CBI Revenue in Dominica Accounts for 37% of GDP: IMF Warns of “Excessive Dependence”

The International Monetary Fund’s (IMF) 2024 Article IV Consultation report highlights that Dominica’s Citizenship by Investment (CBI) program is becoming a significant economic driver. However, it also calls for strategic reforms to ensure long-term stability.

Revenue from the CBI program has reached an unprecedented level, accounting for 37% of Dominica’s GDP in the fiscal year 2022/23, an increase of more than seven percentage points from the previous year. By estimating the average GDP for this fiscal year, it can be inferred that Dominica’s CBI program generated approximately $232 million.

The influx of capital from the CBI program has played a crucial role in Dominica’s post-pandemic recovery, with real GDP growth reaching 5.6% in 2022 and an estimated 4.7% in 2023. However, the IMF also noted that the current account deficit widened to 33.7% of GDP in 2023 due to increased imports related to infrastructure projects funded by the CBI.

The IMF analysis emphasizes the role of the CBI program in financing the Climate Resilience and Recovery Plan (CRRP), which helps Dominica enhance its resilience to natural disasters—a significant concern given the country’s vulnerability to hurricanes and other climatic events.

The CBI program has also financed several major infrastructure projects, including a geothermal energy plant, a new international airport, and initiatives for climate-resilient housing.

The report underscores the necessity to “reduce dependence” on the CBI program, noting that the primary fiscal balance remains in deficit when excluding CBI funding. To diversify the economy, the IMF recommends developing other sectors such as agriculture, manufacturing, and information technology.

Another critical point mentioned by the IMF is the need to strengthen the governance of the CBI program. The report highlights the importance of ensuring that “the CBI program operates with high standards of transparency and integrity.” Therefore, the IMF recommends that Dominica implement regular public reporting on revenue, expenditures, and the effectiveness of the CBI program—something the country has neglected in recent years, leading to the assessment of Dominica’s program as one of the least transparent according to the CBI Transparency Index by IMI.

The IMF urges the implementation of fiscal reforms, recommending “the adoption of an ambitious fiscal consolidation strategy and prudent debt management” to complement the benefits of the CBI program.

Looking ahead, the IMF forecasts that revenue from the CBI program will remain significant but is expected to decline in the medium term. The program will continue to support key sectors of the economy as the government allocates the budget “for public investment, debt repayment, and savings accumulation.”

However, the IMF warns that “CBI revenue lower than forecast” could pose a significant risk to the country.

Potential factors that could lead to a decline in CBI revenue, according to the report, include global policy changes, increased scrutiny of CBI programs, and competition from other countries.