The World Bank in the Eastern Caribbean

Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines are members of the World Bank.

These Organization of Eastern Caribbean States (OECS) countries are small states with a combined population of approximately 625,000. Their small size limits access to economies of scale, which shapes the economy's structure by limiting diversification and international trade, and increases exposure to volatility, natural hazards, and other shocks. 

Economic Outlook

The OECS is heavily dependent on tourism, which contributes to 39 percent of the Gross Domestic Product (GDP) on average and accounts for some 11 percent of the region's jobs. The economic performance of OECS countries is therefore influenced by the tourism sector, as well as economic cycles in main tourism source markets - the USA, Canada, and Europe. This dependency was particularly evident after the Global Financial Crisis (GFC) and the COVID-19 pandemic. Relying on tourism also makes the region vulnerable to the effects of extreme weather events, as they can disrupt tourist arrivals and further impact the economy.

In Dominica, the economy relies on tourism and is supported by significant public investment funded by citizenship by investment revenues. The development of geothermal resources and the construction of an international airport are expected to boost both structural and potential growth.

Economic growth has helped mitigate losses from disasters, and efforts to keep inflation low aim to reduce poverty in the medium term. Dominica is still affected by fluctuating food and fuel costs, the economic impacts of global political events, and reliance on unpredictable central bank revenues.

Grenada's economic growth in 2023 was estimated to have reached 4.8%, with an average of 3.7% in the medium term, as tourism and construction are expanding. Strong private investment is expected to support construction while implementing resilience and climate reforms will positively impact the economy. Inflation is predicted to peak at 2.7% in 2023, and to 2.0 percent from 2024 onwards. Amid moderate economic growth and controlled inflation, poverty (US$6.85 a day in 2017 PPP) is projected to fall below pre-pandemic levels in 2024 and continue to decline in 2025 and 2026.

The Disaster Risk Strategy, aimed at detailing a comprehensive plan including policies, cost, and financing for building resilience to natural disasters and climate change, will help mitigate climate-related risks.

Saint Lucia's growth was expected to be moderate at 3.2% in 2023, with a further slowdown in the medium term. This growth will be supported by tourist arrivals and major construction projects, such as airport renovations and hotel construction, peaking in 2024 and 2025. Poverty reduction will continue, though at a slower pace in the medium term, and inflationary pressures are expected to ease.

St. Vincent and the Grenadines was expected to maintain sturdy growth at 6.5 percent in 2023 and 5.0 percent in 2024, driven by a rebound in tourism that surpasses 2019 levels. Poverty is expected to follow a similar path. Tourism growth over the medium term will be further supported by a new airport and additional hotel and resort facilities.

The government has taken measures to rebuild fiscal reserves, including replenishing the contingency fund after using it in response to the volcanic eruption. These measures involve prioritizing public investment in port modernization and a new hospital while reducing other projects, increasing customs service charges, improving taxpayer compliance, and reforming pension funding.

The main goal of the World Bank’s work in the Eastern Caribbean is to help countries boost economic growth and competitiveness as they bounce back from multiple crises, focus on their development goals for the near future, and strengthen their ability to withstand climate change and other external challenges.

Strengthened Resilience to Climate Change and Other Shocks

Enhancing resilience to climate change and economic shocks is crucial, particularly in preserving marine and coastal ecosystems, fundamental for economic activities and development in the Eastern Caribbean. 

A regional initiative for the blue economy aims to foster sustainable growth in tourism, fisheries, and aquaculture, significantly impacted by the COVID-19 pandemic, especially affecting marginalized groups like women and youth. 

The World Bank will pursue strategies to aid sectoral revival and resource protection, including policy enhancement, innovative financing, and strategic infrastructure investments. 

Additionally, to address escalating debt levels in OECS countries, the Bank will support fiscal responsibility frameworks and improve State-Owned Enterprises' performance. Funding initiatives like the Unleashing the Blue Economy of the Caribbean Project and the PROBLUE Multi Donor Trust Fund further bolster sustainable resource management and economic recovery efforts in the region.

Improved Human Capital seeks to strengthen the health and skills of the population for greater productivity and prosperity and improve financial protection for the vulnerable

Ongoing Investment Project Financing (IPF) support in Saint Lucia and St. Vincent and the Grenadines aims to expand cash transfer programs for the poor and enhance human resource capacity for social protection services. The World Bank intends to improve beneficiary eligibility tools in Saint Lucia and boost the efficiency of social protection systems in other OECS countries. COVID-19 Recovery Development Policy Operations (DPOs) reinforced income support programs, emphasizing gender-specific needs and inclusivity during crises.

Bank-financed projects in Saint Lucia and St. Vincent and the Grenadines aim to tackle challenges in productivity growth and poverty reduction through various measures. These include strengthening Technical and Vocational Education and Training (TVET) systems, utilizing labor market data to shape training and policies, offering direct TVET training for low-income individuals, establishing financial aid programs for disadvantaged students, and enhancing the overall learning environment for TVET education. These initiatives are designed to improve skills, increase employment opportunities, and alleviate poverty in the region.

The World Bank offers technical assistance and investments to bolster institutional capacity and policy frameworks for sustainable TVET and labor markets. These efforts aim to reduce gender inequality in economic opportunities by addressing education and training gaps.

Saint Lucia's Sustainable Recovery Development Policy Credit, approved in January 2024, aims to enhance fiscal management, climate change resilience, and the business environment. The $40 million investment will boost sustainable development, increase revenue, and enhance resilience against future shocks.

