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FactsheetOctober 27, 2022

The World Bank - Organisation of Eastern Caribbean States


Six members of the Organisation of Eastern Caribbean States (OECS) are also member countries of the World Bank Group (WBG), namely: Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

As OECS countries recover from the COVID-19 crisis, they continue to address their medium-term development priorities, and build resilience to climate change and other external shocks. The health impact of COVID-19 has been relatively contained, thanks to the early implementation of lockdowns and social distancing measures, with 89,700 total COVID-19 cases and 1023 deaths reported as of October 10, 2022, in the six countries. Between 28 percent and 70 percent of the OECS countries’ population has received at least one dose of the COVID-19 vaccine. However, the economic impact of the pandemic has been disproportionately severe due to the near shutdown in tourism, the region’s main source of economic activity and employment.

Moreover, OECS countries are highly vulnerable to climate change as it increases the frequency and severity of the extreme weather events that regularly strike the Caribbean.

OECS countries are small states with a combined population of approximately 625,000. Small size limits access to economies of scale, which in turn shapes the structure of the economy by limiting diversification and the composition of international trade, and increases exposure to volatility, natural disasters, and other shocks. Size also affects returns to scale in the public sector, which has implications for government capacity and the organization and financing of service delivery.

Economic growth in the OECS has been volatile due to the concentration of activities in a few sectors and the impact of natural disasters. Growth volatility in the region is among the highest in the world, and over twice the average for the Pacific Islands between the years 2000 and 2019. The OECS is heavily reliant on tourism, which accounts for 35 percent of GDP on average and provides more than half of all jobs. As a result, economic performance is heavily influenced by developments in the tourism sector as well as the business cycles of the tourism source markets – the USA, Canada, and Europe. This was especially noticeable in the aftermath of the Global Financial Crisis (GFC), as well as during the ongoing COVID-19 pandemic. The dependence on tourism also amplifies the impact of weather-related extreme events as they curtail tourist arrivals, further disrupting economic activity.

Real GDP growth has also been relatively low, and the income gap with peer countries has widened since the GFC. The region expanded at an average annual rate of 1.6 percent between 2009 and 2019, comparably lower than the averages of 2.6 percent and 4 percent recorded by the Pacific Islands and the upper middle-income countries (UMIC), respectively. Grenada, the region’s fastest-growing economy in recent years, expanded at an annual average of 3 percent after the GFC. There was a pickup in growth after major category 5 Hurricanes Irma and Maria struck in 2017, with real GDP growth rebounding from 0.1 percent to an average 3.1 percent in 2019. Increased tourist arrivals and large construction projects, such as Dominica’s post-hurricane reconstruction, fuelled the growth acceleration.

Economic activity in the region contracted sharply in 2020 due to the impact of the COVID-19 pandemic, and recovery in 2021 has been slow. In addition to the health impact of COVID-19, the pandemic’s socio-economic impact on OECS countries has been severe, pushing the region into a deep recession. OECS countries are estimated to have contracted by 13.9 percent in 2020. To contain the spread of infections, international travel was almost completely halted, resulting in a 70 percent drop in earnings from tourism. Non-tourism related economic activities also contracted due to disruptions in international logistics, as well as the domestic implementation of social distancing measures including curfews and business closures. Job losses are also estimated to be high, with women likely to be disproportionately affected due to their high participation in the services sector. Estimates in St. Lucia suggest that over 70 percent of households have seen their incomes fall since the beginning of the pandemic, and nearly 45 percent of the working population pre-pandemic had stopped working by May 2020 (WB High Frequency Phone Survey, HFPS, May 2020). Similarly, 70 percent of Dominican households reported a loss in employment or a reduction in salary as of June 2020.

The eruption of the La Soufrière volcano in April 2021 has compounded the effect of the pandemic in St. Vincent and the Grenadines, resulting in additional loss of livelihoods and assets.

OECS countries pursued moderately active fiscal policies over the past decade, with a sharp jump in fiscal deficits in 2020. After a period of improvement post-GFC, the average fiscal surplus peaked at 3.4 percent in 2016, before gradually deteriorating to a deficit of 2.6 percent of GDP in 2019. The average fiscal deficit climbed to 7.1 percent of GDP in 2020 in the context of the pandemic. The deterioration in the fiscal balance prior to 2020 was mainly attributed to large reconstruction projects in Dominica post-hurricane, and a decline of Citizenship-by-Investment (CBI) inflows to Dominica.

