ROSEAU, Dominica: An International Monetary Fund Staff Mission has confirmed that the Dominican economy grew by an estimated 4% in 2006, the strongest in nearly two decades.

The Mission was in Dominica during April 25-May 8, 2007 to conduct the 2007 Article IV Consultation discussions. These consultations are conducted on an annual basis on the economic performance of all member countries of the IMF.

According to the IMF, real GDP growth of 4 percent in 2006 was achieved due to gains in tourism, construction, services, the banana sub-sector as well as a boost in offshore school activity.

The IMF commended the efforts of the Government of Dominica in successfully taking Dominica through a major macroeconomic adjustment, fully recovering from the 2001-02 crisis.

The Mission pointed to the Government’s considerable fiscal effort and structural reforms supported by the IMF’s Poverty Reduction and Growth Facility (PRGF) arrangement as the factors responsible for the rebound in economic activity.

The Fund also highlighted progress being made in several other areas:

• Economic activity recovered markedly and exceeded pre-crisis output levels by 2005 underpinned by a rebound in consumption and buoyant investment
• Public debt declined by 30 percentage points of GDP during the programme
• Banking credit has expanded contributing to economic recovery. Bank credit to the private sector rose by 11% in 2006, the highest rate in 15 years
• Total grant inflows are likely to reach a record high of some 14.5 % of GDP this year, the highest for twenty years
• Further progress has been made in structural reforms. The Fund highlighted the merger of the Air and Sea Ports, the dissolution of the NDC to be replaced by two new agencies and the introduction in Parliament of Financial Services legislation
• Government on course to achieve its major fiscal target

The Mission also noted that although Dominica is in a strong position to address remaining challenges and thereby sustain the growth momentum and reduce poverty, several challenges remain. These include:

• The need to reduce further the public debt ratio
• The need to ensure the financial sector is well regulated and supervised
• The need to diversify the economy and find new growth drivers

Prior to their departure on Tuesday, the IMF Staff Mission led by Mission Chief, Goohoon Kwon held discussions with Prime Minister, Roosevelt Skerrit and other members of Cabinet.