North & Central America and Caribbean

Saint Vincent and the Grenadines
Last reviewed: 04 June 2009

Country information

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ECONOMY

Basic Economic Facts

GDP (2007): US$537 million
GDP per head (2007): US$5,086
Real GDP annual growth at factor cost 2007: 7.7% (EIU)
Inflation: 6.9% in 2007 (EIU)

Fiscal performance improved in 2006, with strong economic growth increasing revenues by 17.9%. Capital expenditure rose, but there was still a reduction in the overall budget deficit. Current revenues have increased by 13.6%, accounted for by a 31.9% increase in taxes on domestic goods and services. The current expenditure is running at EC$254.9 (£48.5m) and increase of 8.2% attributed to higher personal emoluments and interest payments. Capital outlays have seen a 6% increase, largely due to increased expenditure on a number of highway projects. At the end of 2007, public debt was estimated to be 68% of GDP.

Since coming to power, the government has implemented a series of structural reforms intended to promote private sector growth and promotion of agricultural diversification and small businesses. However, the outlook for agriculture is still poor. Despite technological progress, for example in irrigation, the banana industry is still weak, with a reduced level of protection under the EU’s modified tariff-quota regime. New challenges within the WTO to the remaining EU protection may see this situation worsen. The Fair Trade scheme has allowed growers to take advantage of a niche market in the UK and should allow the industry to survive in the medium term.

The major source of grants for 2008 is expected to be the EU which is expected to provide EC$62.5m (£12m), Taiwan at EC$19.07m (£3.8m), Trinidad & Tobago at EC$11.5m (£2.3m) with Cuba EC$8m in kind, Japan at EC$10m (£2m), Venezuela, Caribbean Development Bank, IDA/World Bank, Global Environmental Facility and the UN making up the rest.

VAT and modern Excise was introduced on 1 May 2007. VAT is charged at the rate of 15%, with a reduced rate of 10% for hotel accommodation, diving tours and other tourism related services to help protect the crucial tourist industry. In addition to VAT some commodities are also subject to an Excise Tax to be levied at varying rates, these goods include cars, petroleum products, alcohol and cigarettes. In 2008, the projected revenue stood at EC$162.8m (£31m).

The Income Tax threshold was increased to EC$17,000 in 2008 and the top marginal rate reduced from 37.5 to 35 percent. The standard rate of tax for companies was also reduced to 35.0%.

Unemployment is presently around 22%.