In this context, average total revenues fell from 32.2 percent of GDP in 2016 to 29 percent of GDP in 2020. Average total spending rose to 35 percent of GDP in 2020, an increase of 4.1 percentage points relative to 2019, reflecting increased spending on goods and wages to combat the impact of the pandemic. The countries have been proactive in accessing concessional financing, including from the Bank and the International Monetary Fund (IMF), to supplement financing from regional and domestic sources. Notably, the OECS IDA-recipient countries participated in the Debt Service Suspension Initiative (DSSI) to free up additional fiscal space.

Public debt increased sharply in 2020-2021, reversing recent declines. Improved fiscal management and fiscal consolidation efforts helped reduce the debt burden of the OECS countries prior to the pandemic. Public debt fell from 73.7 percent of GDP in 2016 to 69.1 percent of GDP in 2019, with some countries, such as Grenada, showing substantial reductions in debt levels by over 40 percentage points of GDP. In view of significant COVID-related borrowings and economic contraction in 2020, the debt stock is estimated to have climbed to 85.9 percent of GDP in 2021, with St. Lucia and Antigua and Barbuda increasing by the largest margins.

Poverty in Eastern Caribbean countries remains relatively high with official poverty rates ranging from 18 to 30 percent. The lack of up-to-date socioeconomic data is a key area of concern in the OECS, with Grenada and St. Lucia being the only two countries with recent poverty and inequality data. In Grenada, the country previously with the highest level of poverty in the OECS, the poverty rate declined from 38 to 25 percent between 2008 and 2018, in line with significant growth in per capita incomes. In St. Lucia, poverty declined from 29 percent to 25 percent between 2005 and 2016. The most recent poverty indicators for the other countries, though over a decade old, show poverty rates between 18 and 30 percent of the population. Inequality in OECS countries ranges from moderate to high, with Gini index values between 0.37 and 0.48.

Public debt increased sharply in 2020-2021, reversing recent declines. Improved fiscal management and fiscal consolidation efforts helped reduce the debt burden of OECS countries prior to the pandemic. Public debt fell from 73.7 percent of GDP in 2016 to 69.1 percent of GDP in 2019, with some countries, such as Grenada, showing substantial reductions in debt levels by over 40 percentage points of GDP. In view of significant COVID-related borrowings and economic contraction in 2020, the debt stock is estimated to have climbed to 85.9 percent of GDP in 2021, with St. Lucia and Antigua and Barbuda increasing by the largest margins. According to the most recent Debt Sustainability Analyses (DSA), several of the countries are in a precarious debt situation with high vulnerability to a variety of shocks. Despite strong CBI inflows and several debt restructurings, the region remains one of the world’s most indebted, limiting fiscal space and the central role of fiscal policy for economic development.

Economic Outlook

Prior to the pandemic, some OECS countries initiated measures to reshape their budgets to strengthen fiscal sustainability. Following major debt restructurings under an IMF program, Grenada approved the Fiscal Responsibility Act (FRA) in 2014 and undertook reforms which successfully reduced public debt from 102 percent of GDP in 2014 to 59 percent of GDP in 2019. Development Policy Credits (DPCs) in Grenada have supported the country’s fiscal rule, including by contributing to (i) the establishment of the Fiscal Responsibility Oversight Committee, (ii) incorporating SOE contingent debt in the debt reports and fiscal risks statements, (iii) a negotiation framework for the public sector wage; and (iv) other reforms to enhance public investment efficiency and enhance revenue measures. In 2019, St. Vincent and the Grenadines approved a Fiscal Responsibility Resolution which outlines declaratory fiscal responsibility principles, and sets targets for spending, fiscal balances, and public debt levels.

In 2021, Dominica approved the development of a Fiscal Rules and Responsibility Framework with the support of Bank technical assistance. The Bank has also provided technical assistance to the Government of Saint Lucia in developing and implementing a rules-based Fiscal Responsibility Framework. The COVID-19 DPC in St Lucia supported the government’s continued commitment to the fiscal rule. Antigua and Barbuda and St. Kitts and Nevis, which are more vulnerable to natural disasters and have high debt levels, have accumulated fiscal buffers using the relatively large CBI inflows. With the joint support by IMF, CDB, and the Bank, OECS countries are expected to achieve the 60 percent debt target by 2035 (deferred by the ECCB from 2030 to 2035 in light of the significant impacts from the COVID-19 pandemic).


