KINGSTOWN, St. Vincent – The International Monetary Fund (IMF) has warned the government of St. Vincent and the Grenadines against cutting its value-added tax (VAT), saying the country’s mounting debt and persistent fiscal deficits leave “no room” to lower the standard rate
Speaking at a press conference with Prime Minister Godwin Friday on Tuesday, IMF mission chief Sergei Antoshin said preserving tax revenues is critical to stabilising SVG’s finances. He urged the government to align the special VAT rate for tourism with the standard rate, while welcoming moves to extend VAT to digital services and reform property taxation.
“Tax revenue needs to be preserved, and tax administration further strengthened,” Antoshin said at the conclusion of the IMF’s 2026 Article IV consultation. “There is no room to lower the VAT standard rate.”
Antoshin highlighted SVG’s debt ratio, which has surged by 45 percentage points since 2019, reaching 113% of GDP in 2025. Without policy changes, IMF staff project debt could climb to 145% of GDP by 2031, with gross financing needs rising to 26% of GDP.
The IMF noted that SVG’s fiscal situation has deteriorated since the pandemic, compounded by two major natural disasters and the oil price shock from the war in the Middle East. The 2026 budget envisages a deficit of 19% of GDP, but IMF staff project a smaller though still large deficit of 12%.
To address vulnerabilities, the IMF is proposing an “active policy scenario” aimed at reducing deficits and eventually bringing debt down to 60% of GDP over the long term. This would require improving the primary balance by 11 percentage points of GDP between 2027 and 2029, reaching a 3% surplus by 2029.Antoshin stressed that such fiscal consolidation would demand careful expenditure management, including wage moderation and attrition in the public sector, while protecting vulnerable households through better-targeted social programmes.