Dominica Economic Recovery Support Operation

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The proposed Economic Recovery Support Operation (ERSO) would support the Government's program and reform agenda described in Part III and in the Letter or Development Policy. The main objective of the proposed operation is to support Dominica's efforts to regain fiscal sustainability and to restart growth, while protecting past social gains. In helping to fill the current financing gap, the operation will provide the Government with the needed space to complete the formulation of a medium-term reform program, which is to be embodied in a Poverty Reduction Strategy Paper, and to protect investments in social and human capital. The proposed (ERSO) is a single-tranche structural adjustment credit in the amount of US$3 million equivalent. The operation will support the authorities' efforts to: (a) improve public expenditure management, through reforms in financial and debt management and a restructuring of the public sector investment program; (b) strengthen the financial sector reforms by commercializing the state-owned banks and improving supervision of the credit union sub-sector; and (c) reduce the cost of doing business through reforms in the petroleum, electricity and transport sectors. The operation focuses on the most urgent measures required for fiscal consolidation and a resumption or growth and on areas of the Bank's comparative advantage. The operation's concessional terms will reduce the government's borrowing costs and lengthen debt maturities at the margin. The credit is based on structural reform measures that have been implemented by the Government prior to Board presentation.