WBG Strategy

Strengthened Resilience to Climate Change and Other Shocks

  • The marine ecosystems of the OECS currently provide food, livelihoods, and income to millions of people through tourism, fisheries, and other sectors. Protection of the marine and coastal natural assets is critical to maintain the health and diversity of the natural capital underpinning economic activity and development.
  • Water security has been identified as a threat to the region’s natural assets and long-term development given the dependence of OECS countries on tourism and agriculture. In view of this, it would be important to preserve the natural endowment of water and waterways.
  • Reduce the region’s reliance on fossil fuels and leverage its renewable energy potential. Increasing energy independence through a diversified energy matrix, including by developing the region’s geothermal potential, will contribute to the stabilization and enable reduction of electricity prices, positively impacting industrial competitiveness, household disposable income, and resilience to external economic shocks.
  • Strengthen the investment climate to attract private sector finance in clean energy. The Bank will continue providing TA to design options for a Regional Renewable Energy Infrastructure Financing Facility for the OECS to strengthen private investments in the sector in partnership with the Eastern Caribbean Central Bank (ECCB) and aims to provide financing to support implementation of the Facility.
  • The Bank will continue its long-standing support to the Eastern Caribbean’s climate and disaster risk management, focusing on ex-ante resilience to natural hazards and climate change impacts. Vulnerability to natural hazards is at the crux of the region’s development challenges, as it hurts economic growth, contributes to mounting debt stocks, deters business creation, and hampers poverty reduction.
  • Investments through disaster vulnerability reduction projects in the four OECS Blend countries will help strengthen the resilience of the islands’ infrastructure against the impacts of natural hazards and climate change.
  • The Bank will continue supporting disaster risk financing instruments underpinned by technical assistance  to help governments design and implement national disaster risk financing strategies. The pandemic has had a disproportionate impact on output, government revenues, and debt to GDP levels in the Eastern Caribbean, and has redirected resources away from critical risk reduction activities.

Improve Fiscal, Debt, and Public Financial Management (PFM

  • The crippling economic impact of the COVID-19 pandemic has led to surging debt levels in OECS countries, reversing some of the gains made in recent years. Public debt levels had fallen significantly in the OECS countries prior to the pandemic.
  • Supporting OECS governments in the implementation of fiscal management reforms to safeguard fiscal and debt sustainability. Through policy-based lending, technical assistance and the Performance and Policy Actions (PPAs) under the IDA Sustainable Development Financing Policy (SDFP), the Bank will support the implementation of fiscal responsibility frameworks across the OECS, as well as enhanced debt transparency through the annual publication of debt management reports.
  • Supporting PFM reforms to strengthen the resilience and inclusiveness of budget policies, accounting, auditing, and procurement practices. The region has made progress in PFM in the last decade by improving the budget preparation and external audit practices.

Strengthen Social and Financial Protection for the Poor

  • Poverty reduction in the OECS has been hampered by weak coverage and inefficiencies of the social protection (SP) systems. Social safety nets are critical to protect the poor and vulnerable from the impact of external shocks which regularly strike OECS countries.
  • The WBG contributed to the strengthening of the SP policy framework, increased the coverage of cash transfer programs, and improved the implementation of social programs across the region.
  • The WBG supports the collection of household surveys and publication of up to date and reliable poverty data in the OECS. Currently, household surveys to monitor and analyze poverty and other socioeconomic dimensions in the OECS are conducted about once every ten years or more. The Bank aims to improve the capacity of OECS countries to produce and publicly disseminate statistical data in a timely manner for evidence-based policymaking at both the country and regional levels.

