Maria devastated Dominica on September 18, 2017 when the Category 5 Hurricane made landfall.

The island was still recovering from Tropical Storm Erika which struck in August 2015.

Maria caused severe damage, estimated at near 100 percent of GDP. The hurricane is reportedly Dominica’s worst natural disaster—with more than thirty deaths and damage estimated at US$1.3 billion (225 percent of GDP).

According to the IMF report, the government’s immediate response was focused on supporting displaced families and restoring basic services. All usable public buildings were recommissioned for use as shelters.

“The immediate need to clear debris from towns and roads was facilitated by the arrival of heavy-duty machinery from neighboring countries and main roads became usable days after the storm, facilitating the transport of basic supplies. Banks and credit unions resumed services swiftly,” the report noted. “The international community responded with humanitarian assistance and financial aid. Several Caribbean countries temporarily opened their borders to help shelter Dominicans. Dominica also received a payout of US$20 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF).”

The report added, “The government announced important aspects of its recovery plan. It intends to maintain pre- hurricane levels of government consumption, employment, and wages to allow access to basic needs. The plan also includes six months of tax exemptions on food and construction material imports. Given the significant damage to private housing, the government intends to provide substantial quantities of roofing materials and maintain temporary shelters while communities rebuild.To improve resilience, the authorities stand ready to enforce and review building codes. To help finance home rehabilitation, the government will offer advances on government salaries and on non-contributory pension payments from the Social Security Fund. The establishment of a consumer protection agency seeks to prevent wholesalers and retailers from taking unfair advantage of consumers.”

It said for Dominica to fully recover, significant effort is needed from its people and the international community.

“Looking forward, Dominica’s recovery will require considerable effort from its people, and significant support from the international community. A substantial private insurance payout is expected to facilitate the repair and reconstruction of private housing and structures,” the report stated.

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15 Comments

  1. Clergy
    January 19, 2018

    Of course This should leave them with no choice but to think outside the box and come up with new ways of boosting revenue. Such as lowering custom duties in order to lower the cost of everything, which encourages spending – a win win for the currently stiffled economy; legalized MariJuana, legalized gambling…etc etc, thinking outside the box will fix this. Be brave! If it doesn’t work now make changes.

  2. Not a Dummycan
    January 17, 2018

    The problem is we did not learn from hurricane David. I was still young during/after the passage of hurricane David but the people who existed then were proactive and not lazy. They made use of what was left behind such as the fallen trees were turned into lumber and coals.
    Now a days the citizens just sit and wait on the government to do everything for them, no one wants to clean in front of their own yard, they wait on NEPs. The IMF article gives a snap short of what we are faced with but do we take it serious? Are we interested in really building a resilient country/economy? I doubt that very much. Yes a lot of grant is promised to us but the authorities when running to the media must remind the citizens that they are pledged and not yet delivered. They give the people the impression that these monies are actually on their way but the process is usually long and sometimes the donors never deliver. The mindset of Dominicans must be changed before we see positive change.

  3. Kirku
    January 16, 2018

    But what I hearing there governor showed a graft a few day ago predicting 8% growth in the next year somebody correct me if I m wrong

    • Me
      January 16, 2018

      It probably was a graf, instead of the more appropriate graph.

  4. Roland Alan Mitchell
    January 16, 2018

    Mr Skerrit take heed:

    (1) Make Dominica self sufficient in Meat, Milk, Eggs Etc by importing live stock and get all the people involved in animal husbandry. Involve schools and all young people and all households.
    (2) Encourage agricultural exports from (1) above.
    (3) Make Roseau safe from the river, and low lying areas safe from the sea and landslides.
    (4) Build safe housing away from river plains for citizens.
    (5) Cut the civil service bill by 50%.
    (6) Publish a monthly income and expenditure summary and balance sheet. so that people have confidence in the government.
    (7) Publish what each minister gets in salary and benefits, and what he or she does for the country.
    (8) Publish monthly what is done within the citizen by investment program, so the people have confidence in your stewardship.
    When you do all that, then, no one can criticise you for hiding facts from them.
    Life is simple. Be honest, Be transparent.Be clear.
    You think that you can do that?

    • Paul Rossnof
      January 17, 2018

      Agree with what you are saying and Skerrit probably would agree as well. Problem is, it’s too late, he could not comply with some of the points suggested because otherwise he would end up in prison.

  5. Mother
    January 16, 2018

    Dominica is a lost cause but the P.M.’s wife is concentrating on a fancy carnival band called Rum with expensive costumes? She is like MarieAntoinette, insensitive and out of touch with reality and we all know what happened in France, the king and Marie Antoinette.

    • Roland Alan Mitchell
      January 17, 2018

      I disagree with this comment above about the Pm’s wife. Mrs Skerrit has a right to celebrate carnival. We need to lift the mood of people in Dominica after this disaster.
      The issue we have is with the direction that her husband- Mr Skerrit, is planning to take Dominica.
      We must not attack people personally. They have a right like any other people to do what they like in their private lives. We must respect that.

      Eleanor Roosevelt, ( one of the greatest politicians of our time) once said: ” Great minds discuss ideas, average minds discuss events, and small minds discuss people”. let us be guided by this.

  6. Real Truth
    January 15, 2018

    IMF! Everyone in Dominica who doesn’t know how to pray, this is an excellent time to learn!!

  7. sylvester Cadette
    January 15, 2018

    In jumpstarting the economy and putting young people to work, I hope the Ministry of Agriculture (Forestry Division), the Ministry of Finance, Ministry for Small Business & Enterprise and the Ministry responsible for Housing had considered a strategy to harness some donor funds to utilize all the fallen trees (all the wood) in the rebuilding process.

    At least ten (10) Groups of five (5) individuals could be formed. All equipment bought by Government with donor Funds then handed to these individuals with no conditions save that they cannot sell the equipment and that they have the drive and will to develop a small Business and must periodically account for all equipment . Forestry Division will allocate and guide on the Forest segments per team. AID Bank and Small Business Trust would help them in business procedures and accounting.

    This could be the genesis of small long-term business for some if not all the groups. It provides some employment and of course building supplies.

  8. Tony
    January 15, 2018

    Hello and good afternoon my people. Well I read the article and although it didn’t mention anything about our Government restructuring I got the feeling that they (IMF) want our Government to take a loan from the IMF. I hope our elected officials don’t fall for their scam because they will seek major changes in our Government ,like less employees,Higher Interest Rates. We must examine their prior loans to other Caribbean and African countries and their stringent policy requirements.

    • Anonymous
      January 16, 2018

      And who do you think would give our governmnent a loan instead under the present circumstances. You could ask Roosevelt Skerrit to launch another bond issue but I’m sure nobody would touch that with a barge pole right now.

  9. John
    January 15, 2018

    A major problem is going to be what to do with all the debris since it cannot simply be piled up somewhere and cause an environmental catastrophe. There may be a way to re-cycle all the plastics, paper and tin if a re-cycle location can be found. Since the government has all this available money from the CBI programme they should hire every available carpenter on the island and provide them with the necessary recourses to conduct a major rebuilding effort and bring in carpenters from other islands if need be. The young men need something to do, what better way to do that by hiring them to help with the re-building.

  10. thethingswesay
    January 15, 2018

    Havent and wont read the article, but im sure the IMF is suggesting we turn to them for help in order to fix our economy. Loan sharks and opportunists.

    • January 15, 2018

      I did read it, and it doesn’t really say that. (You’re right to be wary of the IMF, though.)

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