Gov’t proceeding with development bank despite caution from IMF
Government plans to move forward with its general elections campaign promise of establishing a National Development Bank, stressing that if properly managed, an institution of this nature can grow the economy.
In the 2026 article IV report on Saint Vincent and the Grenadines (SVG), the International Monetary Fund (IMF) noted that it shares the government’s financial development goals, but said the establishment of a new national development bank is not recommended, given high fiscal risks and regional experience.
“The proposed bank would entail upfront capitalization and ongoing fiscal costs, which would be inconsistent with needed fiscal consolidation efforts and could create additional contingent liabilities,” the IMF said in its consultation press release which was issued on April 28, 2026 after a press conference at Cabinet Room which was attended by Prime Minister Dr. Godwin Friday.
The IMF report added, “…Instead, policy efforts should focus on strengthening existing credit intermediation channels, including encouraging banks and credit unions to make greater use of regional instruments such as programs for micro firms and start-ups offered by the Eastern Caribbean Partial Credit Guarantee Corporation. Over time, fiscal and financial sector reforms would enable the banking system and adequately capitalized credit unions to provide sufficient credit across economic sectors”.
In the same report, the IMF said, “Bank credit growth to households and micro firms has been insufficient amid a fast expansion by credit unions” and that, “The local bank, which dominates the financial sector, has low non-performing loans (NPL), adequate provisions, and high capital, but also a very large sovereign exposure. Credit unions have maintained rapid lending”.
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