Strengthen Health Services Delivery and Skills Enhancement Program

  • Productivity growth and poverty reduction in OECS countries have been constrained by poor learning outcomes in school, the overall lack of skills in the population, and the mismatch between workforce skills and labor market needs. The Bank is working on boosting human capital development to increase labor force productivity and reduce poverty and unemployment.
  • The World Bank will explore options for supporting secondary and post-secondary education agendas at a regional level, that will support innovation.
  • Though the OECS countries were relatively successful in containing the spread of COVID-19, vulnerability to extreme weather events and frequent disease outbreaks have highlighted weaknesses in health systems’ preparedness for public health emergencies. This will require continuing to strengthen core public health systems at both national and regional levels, including disease surveillance and laboratory systems, as well as adoption of a multi-sectoral One Health Approach.
  • Bank support will help address shortcomings in infectious disease surveillance, epidemic preparedness, and response and improve continuity of care following a natural disaster. Investments in national and regional health systems will strengthen their capacity and preparedness for public health emergencies.
  • Substantial health sector strengthening support is envisioned in St. Vincent and the Grenadines through a proposed Health System Resilience Strengthening Project to improve the health system’s capacity to plan for and respond to emergencies and maintain core functions when crises hits.
  • The Bank will explore opportunities to strengthen gender-based violence prevention and response in OECS countries focusing on institutional gaps, coordination and referral challenges, and preparedness of first responders.

More and Better Jobs

Enhance the Enabling Environment for Businesses

  • The WBG will help increase access to credit for small and medium-sized enterprises (SMEs) to enable business recovery and development, higher employment, and growth, and facilitate provision and expansion of better jobs for women. SMEs contribute to more than 50 percent of employment and GDP in the region.
  • The programme will facilitate economic transactions, increase financial inclusion, spur innovation and support the increased adoption of digital financial services in OECS countries. Specifically, the Bank will support the modernization of policy, legal, and regulatory frameworks and underlaying payment infrastructure to enable innovators within the ECCU to roll out new non-bank digital payment products and services.
  • The WBG will provide additional support to strengthen tourism competitiveness and sustainability in Eastern Caribbean countries. Tourism is the single most important economic sector in the OECS, accounting for the largest share of GDP and employment. However, the region has been losing competitiveness with respect to other parts of the world, reflecting high pricing due to high energy and connectivity costs, as well as a limited menu of tourism offerings for visitors. The OECS Regional Tourism Development Project aims to support the sector’s recovery and medium-term growth by enriching and diversifying tourism offerings.
  • IFC supports this objective through advisory services, such as the Business Regulations and Regional Competitiveness Project. The project aims to support governments in the Caribbean region to design and implement business regulation reforms that would facilitate the creation of regional markets, take digital government service delivery to new frontiers, and unlock sector-specific bottlenecks to open new markets for private investment.
  • MIGA will continue to seek opportunities to promote cross-border investment and lending through its guarantee instruments.
  • Help strengthen the agriculture and fisheries sector as a source of growth, employment and resilience to economic shocks. The COVID-19 pandemic was a painful reminder of the Eastern Caribbean’s vulnerability to global economic shocks due to its tourism-dependence, as the halt in international travel led to deep economic contractions of up to 20 percent across the island countries.

Increase Digital and Physical Connectivity

  • Support digital connectivity and development in the Eastern Caribbean as a driver of growth, job creation, and improved service delivery. Digital technologies can help the OECS small states overcome their challenges of scale by improving the efficiency of economic transactions and government services. They can also be used to develop the digital services industry in the region.
  •  The Caribbean Digital Transformation Project - the first Bank-financed regional project on digital development - seeks to support increased access to and use of broadband, digital financial services, and the skills needed to actively participate in an increasingly digital marketplace and society.
  • Bank support will help deepen digital government reforms in Grenada, improving the access to and efficiency of government services and facilitating tax compliance for individuals and businesses. The Digital Government for Resilience Project seeks to enhance the efficiency, usage, and resilience of digital government services in the country.
  • Contribute to strengthen the region’s air and sea transport connectivity by improving operational safety and navigation efficiency of air transport in the Eastern Caribbean and strengthening the disaster resilience of airports in Grenada and St. Lucia.

Implementing the Regional Partnership Framework

  • Four OECS Blend countries have access to IDA financing on small economy terms (10 years grace period, 40 years maturity and no interest). The IDA indicative country allocation for the four OECS Blend countries is approximately US$70-75 million per country during the IDA19 period and is expected to remain around similar levels in IDA20.
  • A series of core analytics and advisory work. Analytics, such as Country Economic Memoranda, Public Expenditure Reviews, and Poverty Assessments, will serve to inform the reform agenda supported by the envisioned DPOs.
  • Building Implementation Capacity. Capacity is severely constrained in small island states, calling for greater consolidation, more selectivity, and less complexity in Bank-supported interventions. Key lessons learned to address capacity challenges include employing greater selectivity, consolidating the program, and developing deeper synergies with development partners. The Bank has provided technical assistance to OECS countries financed through the Canada “Caribbean Resilience Facility”.



