ROSEAU, Dominicca – Dominica's economy is estimated to have grown by 3.5 percent last year and the projections are for the growth to continue in 2025 at a further 4.2 percent by the end of the calendar year, Finance Minister Dr. Irving McIntyre has said.
He said that the inflation is projected to stabilize at about two percent and broadly aligned with United States price trends.
Legislators will from Monday begin debating the EC$1.3 billion budget that McIntyre presented to Parliament last Friday, in which he said that the economic last year was fueled by robust wholesale and retail trade, a very ambitious public sector investment program, increase in tourism activity, and growth in agricultural output.
He told legislators that the rate of inflation also declined slightly averaging 3.1 percent last year, down from 3.5 percent in the previous year, due to the easing of food and commodity prices.
The finance minister said that the current account deficit is estimated to have narrowed by two percentage points to 32.2 percent of gross domestic product (GDP) in 2024 but remains above its norm of 16.3 percent of GDP due to import-heavy infrastructure projects.
“Currently, our debt/GDP ratio hovers around 89 percent. There was a slight decline in government’s fiscal position in fiscal year 2024/2025 moving from a primary surplus of 1.5 percent of GDP in the previous year, to a deficit of 0.6 percent. However, fiscal year 2024/25 has had the strongest tax revenue performance on record as well as the highest tax arrears collection, a clear sign of the impact of increasing economic activity and improvements in tax administration.”
McIntyre said there was growth in tax revenue collection with all the major tax categories surpassing collections of the previous year. He said value added tax (VAT) has performed exceptionally well, exceeding budget estimates by three percent and surpassing collections for the previous year by nine million dollars.
“The VAT now accounts for 41 percent of total tax revenues. Taxes on incomes and profits also had a strong performance, surpassing budget expectations as well as last year’s collections. Non-tax revenue, supported mainly by CBI inflows, grew by 3.1 percent over that of the previous year.”
McIntyre said that the Citizenship by Investment (CBI) program continues to be a critical source of financing mainly for capital expenditure and accounts for roughly 58 percent of total revenues.
Under the CBI program, foreign investors are granted citizenship of Dominica in return for making a substantial investment in the socio-economic development of the country.
McIntyre said overall outlays for recurrent expenditure have increased slightly by 1.3 percent. Expenditure on personal emoluments and transfers and subsidies registered increases whilst interest payments and spending on goods and services declined. He said it should be noted that total recurrent expenditure fell well within the budget estimate for the year.
“There was a notable increase in capital expenditure for fiscal year 2024/2025, equivalent to 31 percent of GDP, reflecting the ongoing infrastructure development push as government continues to invest heavily in economic infrastructure, resulting in a capital expenditure of EC$603.5 million.”
The Finance Minister said that growth continues in 2025 with projections at a further 4.2 percent by the end of the calendar year, and that the current account deficit is forecasted to narrow to its historical norm of 15 to 16 percent of GDP by 2027–2028.
“The fiscal operations for budget year 2025/26 are projected to yield a primary surplus of one percent of GDP as strong revenue growth is expected to offset increases in both recurrent and capital expenditures.
“Further expansion in tax revenue will persist throughout the year with all major tax categories growing by an average of 4.5 percent. Improvements are also expected in non-tax revenue as CBI inflows remain elevated.”
He said expenditure growth for this fiscal year is fueled by a 9.6 percent increase in capital expenditure over the actual capital expenditure for last fiscal year. As a result, the capital expenditure is now equivalent to 32 percent of GDP.
McIntyre said that recurrent expenditure is expected to grow by 7.6 percent over actual expenditure for last year (0.1 percent of last year’s estimates), due to allocations for personal emoluments.
“The outlook for the 2026/27 and 2027/28 suggests further improvements in the fiscal balances as revenues continue to grow in line with projected economic expansion and total expenditures levels off.”
But the Finance Minister acknowledged that risks to the outlook remain active as ongoing geopolitical tensions could disrupt Dominica’s tourism, trade, and external competitiveness. He said extreme climate events could severely damage infrastructure and compromise growth.
“Furthermore, domestic risks, such as fiscal underperformance and lower-than-expected CBI inflows, could jeopardize the completion of key infrastructure projects, with knock-on effects to growth and debt.
“On the other hand, better than expected dividends from construction of the international airport and the marina, commissioning of the new geothermal energy plant, or higher growth in advanced economies could pose upside risks to the outlook.
“Additionally, the implementation of the fiscal responsibility framework in 2026, the creation of a Debt Repayment Fund (DRF) and the establishment of the Vulnerability Risk and Resilience Fund (VRF) will help in maintaining a sound fiscal position.”
McIntyre said as global policy changes continue and uncertainty reaches unprecedented levels, there is a pressing need for well-calibrated strategies that stimulate growth, maintain fiscal resilience, and foster long-term sustainable development.
He said all these environmental factors were considered in crafting this year’s budget.