Support the availability of more and better jobs by enhancing the enabling environment for business, and increasing digital and physical connectivity for greater innovation, efficiency, and competitiveness.

To bolster job creation and enhance business environments, the Bank collaborates with OECS countries to address challenges faced by Small and Medium Enterprises (SMEs), which contribute significantly to the region's employment and GDP but encounter limited access to financing. Through a partial credit guarantee scheme, the Bank reduces lending risks for SMEs. 

The World Bank also supports the blue economy program, offering matching grants to boost SME productivity and capabilities in sectors such as tourism and fisheries, with a focus on expanding women-owned businesses and providing climate risk insurance. Essential advisory services aim to advance financial reforms, including modernizing payment systems and promoting digital solutions for SMEs, while efforts to reduce gender inequality include advocating for women's participation in digital skills courses and entrepreneurship programs.

The OECS Skills and Innovation Project, approved in January 2024, will allocate $36 million to Grenada, Saint Lucia, and the OECS Commission to enhance youth transversal and advanced technical skills, strengthen regional collaboration in post-secondary education, and foster collaborative innovation. Over the next five years, it will benefit over 40,000 youth and at least 120 entrepreneurs and firms in the OECS region. 

Support for Health Systems 

In the OECS Regional Health Project, Dominica, Grenada, Saint Lucia and St. Vincent and the Grenadines are making progress toward improving preparedness capacities of health systems for public health emergencies, and  providing a response in the event of eligible crises or emergencies. These countries are working to bolster their health infrastructure resilience through the SMARTing of health facilities. 

The Saint Vincent and the Grenadines Strengthening Health System Resilience Project is a transformative investment. At its core is the construction of a SMART, green, and climate resilient acute care hospital. With this as the catalyst for sector reform, the government is aiming to tackle comprehensive aspects of resilience including the ability of the health sector to manage shocks, the adaptability of health services to provide high quality care during and after crises, the maintenance of core functions during devastating climate and natural disasters and other emergencies, the absorption capacity of the hospital to efficiently manage additional resources, and increasing the sector's ability to respond to crises as well as to the rising burden of chronic non-communicable diseases (NCDs).  

Saint Lucia's healthcare transformation towards Universal Health Coverage (UHC) is progressing under the World Bank-financed Saint Lucia Health System Strengthening Project. The project focuses on a primary care-driven UHC agenda, with a Performance-Based Pilot scheme to strengthen NCD care management and outcomes. The Bank supports the government with the institutionalization of the pilot and accelerating digital transformation in health to strengthen service delivery and the gradual shift to output-based payments.  The pilot has benefited from technical assistance provided by the Korea-World Bank Partnership Facility (KWPF)who contributed to the design of the pilot, focusing on supporting the quality-of-care agenda for hypertension and diabetes; designing a scalable and sustainable scheme, drawing on lessons from Korea, Argentina, Colombia and other countries, including supporting the alignment of the PBF scheme with public finance management systems and processes; and, setting up an operational evaluation design for the pilot to inform implementation. 

With funding from the Global Partnership for Education, the System Capacity Grant for Education Sector Plans, Enabling Factors Analysis, and Partnership Compacts in the OECS is supporting regional collaboration in education in Dominica, Saint Vincent and the Grenadines, Grenada and Saint Lucia. Ministries of Education receive technical assistance to identify a priority reform with the potential to catalyze system wide change for education systems and develop a roadmap to implement it. 

Fostering Conditions for Growth and Competitiveness

Under the Micro, Small and Medium-Sized Enterprise Guarantee Facility Project

●      84 MSME loans (34 for women or women co-owned businesses) worth $4.3million have been granted to a variety of sectors in six Eastern Caribbean countries.

Enhancing Resilience

●      The Dominica Housing Recovery Project is part of Dominica’s rebuilding efforts in the aftermath of Hurricane Maria, a category 5 hurricane which severely damaged the island in September 2017. To date, the project has practically completed 230 houses, following damage or destruction by the hurricane. 

●      Further, in response to the COVID-19 pandemic, the The Dominica Housing Recovery Project included two Contingent Emergency Response Component programs. The first provided income support to about 6,167 beneficiaries affected by the pandemic. The second provided reimbursable financial assistance to over 660 small businesses. Both programs have been successfully closed.

●      More than 4,000 households - with over 62% of them led by women in St Vincent and the Grenadines - received short-term income support to aid in recovery from the effects of the volcanic eruption and climate-related events through the Volcanic Eruption Emergency Project

Digital Transformation 

As part of the Caribbean Digital Transformation Project  (Digital Caribbean) since 2020:

● 81% of Dominicans now have access to the internet, up from 74%

● 78% of Grenadians now have access to the internet, up from less than 70%

● 79% of Saint Lucians and 85% of citizens in St. Vincent and the Grenadines now have internet access.

Human Development and Health

As part of the  OECS Regional Health Project:

●       Laboratory testing capacity has been enhanced through lab accreditations, procurement of equipment, training and improved information systems.  

●      Countries have also boosted their emergency operations center (EOC) capacities, procedures, and plans. 

●      Further, Grenada has improved event-based surveillance and established a designated laboratory equipped with COVID-19 diagnostic resources. 

●      Training of health workers on Field Epidemiology Training Program (FETP) has also been conducted under the Project.  

Under the World Bank-financed Saint Lucia Health System Strengthening Project

●      Saint Lucia has implemented its Performance-Based Financing in Health Facilities across the island as part of Universal Health Coverage

●      Successfully launched the of Maternal and Child Health Services under Phase 1 of  Universal Health Coverage