Fostering Conditions for Growth and Competitiveness

Focused on supporting the OECS countries in strengthening macroeconomic stability and advancing structural reforms to revive competitiveness and growth.

In a context of high public indebtedness, support was given to fiscal and PFM reforms considered key to provide a macroeconomic environment more conducive to growth. Moreover, support was given to governments in addressing institutional bottlenecks for private sector development to improve the business climate and attract investments, including inadequate access to finance, cumbersome business regulations, low connectivity, and limited innovation and entrepreneurship. Support also sought to strengthen productivity by building human capital through improvements in health and education.

Improve Macro-Fiscal Policies for Debt Management and Public Procurement

  • The Bank supported important improvements in fiscal policy and PFM.
  • Bank support also informed the public procurement regulatory framework to improve the efficiency of public spending.

Enhanced Transparency and Statistical Capacity of Public Sector Information System

  • Enhanced transparency by supporting the implementation of Open Data policies.

Strengthened Regulatory Frameworks for Competitiveness and Productivity

  • The Bank supported the OECS in strengthening its banking sector to improve access to finance, highlighted by firms as a key constraint for business development in the Enterprise Survey (2010)
  • Energy regulatory frameworks were enhanced, contributing to addressing challenges in the sector.
  • Progress was made to adopt Public-Private Partnership (PPP) policies.

Improved Business Environment and Conditions for Female Entrepreneurship

  • Helped increase the capacity and geographical reach of regional broadband networks in four OECS countries.
  • The OECS made progress in implementing business climate reforms to enhance competitiveness.

Improved Human Capital Results for Higher Quality Standards for Education and Health

  • Jointly with the Global Partnership for Education, the Bank supported the implementation of an OECS Education Strategy (2012-2021) to improve educational outcomes in the region.

Enhancing Resilience

The challenges of small states make the OECS countries highly vulnerable to the impact of external shocks. Like most small states, OECS countries are characterized by: (i) limited economies of scale due to the small market size; (ii) relative geographic isolation; and (iii) few opportunities to establish effective risk-sharing mechanisms to insure resilience against shocks. This results in highly specialized open economies strongly dependent on a single sector (tourism) and few trading partners (USA, Canada, and Great Britain), heightening vulnerability to economic shocks. It also entails that natural disasters affect a very large share of the population all at once, which heightens vulnerability to natural and climate shocks. The result is high levels of volatility which constrain growth and investments, result in higher public debt to finance crisis response spending, and the loss of livelihoods and human lives from the impact of disasters, particularly among the poor and vulnerable.

The Bank helped OECS countries build cross-cutting resilience to shocks along the fiscal/financial, physical/infrastructure, human/social, and environmental dimensions. Results included the strengthening of social safety nets to better protect the poor and vulnerable against the impact of shocks. The Bank also supported the development of disaster risk financing (DRF) strategies, contributed to the strengthening of the region’s infrastructure resilience, and helped protect OECS countries’ vast ocean resources which are the main source of income for most of the population. Support was also given to Dominica’s reconstruction in the aftermath of category 5 Hurricane Maria, which decimated the island in September 2017.

Improved Targeting of Social Protection Systems

  • World Bank program helped strengthen social protection systems to help the poor and protect them from the impact of recurrent external shocks through improvements in Social Safety Nets (SSN).
  • The Bank helped consolidate and strengthen the targeting of cash transfer (CT) programs to improve their efficiency and increase coverage among the poor and vulnerable.

Improved Capacity to Prepare for, Respond to, and Mitigate Natural Disasters

  • World Bank supported the formulation and adoption of National Disaster Risk Financing Strategies.
  • Contingent financing through the CAT DDOs contributed to regulatory reforms to enhance infrastructure resilience.
  • The Disaster Risk Management Programme strengthened hydro-meteorological (hydro-met) systems for disaster preparedness.
  • The Bank contributed substantial rapid response financing to Dominica in the aftermath of category 5 Hurricane Maria, which struck the island in September 2017 and caused damages and losses exceeding 220 percent of GDP.

Better Management of Marine and Coastal Natural Assets

  • The Bank has supported critical improvements in the OECS’ management of its vast marine and coastal resources to develop its “blue economy” in a sustainable manner.
  • Policy-based lending support contributed to important reforms to reduce plastic pollution and coastal environmental degradation.
  • Bank support also contributed to strengthen the capacity for ocean governance in the region.