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Country Reports

Saint Vincent and the Grenadines Country Report

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Risk Level

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Moderate
Elevated
High
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Severe
Extreme

Overview

Executive Summary

The Unity Labour Party (ULP), headed by Prime Minister Ralph Gonsalves, holds eight of the 15 elected seats in the House of Assembly. Government stability is undermined by the opposition New Democratic Party’s (NDP) ongoing legal challenge of the 2015 election results. The next general election is scheduled for 2020. However, if the NDP were successful in its legal case this would increase the likelihood of early elections. An NDP government would make foreign policy changes likely, for example favouring mainland China over Taiwan, a current ally of Gonsalves. NDP also has pledged to introduce a citizenship by investment scheme, which Gonsalves has rejected. IHS Markit’s GDP growth projection for 2019 is 2.4%, despite the risks posed by frequent regional natural disasters. The opening of the new Argyle International Airport in 2017 has boosted tourism-related services. The government is seeking to restructure the jointly owned airline Liat to keep it operational. Its effort is being undertaken alongside other Caribbean government shareholders, which are seeking to generate USD5.4million in emergency funding collectively. Drilling by Iceland Drilling Company for a planned geothermal power plant is expected to start in April 2019, contributing to the positive growth outlook. Management of public finances has not improved significantly, however, with the debt-to-GDP ratio increasing from 67.74% in 2014 to 72% in 2018, according to the World Bank. The 2019 budget projects expenditure of USD394 million, a 7.4% increase versus 2018. The government announced tax increases for products including gasoline and diesel. The EU removed the country from its list of non-cooperative jurisdictions in March 2019, after the government amended International Business Company and International Trust legislation, removing tax exemptions for companies incorporated in the country since January 2019. However, the country’s Financial Services Authority is seeking to limit the application of taxation from worldwide to locally sourced income, to incentivise offshore business.
Last update: March 28, 2019

Operational Outlook

The government welcomes investment, and companies can easily set up operations. The investment promotion agency Invest SVG provides guidelines for investors. However, ongoing constraints include partially deficient infrastructure and the continued threat of natural hazards (mainly hurricanes). The recently opened Argyle International Airport is likely to boost inbound tourism. In December 2017, the IMF called for more labour market flexibility and improved access to credit. Prime Minister Ralph Gonsalves opposes granting citizenship for attracting inward investment, an initiative implemented by other Caribbean countries. Investors in the country face bribery solicitation risks.

Last update: September 4, 2018

Terrorism

There are no domestic terrorist groups with the intention or capability to undertake attacks against the population and/or commercial or government-owned property. The country is not considered a target for international terrorist organisations. St Vincent's offshore banking sector has come under pressure from international organisations to tighten money laundering controls and reduce the possibility of terrorist groups using the jurisdiction to conceal assets or direct funds abroad. In May 2017, the government published an Anti-Money Laundering and Terrorist Financing Code. After government websites were targets of cyber-attacks, the country pledged to increase cyber security in December 2017.

Last update: September 4, 2018

War Risks

The likelihood of interstate conflict involving St. Vincent and the Grenadines is very low. St. Vincent disputes Venezuela's claim to Bird Island, but relations between both countries are friendly under the current administrations. Prime Minister Gonsalves has ideological sympathy for the governments of Cuba and Venezuela. The country has been involved in mediating talks between the Venezuelan government and the opposition. The country works alongside US and European security forces, particularly in regional anti-drug trafficking efforts. In 2017, St. Vincent and the Grenadines signed maritime boundary agreements with Barbados and St. Lucia, reducing the risk of diplomatic disputes.

Last update: September 4, 2018

Social Stability

Deep divisions between the ruling and opposition parties are likely to generate public-sector strikes and protests over governmental policies in the next year. Given the June 2017 High Court decision enabling the opposition to challenge the December 2015 election result in two constituencies, there is a growing risk of political protests in the county. In January 2018, the opposition New Democratic Party (NDP) filed a no-confidence motion against the government, accusing the administration of widespread political misconduct. Despite this, there have been no indications of the government's political stability being under threat due to social unrest.

Last update: September 4, 2018