According to the IMF latest release on SVG, consumer inflation rose from 1 percent in 2016 to 1.9 percent in September 2017, reflecting increases in the VAT and minimum wages.
The domestic banking system remains stable, but credit to the private sector has been flat.
The fiscal situation is projected to worsen substantially in 2017 due to a projected decline in tax revenue after exceptional receipts in 2016 and higher outlays for transfers, subsidies and public investment.
Reflecting debt relief obtained from a bilateral creditor, public sector debt is expected to decline but remain elevated at 77.5 percent of GDP in 2017.
The fiscal position is expected to deteriorate in 2017-18, as new revenue measures only partially cover higher outlays. Public debt will resume rising despite some debt relief.
Moreover, risks to this projection are tilted to the downside given the inadequate policy stance, the uncertain global environment, and vulnerability to natural disasters.
Containing the wage bill and curbing the growth of public pensions should be key pillars of the fiscal consolidation strategy.